What Happened To The Six Combat Ships, And Where Is The RM9b?

Following the 1MDB scandal, here is another massive scandal that has the potential to change the political game. What it demonstrates is that any administration has the freedom to treat taxpayers' money carelessly!

What Happened To The Six Combat Ships, And Where Is The RM9b?

Six littoral combat ships (LCS) were commissioned without an open tender in 2011, to be built by Boustead Naval Shipyard and delivered beginning in 2019.

The LCS, according to Boustead Heavy Industries Corporation Bhd, is a frigate-class vessel capable of performing complex naval missions in all four dimensions of modern warfare, namely anti-air, anti-surface, anti-submarine, and electronic warfare.

So far, RM6 billion (S$1.86 billion) of the RM9 billion cost has been spent, and there is very little to show for that huge sum, instead, there seem to be a massive coverup says Rafizi Ramli, the Keadilan deputy leader.

The designs for these vessels have not been completed, let alone one single vessel.

The first ship was scheduled to arrive in April 2019.

The second and third ships were scheduled to arrive in February and March of 2020, respectively, the fourth ship in October of 2021, and the fifth ship in August of this year.

Physical progress for these five ships currently stands at 44%, 35%, 32%, 27%, and 16%, respectively.

Work on the sixth and final ship, which was supposed to be delivered in October of next year, has yet to begin.

The finger is now pointed at ministers in previous Umno-led governments, while the opposition accuses ex-PM Najib Razak of attempting to shift blame to the short-lived Pakatan Harapan regime.

This is a bad business deal, and it is not a good sign for Malaysia, which is still reeling from the effects of the 1MDB scandal,

On top of that Najib is still going around winning elections for the BN and relaxing at home instead of being behind bars as a convicted politician.

According to analysts, the LCS scandal has the potential to change the political game. How could that be?

That is because the scandal involves many Umno bigwigs who were defence ministers and Prime Minister and they either approved, signed off on, or played some role in the project while they were in office.

They are Defence Minister Hishammuddin Hussein, Najib and Zahid Hamidi, the party's president. They are all on the hook for signing off on the deal and its associated payments.

Experts are telling the fallout could put Umno's hierarchy in limbo and this could boomerang against plans to hold elections in November instead of waiting for the September 2023 deadline.

The Pressure On Sabri

So far, Prime Minister Ismail Sabri Yakoob has been under intense pressure to dissolve parliament and hold snap elections. They came from Zahid, in particular, and his party supporters.

Najib also played a significant role in increasing the pressure for elections by touting the Umno Cabinet.

Will the LCS scandal put pressure on Mr Sabri to hold snap elections, which both Najib and Zahid believe will solve their 'court' cluster problem?

In trying to limit the impact of the LCS scandal, Mr Hishamuddin says the first vessel will now be delivered in two years time.

All six were to be delivered by August 2022, but they are still invisible.

Netizens were outraged by the response, creating memes depicting 'invisible' technology that rendered the vessels invisible or depicting the Defence Minister as having a short memory because he had previously stated the vessels would be ready by 2019.

There are numerous questions. The answers are on their way.
According to the MACC, it has completed its investigation into the LCS scandal and has submitted its report to the AG's office. The AG must now decide what to do next.

In the midst of this chaos, some of Mr Sabri's allies are pressuring him to dissolve Parliament. The Perikatan Nasional is campaigning for elections around the clock. They have also threatened to withdraw their support for Sabri if elections are not called.

The Rafizi Ramli Effect

After exposing the LCS scandal to the public, Rafizi Ramli, the Keadilan deputy President is now asking: “The biggest question: who is the big shark behind certain individuals who have such influence and power?”

Rafizi Ramli alleged that there were plans from the beginning to hide irregularities in the littoral combat ship (LCS) project through various complicated transactions.

Does this not remind you of the infamous 1MDB saga? Billions was laundered under the sovereign fund through a maze of complicated transactions, part of which are still unsolved today.

Nevertheless, Rafizi said the plan included the engagement of two subcontractors — Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED) — when Boustead Naval Shipyard Sdn Bhd could have handled the project on its own.

“As expected, Datuk Seri Najib Razak quickly replied that subcontractors CAD and CED are Armed Forces Pension Fund’s (LTAT) associated companies.

“He did not answer the 200 per cent commission issue that I raised. But only pretending that he was not involved in this scandal because CAD and CED subcontractors are LTAT’s associated companies,” Rafizi said in a statement.

LTAT, a subsidiary of Boustead Heavy Industries Corporation (BHIC), approved the purchase of a 51 per cent stake in CAD, with the other 49 per cent going to Rheinmetall Air Defense AG (RAD), a German defence contractor company held through subsidiaries wholly owned company RD Investment AG.

Rafizi said the decision was made during a BHIC board meeting on April 28, 2020 — a year-and-a-half before the Malaysian government appointed BNS as the contractor of the six LCS warships through a letter of appointment dated December 16, 2011.

He added that the purchase agreement between CAD and BHIC agreed that RAD has management control over CAD despite the fact that it is owned in majority by BHIC.

“As a result of that ridiculous decision, CAD is only owned by Boustead and LTAT on paper. The CEO and CFO, the two most important management positions in CAD, were agreed to be appointed by RAD instead of Boustead and LTAT,” he said.

He also said that the current CEO of CAD is one Gordon Hargreave who represents RAD.

Deep Scandal

So far, Malaysia has paid RM6.08 billion to Boustead Naval Shipyard for the purchase of six combat ships. Five should have been delivered to the navy by August 2022, but none have.

The Public Accounts Committee of Malaysia's parliament tabled a report last week on the procurement of LCS, two years after beginning an investigation into the RM9.13 billion (US$2.05 billion) contract.

According to the committee, the Ministry of Defence awarded the project to Boustead Naval Shipyard Sdn Bhd through direct negotiation, and the government has paid 66.65% of the cost, so far.

Former Defence Minister Ahmad Zahid Hamidi, current Defence Minister Hishammuddin Hussein, who held the position from May 2013 to May 2018, former navy chief Admiral Abdul Aziz Jaafar, and officials from Boustead subsidiaries were summoned to the proceedings by the PAC.

According to the PAC, the acquisition of LCS was part of the navy's transformation plan to reduce the number of ship classes from 15 to five.

"There were supposed to be 12 LCS under the navy transformation." "However, this contract only included six LCS," according to the report.

Following the postponement of the PAC report, the Malaysian navy stated that it fully supports the investigations into any leakages in the project and that those responsible must be brought to justice as soon as possible.

The navy says the LCS is crucial in maintaining the country's safety and sovereignty: “The navy requires combat capabilities that are in line with the developments of the regional security geostrategic and geopolitical landscape,” it said in a statement on Aug 6.

Netizens insist the ships are equipped with 'invisibility cloaks' and that these are new and unique technologies developed by the country.

According to the report, Boustead Naval Shipyard’ subsidiaries did not use all of the payments received from the government for the LCS project.

A July 2010 correspondence from BNS to then defence minister Zahid Hamidi seeking a letter of intent for the LCS deal is the highlight of the media.

In the letter, BNS said it needed to fill its dwindling order books and had prepared and planned for the vessels for "the past two years", dating back to when Najib was defence minister. The letter of intent was issued in October the same year.

RM400 million of the money given for the project to BNS was spent by subsidiaries on settling the bad debts of the old NGPV (New Generation Patrol Vessel) project. That leaves the bulk of the RM6.08 billion still unaccounted for.

The acquisition of LCS was a project under the navy’s transformation plan.

“Under the navy transformation, there were supposed to be 12 LCS. However, this contract only involved six LCS,” said the PAC report.