TI-M demands accountability over process that led to LCS scandal

Transparency International Malaysia (TI-M) questioned the lack of accountability after it was announced the Finance Ministry set up a special purpose vehicle (SPV) to take over the company contracted to build six littoral combat ships (LCS) for the Royal Malaysian Navy (RMN).

It said while it understood Prime Minister Anwar Ibrahim’s rationale in attempting to ensure the completion of the RM9 billion project which was contracted to Boustead Naval Shipyard (BNS) in 2011, there were many questions the government needed to answer.

“TI-M acknowledges the rationale behind this decision given that RM6.083 billion of taxpayers’ money has already been paid thus far.

“However, a quick look at the project status will show a number of abysmal results,” said the corruption watchdog in a statement.

It pointed out that the first vessel was slated to be delivered in April 2019, yet today, after four years, not a single ship has been delivered

“The project cost has increased from RM9 billion to RM11.2 billion; however, the RMN will now only be getting five LCS instead of six.

“This calls into question larger issues on governance and transparency related to this problematic project which remain unanswered,” it added.

TI-M said the government needs to address the following questions:

• What was the rationale for awarding the project to BNS in 2011 via direct negotiation?

• Were red flags raised when BNS first indicated its inability to deliver the LCS within budget?

• What action was taken to address these red flags?

• Who was responsible for approving changes to the design specification from RMN’s preferred LCS?

• Were there suspected kickbacks in how the contract negotiations were done and the final contract price determined?

‘No actions to date’

TI-M said these were some questions it raised in August 2022, after it was reported in January 2022 that MACC detained two senior executives in relation to the project.

“Other than this, to date, we have not heard of any actions to address the various issues raised and bring those responsible to justice.

“Anwar has repeatedly stated his firm commitment to fighting corruption and improving governance and integrity practices in the public sector.

“Ensuring the LCS project is not abandoned is important but holding those responsible for this problematic project accountable for their actions is vital,” it said.