Transparency International Malaysia calls for accountability over LCS scandal

KUALA LUMPUR: Transparency International Malaysia (TI-M) has called for a probe into the multi-billion-ringgit Littoral Combat Ship (LCS) scandal.

The anti-graft watchdog said there was no sight of the completed ships although RM6.083 billion had been paid to Boustead Naval Shipyard Sdn Bhd (BNS).

"This is a major question mark as to the integrity, transparency and good governance of this project," said TI-M president Dr Muhammad Mohan.

On Thursday, the parliamentary Public Accounts Committee (PAC) revealed that the LCS project contract was awarded to BNS via direct negotiation, with the government paying RM6.083 billion, but not one LCS has been delivered

Mohan said TI-M proposed several measures to end bad accountability and governance involving the multi-billion-ringgit deal.

He said TI-M proposed that payments for the project be stopped until the LCS were delivered.

TI-M urged the authorities to investigate all levels of contractors and subcontractors for the project to check if unnecessary, intermediary "dummy companies" were used to unlawfully "take a cut" from the deal.

TI-M called for standard operating procedures to be put in place for mid-stream audits to be conducted for all public sector projects involving billions of ringgit.

"This will help spot potential issues and address them before they become a project risk that leads to delays and involve potential budget overruns," Mohan said in a statement here today.

TI-M called for a mandate requiring all high value, high-impact projects involving taxpayers' money to be reviewed by Parliament before they are approved and to ensure that the projects go through a competitive tendering process.

TI-M said serious action should be taken against civil servants involved in the project if they were found to have neglected their duties.

It called for criminal proceedings against any person suspected of breaking the law or involvement in bribery, corruption and abuse of power under the Malaysian Anti-Corruption Commission Act 2009.

Mohan said in examining the background of the LCS project, many questions had cropped up, such as:

— Why was a multi-billion-ringgit project of this size awarded via direct negotiation and what is the justification?

— On what basis was BNS awarded the contract?

— What was the justification for changing the design specification from the LCS preferred by the Royal Malaysian Navy, resulting in a change of vendor, and who approved this change?

— Why were rigorous procurement practices not maintained to ensure value for money and to remove redundant layers that further inflated the project cost? For example, it was reported that two companies controlled by Boustead Heavy Industries Corp (BHIC) were allowed to deliver products for the project at marked up rates when BHIC could undertake the task itself.

— Tan Sri Dr Abdul Aziz Jaafar, former chief of the RMN, said he wrote 10 letters to various levels of the government expressing his deep concerns about the risks and non-compliance of the LCS project. The letters were addressed to, among others, the chief secretary of the Defence Ministry, the defence minister, the chief secretary to the government, the prime minister and the deputy prime minister. How were his concerns addressed, if at all?

— Multiple audits by separate entities were conducted, including by the National Audit Department, Special Investigation Committee on Governance, Procurement and Government Financial Issues and BHIC, highlighting issues related to the project. Was any action taken because of these reports?

— In January this year, the Malaysian Anti-Corruption Commission detained two senior executives over the LCS project. What is the outcome of the detentions and has there been any follow-up action since then?

Mohan said many governance and audit structures in the public sector were responsible for preventing corruption and improving good governance, such as integrity units, internal and external audits, integrity committees at ministries, the National Anti-Corruption Committee headed by the chief secretary to the government and the Special Cabinet Committee on Anti-Corruption headed by the prime minister.

"With all this in place, how could the LCS project, which started in 2013, be allowed to become a colossal procurement and governance failure for so long?

"How could they collectively have missed all the red flags?

"Where is the oversight, governance and accountability? Or has it become conveniently invisible, just like the ships that were supposed to be delivered?

"Is it any wonder that Malaysia's CPI (Corruption Perceptions Index) score has been on a downward trend in the past two years since a high in 2019?"

Mohan said Malaysia was increasingly known for its poor governance practices, resulting in the loss of billions of ringgit of public funds, from 1Malaysia Development Bhd to the LCS project.

"Action has been and continues to be taken over 1MDB. How long do we have to wait for those responsible for another fiasco to be prosecuted?"

He said if the government failed to act or do so in time, it would show a lack of sincerity in its commitment towards institutional reforms and in its fight against corruption.

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