AN anti-graft watchdog has asked Putrajaya to be transparent and explain what went wrong with the controversial littoral combat ship (LCS) project. 

Claiming that numerous questions pertaining to the awarding of the LCS contract to Boustead Naval Shipyard Sdn Bhd (BNS) remain unanswered, Transparency International Malaysia (TI-M) asked the government to declassify the Procurement and Finance Investigation Report done under then auditor-general Ambrin Buang. 

“The government should not hide behind the official secrets act or “national security” if corruption and abuse of power is detected,” TI-M said in a statement today. 

“(Prime Minister) Anwar Ibrahim has repeatedly stated his firm commitment to fighting corruption and improving governance and integrity practice in the public sector. 

“Ensuring the LCS project is not abandoned is important. Holding those responsible for this problematic project accountable for their actions is vital,” it added. 

Among the questions posed related to the problematic project were: 

i. What was Putrajaya’s rationale for awarding the project to BNS in 2011 via direct negotiation?
ii. Were red flags raised when BNS first indicated its inability to deliver the LCS within budget?
iii.  What action was taken to address those red flags?
iv. Who was responsible for approving changes to the design specification from the Royal Malaysian Navy’s (RMN) preferred LCS?
v. Were there suspected kickbacks in how the contract negotiations were done and the final contract price determined?

TI-M’s statement came after Defence Minister Mohamad Hasan said the Finance Ministry has established a special purpose vehicle to take over the company responsible for the LCS project. 

He said the project would still be monitored by the Project Monitoring Committee jointly chaired by the Treasury secretary-general and the Defence Ministry secretary-general.

TI-M acknowledged the rationale behind the decision given that RM6.083 billion in taxpayers’ money had already been paid. 

It, however, highlighted the project’s abysmal results thus far. 

“The first vessel was slated to be delivered in April 2019 – today, after four years, not a single ship has been delivered. 

“The project cost increased from RM9 billion to RM11.2 billion. However, the Royal Malaysian Navy will now only be getting five LCS instead of six,” it said. 

The LCS project, said to be the largest defence procurement in Malaysia’s history with an initial total cost of RM9 billion, was revised to the tune of RM11.2 billion last week after BNS signed a sixth supplemental contract for the project with the government.

The company said the first vessel will be delivered, fully tested in August 2026, while the fifth ship is expected to be delivered in April 2029.

In February, Mohamad said the cost for the project would remain although the navy would only receive five frigates instead of the original six.

He said there would be no reduction in the price tag of the RM9 billion project that had been previously approved due to the many variations from the original order as well as inflationary costs.

TI-M also said besides the news of two senior executives being detained by the Malaysian Anti-Corruption Commission (MACC) in relation to the LCS project, no other updates were given pertaining to the issue. 

“To date we have not heard of any action to address the various issues raised and bring those responsible to justice,” it said. 

The project had been awarded to BNS through direct negotiation, and the MACC – which investigated the project – had previously recommended that several individuals be charged in relation to the project. – May 29, 2023.