LCS audit report: Up to RM890m lost due to mishandling

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Mismanagement and irregularities in the littoral combat ship (LCS) project could cause potential losses of RM890 million, the declassified forensic audit report indicates.

These losses were incurred by overlapping letters of award (LOAs), double claims, currency conversion, undelivered items, and alleged dummy payments to companies.

The report by Boustead Heavy Industries Corporation Berhad (BHIC) was declassified on Monday (Aug 22) night.

Of the losses, RM537 million was due to double claims for the same service with different names or descriptions used related to service costs and combat system integration.

The report said this was confirmed by Boustead Naval Shipyard Sdn Bhd (BNS) chief executive officer Captain Azhar Jumaat but it noted that an expert opinion was required on the matter.

It also found that an overlapping LOA issued to subcontractor Contraves Electrodynamics Sdn Bhd (CED) CED in 2012 for the built-in test (BIT) centre had cost RM305 million.

The report again noted that an expert opinion was also needed on this.

It pointed out that there were losses due to alleged dummy payments for technical services to three companies related to the Second Generation Patrol Vessel (SGPV) project during 2011 and 2012 to the tune of RM23.36 million.

The report also said that the currency in two LOAs was changed from ringgit to euros and resulted in a net loss of RM13.4 million to BNS.

RM6.78 million was also marked as a potential loss to Boustead Penang Shipyard Sdn Bhd (BPS) due to a reorder for 23 undelivered items by Alizes Marine.

There was also a potential loss of RM4.58 million due to additional variation orders issued in favour of IHC Metalix BV for mill certification in 2017, despite its cost being part of the original request for quotation. – The Star