It looks like Defence Minister Zahid Hamidi is determined to give Prime Minister Najib Razak a run for his money as the defense minister most embroiled in an arms procurement scandal.
In 2002, Najib began a string of controversial acquisitions starting with two technically impaired Scorpene submarines worth a total of RM7bil. Then the defense minister, Najib moved on Sukhoi jet-fighters, Eurocopters and is now believed to be the hand behind Zahid's rush to buy 12 state-of-the-art Littoral Combatant Ships that will result in the Malaysian navy becoming the best equipped in the world - way ahead of US, no joke!
When Zahid announced that the Najib administration had approved RM6 billion for the Royal Malaysian Navy to acquire 6 second generation patrol vessels to be built by Boustead Naval Shipyards at a “un-fixed” price, Malaysians should have smelt a rat!
True enough, the country is now destined for more financial trouble, caused by unscrupulous leaders who treat public money as their own private kitty. In the case of the Scorpenes, Najib was accused of taking a 114 mil euros kickback from ship-builder DCN. Will the LCS deal with Boustead also be crafted in such a way as to line the pockets of the UMNO elite, of which both Najib and Zahid are.
"Un-fixed" price turns out to be even higher
Whether it is a sign of insolence or sheer hunger for kickbacks of his own, Zahid's "un-fixed" price is now RM9 billion, a 50% increase from the original pricing stated by the Defence Minister in February of 2011.
In defending the RM6 billion deal in Parliament, the Minister had claimed that these patrol vessels were no ordinary ships but were advanced warships known as "littoral combatant ships" (LCS). Zahid had in March claimed that the LCS is "bigger and faster" and "it is also equipped with three-dimensional warfare equipment like cannons, missiles and torpedoes” which are able to take on jets, ships and submarines respectively.
He argued that "with the rapid development of technology, the RMN would need an LCS with state-of-the-art equipment like the sonar system for submarine detection and anti-submarine torpedoes, which would help in the operation of the two RMN submarines to safeguard the sovereignty of national maritime areas."
What the Defence Minister failed to mention was that the LCS vessel is notoriously flawed and prone to cost-overruns. Just ask the American navy, for they came across this problem when commissioning LCS vessels of their own.
Even the US has only 2 LCS
The American Navy now has 2 LCS class vessels, the USS Freedom and USS Independence. The USS Freedom is produced by the Lockheed Martin consortium, in competition with the General Dynamics-designed USS Independence.
Cost overruns during Freedom's construction combined with projected future overruns led the government to issue a "Stop-work" in January 2007 and ultimately led to the cancellation of construction of LCS-3 (the second Lockheed Martin ship) on 13 April 2007.
On 25 April 2008 the New York Times ran a highly critical article, arguing that both Freedom and competitor Independence demonstrated a failure of the Navy's littoral combat ship program. The development and construction of Independence as of June 2009 was running at 220% over-budget. The total projected cost for the Independence is $704 million. The Navy had originally projected the cost at $220 million.
The American Navy budgeted $490 Million for each ship while the Congressional Budget Office projected a cost of $591 million for each ship. Navy acquisition chief Sean Stackley testified to a Senate panel that the actual price range was $440 to $460 million.
Experimental craft, largest fleet in the world
The LCS class vessels are open-ended vessels that verge on the fringe of experimental craft. The modular nature of the craft means that it can be outfitted in any configuration that suites the buyer.
Bear in mind, the primary developer of the LCS class vessels is the American navy and countries such as Saudi Arabia and Israel are keen to have a modified version of the LCS-1 version developed by the American Navy. The version that Malaysia wants to buy is a smaller scale version of the LCS craft being developed in America.
It does not take a genius to figure out that the cost overruns experienced by the American Navy in developing the LCS was a primary concern, and measures were taken to counter the escalating cost to both design, outfit and fix the numerous problems the vessel had.
Yet, in spite of all these issues; the Malaysian Defence Ministry is steaming ahead to purchase 12 LCS class vessels. If this is realized, Malaysia would have the largest fleet of LCS class vessels in the world. The American Navy, to date; has two operational craft and seven in various state of planning and development.
Even more expensive than the US ships
It defies logic that the Malaysian government would want to continue to support the purchasing of these vessels at a price that is clearly more expensive than the ones developed in America.
And bear in mind, the American Navy is far more experienced in developing naval craft than Boustead Naval Shipyards. The 50% increase in cost is unrealistic and illogical and no amount of modification or fitting can justify the increase. And even if Boustead decides to built the vessels at the same size as the American vessels, the price should mirror the ones the American Navy had to pay out.
So how is it, that smaller craft modelled after their bigger counterparts, could cost more and suffer cost-overruns; even at the drawing-board stage?
Until a proper explanation is offered by the Defence Ministry, we can only speculate and wonder. And watch public funds being washed away by currents totally driven by the personal greed of unscrupulous politicians.
Malaysia Chronicle
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