THE report by the Public Account Committee (PAC) highlighted the contract awarded by the government to Boustead Naval Shipyard Sdn Bhd (BNS) by direct negotiation, and a total sum of RM6 billion paid without any ship being delivered as of 2019.

The government’s mismanagement, lack of transparency and irregularities are repeating history, as we had with 1MDB and Sapura Energy Sdn Bhd.

Thus, it is critically crucial to evaluate, the establishment of good corporate governance. There is no exact definition, but it is generally accepted that corporate governance refers to the processes used to manage businesses to promote prosperity and accountability with a long-term objective.

It plays a pivotal role in the country’s economic development. As such, good corporate governance exhibits certain distinct features, like:

• accountability
• transparency
• participatory decision-making
• responsiveness
• inclusiveness
• equity and justice
• honesty, impartiality, and integrity.

In Malaysia, the legal framework for corporate governance is built in several pieces, but the main legislation can be seen under the Companies Act 2016, and the Malaysian Code on Corporate Governance 2017 by the Securities Commission, Bank Negara Malaysia and a few others.

Meanwhile, the general principles of corporate governance are:

• board leadership and effectiveness
• effectiveness audit and risk management
• integrity in corporate reporting and meaningful relationship with stakeholders.

In recent years, the Malaysian government has been making some efforts in reducing corruption and improving corporate governance by introducing the National Anti-Corruption Plan 2019-2023, and amendments to the Malaysia Anti-Corruption Act 2009.

So, what makes the littoral combat ship contract fail?

As reported, it was mainly due to the unsatisfactory design and a delay in finalising the acquisition of equipment.

In addition, the quality of work was unsatisfactory, not according to specification, resulting in redundant work that caused delays.

BNS was solvent when it was given the project, but its liability was significantly more than its assets.

As reported, the payment made by the government to BNS, was used to bail the company out of its previous projects.

These are the initial signs of how corporate governance has failed. The major failure is reflected in poor ethical leadership, lack of integrity, mismanagement, lack of transparency, and violation of corporate governance rules.

However, since the government had pledged to investigate the situation, perhaps there will be light at the end of the tunnel.

So, let’s just see where this is heading. – August 12, 2022.

* Matilda George reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.