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11th May 2021
THE LCS PROJECT MUST NOT FAIL A SECOND TIME, PATRIOT VOLUNTEERS TO KEEP AN EYE

 The announcement by Defence Minister Dato Seri Ismail Sabri that the government has agreed for the Boustead Group to continue with the littoral combat ship (LCS) project is welcomed with mixed enthusiasm. If the project is well managed after drawing lesson of past mistakes, it has potential for a positive spin on the economy. Otherwise, committing more funds using the same incompetent project and management team is digging a deeper hole for self-burial.  
 
Announcing the continuation of the LCS project without giving details of the funds - amount, source, and for what number of the ships to be delivered; is half -baked. Will there be any new party involved, besides the Boustead Group? Since in 2019 and 2020 the shares of Boustead Heavy Industries Corporation Bhd (BHIC) were cornered and artificially suppressed, while Urusharta Jemaah was dumping the BHIC shares in the open market. Will those who cornered the BHIC shares be part of the new management team? 
 
Patriot had previously issued at least six media statements on this issue and had asked Bursa Malaysia to investigate. The whole episode of the LCS project fiasco reflected poorly on corporate governance and a lackluster attitude of those sitting in the cushy Kuala Lumpur offices disconnected from the happening within the shipyard in Lumut.   
 
The fault lies equally with Mindef and Putrajaya where both parties procrastinated in approving the three variation orders through no fault of the Boustead Naval Shipyard (BNS), a subsidiary of the Boustead Group and the contractor of the LCS project. There is no option other than to approve the variation orders, possibly with a much higher amount than the first stated RM1.4 billion and later estimated upward to RM3 billion.    
 
The approval of the variation orders amount, be it RM3 billion or more, plus an additional sum for Putrajaya to pump in will give the Boustead Group much leeway to pay some debts and acquire bridging loans. Provisions in accounting previously made for the LCS project can now be written back. Even a portion of the variation orders amount can be taken as profit.  
 
Patriot would like to know the outcome of the MACC report filed by BHIC in September 2020 after a seven-month forensic audit on the LCS project. Truth be told, from the perspective of a military operation, this has been a total screw up of the highest order. People in Putrajaya, Mindef, LTAT, Boustead Holdings, BHIC and BNS must take responsibility.  
 
It has also been reported that out of the RM6 billion already disbursed for the project, RM1 billion was unaccounted for. Patriot would also like to know the outcome of this investigation. If the funds disbursed did not reach the contractor, then where did it go? The Prime Minister, Finance and Defence Ministers must answer this question.  
 
The revived LCS project must be managed by a new and responsible team. Past mistakes must not repeat. Patriot volunteers to form an expert team to help keep an eye on the project, not to interfere, but acts as an independent audit team with special authorisation from higher authority. We hope the government grunts us this honour. We have among us naval and shipbuilding experts with high spirit of altruism.  
 
Most important, it is the people’s money, and the project cannot fail a second time.   
 
BG Dato Mohamed Arshad Raji (Rtd) 
President, 
Persatuan Patriot Kebangsaan 
www.patriotkebangsaan.org.my