LTAT CEO: Boustead forced to use LCS funds to pay off bad debts

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Why none of the LCS has been completed yet as all six ships must be built together.

  • RM400 million used to settle bad debt of another old project
  • Money spent on buying machinery needed for the ships’ construction
  • Also paid for the basic design and detailed design from French company
  • Construction of LCS ongoing at Lumut shipyard
  • All six ships need to be built together

Armed Forces Pension Fund (LTAT) chief executive officer Ahmad Nazim Abdul Rahman said Boustead Naval Shipyard Sdn Bhd (BNS) was forced to use part of the funds meant for the littoral combat ships’ (LCS) procurement to pay off the bad debts of another old project.

This is because Boustead Holdings Bhd – whose biggest shareholder is LTAT – was compelled at one point to take over the debt-ridden PSC Industries Bhd, a company that failed to deliver on an RM9 billion contract to build six offshore patrol vessels (OPVs).

“After the failure of the navy’s privatised shipbuilding project that was given to PSC back then, Boustead was forced to take over this company to prevent losses throughout the financial and economic chain.

Bernama

“The acquisition included the enormous bank debt that Boustead Holdings and BNS are now forced to bear.

“So, part of the LCS money had to be used to pay off PSC’s bad debts. This information is in the Public Accounts Committee’s (PAC) report,” Nazim said in a Facebook posting last night.

The PAC issued a report on Aug 4, highlighting the problems that led to the failure of the LCS procurement initiative.

One of the issues they pointed out was that part of the payment made by the government was not used in the procurement of LCS but RM400 million was used by BNS to settle the bad debt of another old project, that is the New Generation Patrol Vessel (NGPV).

The NGPV contract was awarded in 1998 and Boustead Holdings took over PSC in 2005.

LCS construction ongoing

Nazim also affirmed last night that he had visited the Lumut shipyard and that the construction of the LCS is ongoing.

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He claimed that the contract states all six ships need to be built concurrently, instead of constructing and delivering them one at a time.

Nazim also defended the RM6 billion that has already been paid even though not a single ship is completed, saying the money was spent to buy the machinery needed for the ships’ construction.

Another huge initial expense was also for the basic design and detailed design from the French company Naval Group, he said.

On the contrary, he said, the LCS construction has given technical and engineering job opportunities to almost 3,000 engineers and more than 400 local vendors.

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BNS was awarded the LCS contract in 2011 in a direct negotiation and RM6 billion was paid as of 2020, but it missed the targeted delivery date of 2019.

According to the contract, BNS should have delivered the first ship in April 2019 and two ships in February and March 2020 respectively. – Malaysiakini