After NFC, navy vessels scandal next

How did the cost of six offshore patrol vessels increase by RM3 billion each and why were there no payment vouchers?

COMMENT

Over the last 10 years, we lost over RM1 trillion through illicit transfer.

To say that the Barisan Nasional government hides a monumental submerged portion of financial excesses and rip offs is an understatement.

In this context the current National Feedlot Corporation fiasco involving RM250 million is just a tip of the iceberg.

We are, in fact, readying ourselves now for the exposure of the next big financial scandal…and the next!

Immediately the next possible source of financial legerdemain, with all the necessary ingredients of manipulations and underhand moves, is certainly the cost of six offshore patrol vessels from Boustead Naval Shipyard Sdn Bhd at RM1 billion each.

The cost has now increased by an unexplainable RM3 billion. How does Boustead get into the vessel building business?

Now, the history of the Malaysian Navy’s purchase of weaponry is a dismal one.

So, let’s get into a little history lesson.

Contract cost ballooned

The original contractor chosen to build Malaysia’s first generation naval vessels was PSC-Naval Dockyard. It was controlled by Amin Shah Omar Shah and his brothers.

(Amin Shah, 53, was reportedly a high-profile tycoon known for his close ties to former Finance Minister Daim Zainuddin. This was during the era of former prime minister Tun Dr Mahathir Mohamad.

(Under the 1990s privatization programme advocated by Mahathir, Amin Shah was among the few bumiputera entrepreneurs who were able to secure government concessions and contracts. And one of these key contracts was the Naval Dockyard in Lumut.

(In 1995, the government privatised the Naval Dockyard to the then PSC Industries Bhd (PSCI), for RM300 million. Amin Shah had a substantial stake in this and the dockyard was renamed PSC-Naval Dockyard Sdn Bhd.

(In 1998, PSC-Naval Dockyard was awarded a mammoth RM24 billion contract to build 27 offshore patrol vessels for the Royal Malaysian Navy.)

By mid 2006, only two of the 27 offshore vessels (worth RM24 million) were delivered. But both failed to pass the pre-delivery trials.

There were 298 recorded complaints about the two boats, which were also found to have 100 and 383 uncompleted items aboard them respectively.

The original RM5.35 billion contract ballooned to RM6.75 billion by January 2007.

No payment vouchers or documents

The auditor also reported that the Defence Ministry had paid out RM4.26 billion to PSC up to December 2006 although only RM2.87 billion of work had been done, an overpayment of RM1.39 billion, or 48 percent.

In addition, Malaysia’s cabinet waived late penalties of RM214 million.

According to the Auditor General, 14 “progress payments” amounting to RM943 million were paid out to PSC from Dec 1999, but there were no payment vouchers or relevant documents dealing with the payments.

How did the government explain such blatant abuses of financial discipline?

On what authority was the ministry authorized to pay money for jobs not yet completely done or not even done yet?

The Auditor General attributed the failure to serious “financial mismanagement” and “technical incompetence” stemming from the fact that PSC had never built anything but trawlers or police boats before being given the contract.

These terms must be the world’s biggest oversimplification.

“Financial mismanagement” is plain corruption and “technical incompetence” is mental deficiency.

The writer is a former Umno state assemblyman and a FMT columnist.