Mindef awards two contracts worth RM140 mil to Boustead Heavy Industries Corp subsidiary

KUALA LUMPUR – The Defence Ministry has awarded two Royal Malaysian Navy contracts amounting to more than RM140 million to a Boustead Heavy Industries Corporation Bhd (BHIC) subsidiary.

In a Bursa filing by BHIC, a RM99.8 million contract has been awarded to BHIC Submarine Engineering Services Sdn Bhd (BSES) for interim in-service support (ISS) for the navy’s prime minister’s class submarines for a period of 11 months, from March 15 to February 14 next year.

BSES is also awarded an extension, which is valued at RM40,260,763, to upkeep submarine facilities for 12 months, starting January 1 to December 31. 

The formal contracts between the Malaysian government and BSES will be finalised and executed at a later date.

“Save for Tan Sri Aziah Ali and Salihin Abang, who are BHIC and BSES directors, none of the directors or substantial shareholders of the company, or persons connected with them, have any interest, direct or indirect, in the contract,” according to the filing.

It has been reported that BHIC has been struggling with a RM9.13 billion contract awarded in 2011 to build six littoral combat ships (LCS). None has been delivered as yet.

Last month, the navy said the reconstruction of the LCS project was to begin three months after the sixth supplemental agreement was concluded.

Defence Minister Datuk Seri Mohamad Hasan had previously said the first LCS was expected to operate in 2026.

At the height of the LCS scandal last year, BHIC escaped penalties over claims of mismanagement and irregularities as its subsidiary Boustead Naval Shipyard (BNS) terminated two of its main contractors for the project.

The forensic audit report on the LCS project, which was declassified on August 22 last year, found BHIC lost RM890 million due to double claims and fake payments.

Last August, former navy chief Tan Sri Ahmad Ramli Mohd Nor pleaded not guilty to three counts of criminal breach of trust at the sessions court here.

Ramli, who is former managing director at BNS and BHIC, was accused of fraudulently approving payments amounting to a total of RM21.08 million to three firms without the approval of BNS’ board while he helmed the company. – The Vibes, May 18, 2023