Who should be held responsible in the Littoral Combat Ship (LCS) scandal if not Najib and Zahid when a whopping RM1.02 billion was paid in the name of “mobilisation payment” without any deliverables?

Since the tabling of the PAC report in Parliament on 04.08.2022, we have yet to hear any explanation from the then Finance Minister in charge, Najib Razak and the then Defence Minister, Ahmad Zahid Hamidi on the lopsided LCS contract and the mismanagement and misuse of funds as disclosed in the PAC report.

Najib has continuously implied that the failure of the LCS project was due to the stop-work order by Paktan Harapan in 2018, yet in fact there was no stop-work order and the project had encountered a situation of natural death due to the serious mismanagement and misuse of LCS funds.

Zahid had ludicrously claimed that he had nothing to do with the decision-making process in the LCS project despite reports from the PAC and the JKSTUPKK saying otherwise.

Najib and Zahid must also answer for the problematic issues related to Boustead Heavy Industries Corporation (BHIC) and Boustead Naval Shipyard (BNS) that were presented in the forensic report on the LCS project.

The PAC has reported that an advanced payment of RM1.36 billion was paid to BNS, despite clear rules from the Ministry of Finance that any advance payment in any government contract shall not be more than 25% or RM10 million, whichever is lower. This exception was strangely approved by MOF which was headed by Najib Razak at the time.

RM1.02 billion “Mobilisation Payment”

Another stunning disclosure in the forensic report from the PAC was that from 2011 to 2014, BNS has already issued at least 12 Letter of Awards (LOAs) totaling up to RM5 billion in value.

In line with the LCS project’s Progress Payment Plan, RM1.94 billion was paid up till 2014. This figure represents approximately 40% of the contract value.

However, an additional RM1.02 billion was also made in the name of “Mobilization Payment” without any deliverables.

There are 4 main segments in the LCS project, namely:

1. Design and Support Services – procurement through Naval Group. Up till 2014, RM576 million was paid.
2. Platform System & Steel kits – procurement directly from OEM. Up till 2014, RM179 million was paid.
3. Major Sub-System including CMS – procurement from OEMS through CAD / CED. Up till 2014, RM1.2 billion was paid.
4. Other Components – procurement directly from OEMs. Up till 2014, RM500,000 was paid.

It is clear to everyone that something is gravely wrong when a sum of RM1.02 billion out of the RM1.94 billion was paid without any clear benefit to the project.

Judging from the payments made in different segments of the project, the bulk of the RM1.02 billion was paid to the infamous Naval Group and dubious entities such as CAD and CED.

Both Najib Razak and Zahid Hamidi must be held responsible in allowing the contract to be drafted in such a way where a huge sum of RM1.02 billion was allowed to be used in the name of “Mobilisation Payment” without any deliverables.