Show Me The Money…Part…

SHAH ALAM: Show me the money..part xxx. Setiawangsa MP Nik Nazmi Nik Ahmad, the chairman of the Parliamentary Select Committee on Defence and Home Affairs has wade into the debate regarding the LCS project. The committee has investigated the project and the chairman wrote about it at length in the comments section of the Malaysiakini. The full article can be found here.

Nik Nazmi revealed the nature of the RM1 billion “funds which were not accounted for” the stand taken on the issue by former deputy Defence Minister Liew Chin Tong. The senator had also made the same missing money claim in Dewan Negara when he was still the deputy minister and several times after that including on 10 September 2020.

The keel of the fourth LCS in the BNS hangar for the ceremony in 2018. The ceremony was graced by the then deputy defence minister Liew Chin Tong.

In his comments in MalaysiaKini, Nik Nazmi said:

“The committee (The Special Investigation Committee on Public Governance, Procurement, and Finance (JKSTUPKK)) was also told that BNS had applied and received an advance of more than RM1 billion on the contract, which is more than the norms established by the Finance Ministry

Based on his statement, we can assumed that the RM1 billion was and is the same “funds which were not accounted for” as claimed by Liew. In fact, Nik Nazmi confirmed this as he continued:

An exception however was made at the request of the Defence Ministry due to the supposed weak financial state of BNS even at that early stage. So the current problems faced by the LCS was not something inevitable if normal government financial procedures were followed.

The JKSTUPKK committee in fact heard from BNS’ management itself that almost RM396 million from the LCS project was used to pay off debts and interest that occurred from the NGPV project. Effectively, this was robbing Peter to pay Paul.

So some RM396 million had been accounted for, it was used to pay off BNS debts, though Nik Nazmi is silent on the rest of the funds, some RM604 million. Do note unlike the MP and the senator, I do not have access to any of the documents above but I am aware that BNS got the funds ahead of the actual shipbuilding so as to prepare the yard for the project. I am not aware that the funds were also used to pay its debts however. But as Nik Nazmi said “RM396 million” was used to pay off BNS debts, it is likely the rest of the RM1 billion, around RM604 million was used to upgrade the shipyard for the LCS project. Nik Nazmi was silent about this. PSC-NDSB the company that ran the NGPV project into the ground also got similar funds to develop the yard for the project.

The new hangars (far right) and gantry crane at BNS added specifically for the LCS programme. Picture taken in 2017.

Based on Nik Nazmi comments, it is certainly unfair for anyone including he himself, the former deputy minister and others to say the money was missing. This matter was even made worse when some parties implied that the money went missing due to malfeasance or corruption. The question that should be asked instead is the RM1 billion included in the RM6 billion the government (both PH and PN) had said were already been paid to BNS.

Boustead chairman TS Ramlan Mohamed Ali(second from right, facing camera) listens as the then Defence Miniter Mat Sabu is briefed on the LCS project during his visit to BNS in late June, 2019. Mat Sabu FB.

Again I am not absolving BNS or the BN government of anything with the LCS fiasco but tarring the issue with allegations of corruption is to me, disingenuous to say the least. I am also not saying that there was no corruption with the project – the fact that the Malaysian Anti Corruption Agency (MACC) have yet to find anyone to charge – is not to me an indication of its being clean.

It is interesting to note that Nik Nazmi said the audit committee had presented its finding to the then PM, Tun Mahathir Mohamad, which had presided over the NGPV project together with his then Finance Minister Tun Daim Zainuddin. Of course they might not remember what had happened with PSC-NDSB! Nik Nazmi also lamented that BNS should not be given the LCS project based on its track record, again another disingenuous attempt to tar the state-owned company with the fiasco created by PSC-NDSB and its owner Amin Shah Omar Shah. PH has not seen fit to publicly publish the JKSTUPP report though some of its lawmakers are calling it to be made public now after the media storm following the resumption of the LCS building by the government.

Boustead executive chairman TS Ramlan Ali (centre) greeting Defence Minister DS Ismail Sabri when the latter visited the BNS yard in November 2020 to check on the LCS project. The LCS hull in the background looked appeared to be fitted with the propellors but without the rudder. I am guessing that this is the second hull as it does not have water marks on it. Kementerian Pertahanan picture.

As for BNS lacking funds as stated by Nik Nazmi, this was expected as it had no further contracts after the Kedah class project ended (apart from the refit projects including the ones for the Kasturi class). It was in the first place created to bail out a failed project and company. Boustead, I was told only took the rescue after it was given verbal assurances that it will be given the follow on naval shipbuilding contract. The people there realised that they cannot recoup their investment from refits as it comes and goes based on the decisions (some say whims and fancies) of the RMN. The shipbuilding contract – the one fo the LCS – was only signed in 2014 – not when it was awarded the project in 2011.

Nik Nazmi as the chairman of the select committee on defence and home affairs must be aware of the background issues with BNS. Unfortunately he did not mentioned them and instead used half-truths, to make his arguments, which to me smacks of hypocrisy. Do the government needs to be transparent on the BNS bail out, of course, but Nik Nazmi himself failed to be truthful as well.

Another angle of the keel of the first LCS, most likely from the bow end when the then Defence Minister Hishammudin Hussein launched the first keel in 2016. H20 picture

Again I am not absolving any of the parties involved in the LCS fiasco. Infact, long time readers of Malaysian Defence, will know that I had long ago urged caution as the project was using a similar script as the NGPV one and we may end up repeating its failures as well.

Some commenters here had stated before that I was overly pessimistic on this and they would prefer to wait and see before making a stand on the issue. I have been unfortunately been proven correct. Again I am not celebrating the fact that my fears were realised, I am disgusted by the fact that many of our bravest people are out there patrolling the nation’s waters in ships and boats which should have been replaced with new ones a decade ago.

Sea water was sprayed on Maharaja Lela and fireworks boomed as part of her launch gimmick in 2017.

I am not keen to write things based on incomplete data especially ones that is already available – I may yet regret writing this post but it is more distressing to see people with all the facts hiding them in order to push forward their objectives.

The keel of the second LCS (right) prior to the keel laying ceremony. Next to it is the structure of the 1st LCS. Most of this facility were built specifically for the LCS project. RMN

Anyhow Selamat Hari Raya and Maaf Zahir Batin.

— Malaysian Defence

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