Letter to Editor
THE Littoral Combat Ship (LCS) project was signed in July 2014. Datuk Seri Najib Razak who was the Prime Minister and Finance Minister of that point of time must explain to us why the contract between Boustead Naval Shipyard Sdn Bhd (BNS) was extremely lopsided and put the Malaysian Government in a very unfavourable position.
According to the report of the Parliamentary Account Committee, by end-December, 2019, the handover of LCS 1 was already late by 245 days and therefore the Government was entitled to liquidated ascertained damages (LAD) amounting to RM116.54 mil.
LCS 1 is still not delivered until today even though it was supposed to be handed over in April 2019. In other words, by July 31 this year, the handover of LCS 1 was delayed by 1,188 days while the LAD would be as high as RM582.12 mil.
However, the maximum LAD our Government can claim from BNS for LCS 1 is only RM180 million as per contract between BNS and the Government!
The delivery of LCS 2, LCS 3 and LCS 4 are also late. Simple calculation would show that by July 2022, the total LAD by days for LCS 1 to LCS 4 by should be RM1.57 bil but the total LAD claimable by the Government is only RM671 mil due to the RM180 mi LAD capping per ship.
What was the rationale for inserting capping of RM180 mil in the contract which only benefits BNS and putting the Government in a very detrimental position?
As the Prime Minister-cum-Finance Minister when the contract was signed, didn’t Najib think he owes Malaysians an explanation?
Not only that, the Malaysia Treasury Circular (No. 5 of 2007) (Pekeliling Perbendaharaan Bil. 5 Tahun 2007) stated that the maximum 25% of the contract sum or RM10 mil, whichever is the lower, could be paid as advance payment in any contract.
However, RM1.36 bil was paid by the Government to BNS as advance payment, way above the limit allowed under Finance Ministry’s (MOF) financial guideline, hence causing the Acceptance Letter (Surat Setuju Terima) to be amended twice.
More importantly, such payment could only be made with the approval of MOF. Could Najib the then Finance Minister please explain to us under what situation the approval was given? – Aug 10, 2022
Teo Nie Ching is the MP for Kulai and the DAP National Publicity Secretary.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
