LCS project officers kept in the dark, says report

 

Top officers in the littoral combat ships project ran the programme ‘the way they saw fit’, says BHIC’s declassified audit report.

PETALING JAYA: The organisational structure of the littoral combat ships (LCS) project was left unapproved so that various officers were kept in the dark about their levels of authority and responsibilities, according to a declassified audit report by Boustead Heavy Industries Corp (BHIC).

This unapproved structure also kept the officers uncertain about the role of the LCS project head, the report said.

Multiple vacant positions meant to support the management of LCS were not filled, it added.

The shortage of manpower hindered the business operations from performing effectively and allowed the heads to run the programme “the way they saw fit”.

Other major governance discrepancies included a budget that was not approved, which meant that profits or losses could not be tracked.

“It (the budget) could not be used as an official benchmark to determine the project’s performance and profitability,” said the report.

It also said no proper variance analysis was done for cost controls or to identify negative variances, all of which would have helped to keep the project on track and achieve the desired milestones.

The SOPs for operations were not formalised and “the limit of authority was not defined for a long time”, which resulted in inconsistent, incomplete and inaccurate processing of transactions, said the report.

It said that despite red flags raised by various parties, including the group’s internal auditor, no corrective measures were taken by the management or the board chairman to confirm allegations.

BHIC declassified its internal forensic audit report and made it public, in line with a Cabinet decision.

The report, titled “Review of the LCS Programme“, has been published on the website of Parliament’s Public Accounts Committee (PAC). Portions of the report have been redacted.

According to the report, three companies were allegedly used to siphon off RM23.37 million from the navy’s troubled LCS project.

The PAC has said that RM6 billion had been spent on the project since 2014 but none of the ships had been completed or delivered. - FMT