PRIME Minister Anwar Ibrahim’s stand on the controversial littoral combat ship (LCS) project is contradictory to his previously held sentiments while he was the opposition leader, Center to Combat Corruption and Cronyism (C4 Center) said. 

The anti-graft watchdog said Anwar’s claim that the government had “no choice” but to continue with the project was unsettling in light of its inaction in holding the perpetrators of this scandal to account.

“If mega-projects that cost taxpayers billions of ringgit were allowed to continue despite clear mismanagement and the strong possibility of corruption based on the logic of ‘sunk cost’, this sets a dangerous precedent where the mismanagement of projects is retroactively disregarded in favour of ensuring delivery. 

“The validity of the project becomes secondary to the need for completion, all while using up more public funds. The cost of the LCS project has inflated to RM11 billion by way of the supplementary contract – with RM6 billion already spent on this but no ships fully completed, the logic of sunk cost compels the government to spend another RM 5 billion. 

“That is not to say the project is a complete waste of money – defence spending is undeniably important for the nation. However, cost-benefit analysis and the return on investment for public procurement must be prioritised,” C4 Centre said in a statement today. 

In August 2022, as opposition leader, Anwar urged Putrajaya to halt the remainder of the project involving the navy’s LCS project, which he termed as the “biggest scandal” in his time of service.

Upon assuming the premiership following the formation of the unity government, Anwar in March this year said investigations into the LCS project must continue and that the previous prosecutions were not enough as they did not even involve the main culprits behind the project’s failure.

A street protest called “Mana Kapal LCS” was also held in August 2022. Several politicians who are currently serving in the unity government also took part in the protest, among them being Natural Resources, Environment and Climate Change Minister and PKR vice-president Nik Nazmi Nik Ahmad. 

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 Boustead Naval Shipyard Sdn Bhd (BNS) signed a sixth supplemental contract for the project with the government.

It was also announced that the Finance Ministry (MOF), which is also headed by Anwar, had established a special purpose vehicle to take over BNS as a subsidiary, essentially giving MOF greater control over the project and also enacting more accountability measures to ensure the project’s completion.

Defence Minister Mohamad Hasan said the project would still be monitored by the Project Monitoring Committee (PMC) jointly chaired by the Treasury secretary-general and the Defence Ministry secretary-general.

The Rembau MP also said periodic progress reports to the cabinet would be prepared in accordance with the conditions set by the auditor-general, and periodic reporting to parliament through the Public Account Committee (PAC) will be done at least once every three months as well.

C4 Centre acknowledged the move, saying it is a step in the right direction in order to ensure that the project does not encounter further obstacles and delays.

However, it also questioned why those responsible for the project’s catastrophic failures still have not been held accountable, and what the continuation of the project means for future anti-corruption efforts.

“While the increased oversight over the LCS project is a welcome development on paper, the administration of oversight itself must be practised and maintained to its fullest extent to ensure the project itself can meet its obligations, adhering to the timelines for delivery that have been set without failure or delays. 

“If those reports are to be made to the cabinet and to the PAC, they should also be made available for the public. With the RM6 billion that has already been sunk into this project, all of which came from people living in Malaysia but with not a single ship to show for it, the government has an obligation to uphold transparency, both in terms of fulfilling their mandate of public service and also for rebuilding trust in government institutions where it has been eroded after countless corruption and financial mismanagement controversies. 

“The capacity of our navy to defend our shores, for which these ships were purchased in the first place, has already been severely limited by this misstep,” it said. 

C4 Center also urged the following: 

1. For the monitoring reports by the PMC and the PAC to be released to the public and kept in accordance with the set period as determined; 

2. For the results of the MACC’s investigations so far to be released promptly, made available and accessible to the public, accompanied by periodic updates on the status of ongoing investigations; 

3. For the Attorney-General’s Chambers to initiate prosecutions against individuals found to be engaging in corruption-related offences at the point of contracting, and for those involved in the financial mismanagement of the project to be held publicly accountable; 

4. For parliament to enact the requisite institutional reforms such as the government procurement act that would serve as a preventative measure against massive wastage and poor delivery of infrastructure, and also reforms to the MACC that would ensure that public sector corruption can be dealt with more effectively. – June 1, 2023.