Malaysia

LCS scandal: firm set up merely 45 days before obtaining subcontractor package – Part 1

SSM documents reveal intricate corporate web involving directors of firms involved with project

Updated 1 year ago · Published on 11 Aug 2022 7:00AM

LCS scandal: firm set up merely 45 days before obtaining subcontractor package – Part 1
The littoral combat ships saga is under the spotlight again, following the release of the Public Accounts Committee’s report detailing discrepancies in the project. – Bernama pic, August 11, 2022

by Qistina Nadia Dzulqarnain

KUALA LUMPUR – A company that was commissioned to implement vital defence features worth RM1.185 billion in the littoral combat ships (LCS) project was formed less than two months prior to its appointment as a subcontractor. 

According to Companies Commission of Malaysia (SSM) documents sighted by The Vibes, Contraves Electrodynamics Sdn Bhd (CED) was established on February 23, 2012. 

This was a mere 45 days before it was elected by Contraves Advanced Devices Sdn Bhd (CAD) for the implementation of two supply and manufacturing packages, as claimed by PKR deputy president Rafizi Ramli on Tuesday. 

In a statement, Rafizi revealed that CAD had appointed CED as its subcontractor on the same day (April 9, 2012) that Boustead Naval Shipyard Sdn Bhd (BNS) awarded the two packages to the former, and the PKR man questioned why the deal had to go through multiple layers. 

He detailed that the packages include combat system work on equipment integration, integration support, training centre, software and shore integration facility, combat system management as well as software system integration. 

PKR deputy president Rafizi Ramli questions why the award of the two supply and manufacturing packages for the LCS project had to go through multiple layers. – The Vibes file pic, August 11, 2022
PKR deputy president Rafizi Ramli questions why the award of the two supply and manufacturing packages for the LCS project had to go through multiple layers. – The Vibes file pic, August 11, 2022

Notably, the first-layer subcontractor CAD’s business nature as recorded by SSM – industrial manufacturing, assembling and modules production – appears to not align with the requirements of the packages. 

On the other hand, CED was set up to deal with system integration, training and simulation, as well as related technical services for the defence industry, ostensibly a better match for the listed works. 

The SSM document also revealed that CAD is the sole shareholder of CED’s RM1 million share capital, while BHIC Defence Technologies Sdn Bhd (BHICDT) has a majority 51% share in CAD. 

BHICDT is a wholly owned subsidiary of Boustead Heavy Industries Corporation Bhd (BHIC), which shares the same parent company as BNS, Boustead Holdings Bhd. 

The multi-billion-ringgit LCS procurement scandal has recently come under the spotlight after the Public Accounts Committee released a report outlining discrepancies in the project. 

Among the damning findings made by the committee include how the government has paid a total of RM6.083 billion to BNS for the project but has yet to see the delivery of a single ship.

Besides that, the report also concluded that CAD was used as a medium to minimise transparency and avoid scrutiny by authorities.

It stated that the involvement of CAD had substantially increased the project cost from initial estimates, with 12 award letters issued to the company worth RM3.3 billion or 38% of the overall contract value.

The Vibes has reached out to CAD for insight on the matter but has not received a response as of press time. 

Pictured here is Boustead Naval Shipyard in Lumut, Perak. Rafizi Ramli reveals that Boustead Naval Shipyard awarded the two supply and manufacturing packages to Contraves Advanced Devices on the same day the latter appointed Contraves Electrodynamics as its subcontractor. – Wikimedia Commons pic, August 11, 2022
Pictured here is Boustead Naval Shipyard in Lumut, Perak. Rafizi Ramli reveals that Boustead Naval Shipyard awarded the two supply and manufacturing packages to Contraves Advanced Devices on the same day the latter appointed Contraves Electrodynamics as its subcontractor. – Wikimedia Commons pic, August 11, 2022

Company directors in intricate corporate web 

Besides the primary company information, the documents also showed the corporate intricacies behind major firms involved with the LCS project as the names of top officials were repeated throughout several profiles of companies under Boustead Holdings. 

Most glaringly, a foreigner named Gordon Douglas Hargreave – who was the sole director of CED when the company was first set up in 2012 – was later appointed as a CAD director in June 2014, continuing to helm both positions to date. 

Hargreave also recorded three different addresses in the documents, with one in Cyberjaya, one in Australia and another in Singapore. 

Prior to his involvement with subsidiaries of Boustead Holdings, he had served as a senior vice-president at German-based automotive and arms manufacturer Rheinmetall AG from January 2008 to September 2010. 

CAD is reportedly a joint venture entity between BHIC and RD Investment AG, a subsidiary of Rheinmetall Air Defence AG under Rheinmetall AG. 

Companies Commission of Malaysia documents reveal the corporate intricacies behind major firms involved with the LCS project as the names of top officials are repeated throughout several profiles of companies under Boustead Holdings. – Wikimedia Commons pic, August 11, 2022
Companies Commission of Malaysia documents reveal the corporate intricacies behind major firms involved with the LCS project as the names of top officials are repeated throughout several profiles of companies under Boustead Holdings. – Wikimedia Commons pic, August 11, 2022

Similarly, Salihin Abang, who was appointed director of CAD in 2019, was also appointed as an independent non-executive director of BHIC in the same year before joining CED’s board of directors the next year. 

Besides that, CED also formerly had three other directors – Tan Sri Ahmad Kamarulzaman Ahmad Badaruddin, Fakril Zamani Mahmud and Anuar Murad – who simultaneously held directorship roles at CAD throughout differing periods from 2012 to 2020. 

While Fakril Zamani held the positions in CAD and CED for two years from November 2017, he was also an alternate director at BNS from February 2019 to June 2020. 

Meanwhile, Datuk Syed Zahiruddin Putra Syed Osman, who was CAD director from February 2020, has also held independent non-executive directorship posts at BHIC and Boustead DCNS Naval Corp Bhd since 2019. 

Boustead DCNS Naval Corp is a joint-venture project between major shareholder BHIC and French naval vessel maker Naval Group (formerly DCNS). – The Vibes, August 11, 2022 

Additional reporting by Amar Shah Mohsen

The report above is the first part of a series by The Vibes on the LCS scandal. The second and third part can be read here and here.

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