Former defence minister Mohamad Sabu and his then deputy Liew Chin Tong questioned whether former premier Najib Abdul Razak’s plan from the beginning for the littoral combat ships (LCS) project was to help pay off the bad debts from the failed new generation patrol vessel (NGPV) project.
This comes after Najib attempted to link former prime minister Dr Mahathir Mohamad to Boustead Naval Shipyard Sdn Bhd (BNS) being forced to use part of the funding for the LCS to pay off NGPV’s bad debts.
“In 2011, Najib as the sixth prime minister (PM6) approved the procurement of six LCS and awarded the contract to BNS.
“Did PM6 start the LCS project through direct negotiations with the aim of paying off NGPV’s bad debt?
“Najib’s answer to this question will help us all understand the problems of the LCS project,” Mohamad and Liew said in a statement today.
Over RM6 billion of the ceiling RM9 billion LCS project allocation had been paid to BNS by the Malaysian government. Of the RM6 billion, a total of RM745 million was used for the “bailout” of the NGPV project, they said.
They claim using the funds in this manner is a criminal breach of trust that is considered a crime under Section 409 of the Penal Code.
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“This RM9.128 billion is to make the LCS project a success, not to ‘bailout’ NGPV project.
“Basically, what has been done here was to cover the losses of the old agreement that failed with a new agreement,” they said.
“If we follow Najib’s logic (that) NGPV’s bad debts were the responsibility of the fourth prime minister (Mahathir), then all of the LCS problems are the responsibility of the sixth prime minister because all the decisions regarding LCS happened while Najib was the prime minister from 2009 to 2018,” they added.
‘Najib deeply involved’
While Najib tried to pin the failure of the NGPV project on Mahathir, Mohamad and Liew said Najib was also deeply involved in that project as the defence minister at the material time.
They pointed out that the NGPV project took place between 1998 and 2010 while Najib was the defence minister from 1999 to 2008, as well as from 1990 to 1995.
They said the origin of this issue dates back to 1990 when the Royal Malaysian Navy first planned to acquire 27 patrol vessels.
After getting approval in principle from the cabinet in 1993, the proposed construction and acquisition of the patrol vessels were included in the privatisation agreement of Naval Dockyard Sdn Bhd (NDSB) between the Malaysian government and Penang Shipbuilding and Construction Sdn Bhd (PSC) in order to form a consortium called PSC-NDSB.
“In other words, Najib as the defence minister also agreed to privatise this shipyard,” said the Harapan duo.
The NGPV procurement contract was later signed with PSC-NDSB in 1998.
After the failure of the NGPV project, Boustead Holdings Berhad took over PSC-NDSB in 2005 and renamed the company BNS the following year.
The Public Accounts Committee (PAC) also found in 2005 that the NGPV project was not well managed by the contractor and the Defence Ministry.
On top of that, the auditor general’s report in 2006 also found that the NGPV project had many weaknesses because the government and the Defence Ministry gave too many opportunities to companies with financial and management issues to the point that the government’s interests were not preserved.
Mohamad and Liew reminded Najib that he was the defence minister when all this happened.
Enormous bank debt
Armed Forces Pension Fund (LTAT) chief executive officer Ahmad Nazim Abdul Rahman had previously said BNS was forced to use part of the LCS funding to pay off bad debts from the NGPV project because Boustead Holdings was compelled in 2005 to take over PSC-NDSB.
“The acquisition included the enormous bank debt that Boustead Holdings and BNS are now forced to bear.
“So, part of the LCS money had to be used to pay off PSC’s bad debts. This information is in the PAC report,” Nazim said.
The PAC issued a report on Aug 4, highlighting the problems that led to the failure of the LCS procurement initiative.
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