SHORTLY after the Public Account Committee’s (PAC) report on the littoral combat ship (LCS) project was tabled, a reporter friend texted me, asking “How did you feel?”
I replied: “Heart-breaking.”
We have conducted 10 proceedings including a site visit to the Boustead Naval Shipyard Bhd’s (BNS) dockyard in Lumut, calling 21 witnesses altogether. Eventually a report of 247 pages, together with the 489-pages-hansard and 192-pages-slides was tabled as the full report.
The PAC decided to visit the BNS dockyard after getting evidence from the Defence Ministry’s (MINDEF) secretary-general Datuk Seri Muez Abd Aziz, witnesses from BNS and former defence minister Datuk Seri Ahmad Zahid Hamidi.
Site visit on Dec 11, 2021
We reached the dockyard at 9am on December 11, 2021. The proceeding started at 9.05am with the presence of the witnesses from MINDEF, the Royal Malaysian Navy (RMN), Boustead Heavy Industries Corp Bhd (BHIC) and BNS.
To name, the three important witnesses were BHIC CEO Sharifuddin Md Zaini Al-Manaf, the Navy’s LCS project team’s former director-general and retired Navy captain Azhar Jumaat and the former Navy Project Team leader Datuk Mohd Shaiful Adli Chung bin Abdullah.
The proceeding lasted exactly three hours – ended at 12.01pm – and everyone proceed for the site visit.
The store
The PAC was first brought to visit the warehouse. There were 13 stores at the warehouse keeping LCS-related equipment, five of which specifically for LCS equipment while the rest were BNS General Stores that contain a mix of LCS and general equipment.
We visited a few stores. There were parts for ammunitions and parts for ship buildings, among others. Notably, there were some packages of smart TVs for the LCS’ use which were kept in the store.
I am not quite sure about others, particularly those parts that involve warship technology. When we checked, we discovered that many of these parts were purchased way back in 2013, 2014 and 2015.
A question in mind was whether these technologies will still be “smart” enough for current needs given the advancement in technology these days.
We were told the total equipment value in storage is RM1,757,791,266.02 (RM1.76 bil). When I asked BNS how much of it has become obsolete, the answer given was approximately 15% (which means there was an approximated loss of RM263,668,689.90 or RM263.67 mil).
Had BNS paid for all the equipment? No, not all had been paid. This is why we read that there are huge debts owing to the original equipment manufacturer (OEM) which had eventually caused them to stop work and stop supply.
The site
We were then brought to visit LCS1 at the construction site. Looking at the outfit alone, one will not be able to tell that it was the same warship that was “launched” in 2017.
But we know it is. Of course, the much-disputed mast is no longer there.
We went up and went into the main block to see the progress of the actual construction. MINDEF informed PAC that the progress of the actual construction is 44% for LCS1.
We spent around an hour in LCS1 and went to the bus. The bus drove us past the whole construction site for LCS1 to LCS5.
There were no longer workers at the construction site – neither local nor foreign. No contractors. No longer any on-going works. Totally zero, totally stalled. It is heart-breaking, as we all know RM6 bil was already spent.
No more money
In the earlier proceedings, we were told BNS’ financial position is in dire straits due to financial mismanagement of the company.
PAC member Wong Shu Qi raised the question if all RM6 bil had been spent by BNS.
BHIC CEO Sharifuddin admitted, “Memang duit kita sudah habis… company memang tidak ada duit dan memang akan lingkup besok silap-silap” (“It’s true we have no more money … the company has no more money and might even go bust tomorrow”).
Staff salaries were cut since October 2020 while Employees Provident Fund (EPF) contributions were not paid since May 2021. BNS was merely relying on minor jobs like doing repairs for the navy to survive (page 49 of the Hansard).
Sharifuddin further informed PAC that if BNS is gone, Boustead Holdings Bhd and the Armed Forces Fund Board (LTAT) will be affected severely.
Boustead Plantations Bhd, Pharmaniaga Bhd, Boustead Properties and Boustead Hotels will all be equally affected. It will go as far as LTAT losing up to 46% of its fund size (page 52 of the Hansard). 
Heart-breaking
It was sad, and tremendously heart-breaking.
First thing that came to my mind was how could a company who has a RM9 bil contract from the Government arrive at this stage?
It is more than mismanagement. It is more than poor management. Something is gravely wrong with those who were in power and those who acquired the contract.
I hope the PAC report on the LCS can help the nation by serving as a definitive textbook on how NOT the defence procurement should be conducted, how NOT the power and process be abused.
The absorbing horror story in the whole process of the LCS project shall serve as a lesson to all those who are in power, now and in the future. – Aug 12, 2022
Wong Kah Woh is the chairperson of the parliamentary Public Accounts Committee (PAC). He is also Ipoh Timur MP.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
