KUALA LUMPUR – Defence Minister Datuk Seri Mohamad Hasan (Rembau-BN) has refuted findings detailed in a report by Parliament’s Public Accounts Committee (PAC) on the embattled multi-billion ringgit littoral combat ships (LCS) project.
Among other matters, the report said that the ministry had signed a Sixth Supplemental Agreement (SA6) with the main project contractor, Boustead Naval Shipyard Sdn Bhd (BNS), on May 26 this year.
This, the report said, was done without the approval of the Attorney-General’s Chambers (AGC).
In response, Mohamad dismissed the claims, asserting instead that representatives from the AGC were always present during the negotiation process leading up to the signing of the agreement.
“The (PAC) report said that we (Defence Ministry) didn’t consider the views and advice of the AGC. This is wrong, totally wrong.
“During negotiations, there were representatives from the AGC, and we considered their advice. The AGC was with us, this is not an issue,” he said during a press conference in Parliament last night.
Mohamad, however, conceded that perhaps the ministry had failed to pay attention to certain matters, saying: “Maybe the AGC wanted us to get a black and white letter from them before we signed the SA6. This was overlooked on our part.”
The agreement details new terms on the LCS contract, including an increase in costs, contract extension, unlimited liquidated ascertained damages, and payment methods based on work progress.
“The SA6 did not get the consent of the AGC, which said the Defence Ministry was informed that further actions were needed for the agreement draft and should have been resubmitted to the AGC before it was signed.
“The Defence Ministry’s decision to go behind the AGC by signing the SA6 is an improper action that should not have been done as it can lead to legal implications for the government. This sort of decision cannot be repeated,” read the report.
Besides that, the report also said that since the construction period for the ships has been extended to 83 months, it is expected that all five ships will only be delivered to the Royal Malaysian Navy in 2029 instead of 2022, as agreed on in the original contract.
It added that the main issue in the project is the ships’ detailed designs, which are currently at a 96% completion rate at the construction contractor level, with only 84% having gone through the verification, confirmation, and approval stage by French shipbuilder Naval Group as the ships’ design supervisor.
The government’s decision to reduce the number of vessels from six to five, the report said, is due to the fact that the sixth ship has yet to begin its building process, with the equipment purchased able to be used on the other five ships.
The LCS project first courted controversy last year when multiple government and corporate reports outlined discrepancies behind the deal with BNS and other companies, as detailed by Scoop in a recap on the project. – October 10, 2023