Lcs Fiasco Sub Contracting Results In Costs Ballooning Almost 3 Times

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The use of multi-layered subcontracting for two packages in the littoral combat ship (LCS) project ultimately resulted in the cost ballooning almost three times from RM397 million to RM1.185 billion, claimed PKR deputy president Rafizi Ramli.
In a statement today, he said the three layers of contracts involved Boustead Naval Shipyard Bhd (BNS), Contraves Advanced Devices Sdn Bhd (CAD), Contraves Electrodynamics Sdn Bhd (CED) and French defence firm DCNS (now known as Naval Group).
Rafizi alleged BNS, as the main contractor, issued two Letters of Award (LOAs) for the two packages worth RM1.185 billion to CAD as the sub-contractor on April 9, 2012.
“On the same day, CAD, in turn, appointed associate company CED as its sub-contractor (second layer). CED then issued its own LOA to DCNS,” he said.
Rafizi did not publish the LOAs but provided reference numbers, cost of each package and the scope of work.
Rafizi added that investigations found that DCNS only charged RM397 million for the two packages finalised at RM1.185 billion with the government.
“Even children can conclude that there were hidden hands behind the companies, BNS, CAD and CED, which arranged the supply contracts to the extent of taking 200 percent commission from the cost charged by DCNS.
“The public wants to know who are the sharks robbing the public’s funds and weakening the country’s defence like this,” he said.
Rafizi said that based on his observations, the LCS scandal showed that there was planning from the start to “hide” DCNS’s involvement in the LCS project.
He said that logically, the Malaysian government should have directly appointed DCNS as the main contractor instead of BNS.
PKR deputy president Rafizi RamliNajib denies allegations
Meanwhile, in a Facebook post today, former prime minister Najib Abdul Razak rebutted allegations of his involvement in this project.
Instead, he accused Rafizi of failing to mention who owned CAD and CED.
According to the Public Accounts Committee (PAC) report, CAD and CED were joint ventures between BHIC and Rheinmetall Air Defense AD. BHIC has a 51 percent stake, while Rheinmetall Air Defense AG has a 49 percent.
“The managing director of BHIC and the LCS project committee chairperson at the time was former Navy commander Ahmad Ramli Mohd Nor. BHIC is also a listed company under Bursa Malaysia.
“So what does this issue have to do with me?” Najib said.
He questioned if Rafizi also accused the former navy commander, LTAT and Rheinmetall Air Defense AG of conspiring with him.
“How am I involved when I never had a hand in giving and managing this project?
“Why not thoroughly investigate to your heart’s content if the former commander, LTAT and German company are guilty? I have no objections because I am not involved,” he said.
A news report from The Edge Markets on Oct 3, 2012, stated that CAD is a unit of Boustead Heavy Industries and CED is a wholly-owned subsidiary of CAD.
Yesterday, Rafizi accused Najib of influencing Putrajaya’s design choice for the LCS project.
He claimed to be in possession of leaked quotation documents and a “letter of intent” from DCNS that were issued prior to BNS being made the main contractor on Dec 16, 2011.
The former Pandan MP added that it was likely Najib had a hand in the design switch because of the latter’s history with DCNS through the Scorpene submarine deal in the early 2000s. Najib was the defence minister when the deal was signed.
Today, he labelled Najib’s attempts to divert attention to divert from the issue as “weak” in order to deceive his followers into thinking the LCS scandal did not contain elements of corruption.
On Aug 4, a PAC report on the LCS pointed out that the Defence Ministry initially chose the Sigma design for the LCS project in May 2011, but two months later, it decided to change to the Gowind design from the same French manufacturer of the Scorpene submarine.
The decision to change to the Gowind design was made on July 11, 2011, following the recommendation brought by BNS to then defence minister Ahmad Zahid Hamidi on July 8, 2011,” it said.
Zahid helmed the Defence Ministry between 2009 and 2013.
- Mkini

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