[UPDATED] Boustead’s internal forensic audit report on LCS declassified: Hishammuddin

KUALA LUMPUR – The internal forensic audit by Boustead Heavy Industries Corporation Bhd’s (BHIC) into the littoral combat ships (LCS) controversy has been declassified, Defence Minister Datuk Seri Hishammuddin Hussein said tonight.

The report is available on the Public Accounts Committee’s page on the Parliament website, he said in a brief statement on social media.

“In line with the cabinet’s decision to ‘declassify’ BHIC’s internal Forensic Audit report regarding the LCS, BHIC’s board of directors has met and agreed that the documents be declassified,” said Hishammuddin.

This is the third report revealed to the public on the LCS, following the PAC’s report on hearings it conducted into the matter, and the report by the Special Committee on Governance Investigation, Government Procurement and Finance.

The BHIC internal forensic audit report on the Parliament website has several paragraphs and charts redacted.

It does, however, note that there were attempts to “cover up” irregularities.

“The first sign of a cover up appeared from the shareholders’ agreement where all the powers were vested with CAD even though BHICDT was the majority shareholder,” the report said, in reference to Contraves Advanced Devices Sdn Bhd, the original contractor that was awarded the two packages – on April 9, 2012, to implement vital defence features valued at RM1.185 billion for LCS.

It also mentions the second layer contractor Contraves Electrodynamics Sdn Bhd (CED), and that CAD and CED together were used as “intermediaries to compromise the transparency and add an additional layer”.

The terms of the LCS project were also more favourable to CAD/CED than to BNS or BHICDT, the report added.

Numerous variation orders (VOs) were issued without following procedures, including validation of the technical, commercial and procurement teams, and that although red flags were raised, “no corrective measures were taken either by the management or by the chairman of the board”.

“Such failure to stop the abuse of power was a clear act of cover-up by the then MD and his immediate subordinates.”

Following the release of the latest report this evening, PAC chairman Wong Kah Woh noted that its contents were based on audits conducted for the 2011-2014 financial years.

He said although most of the Letter of Awards (LOAs) were issued by BNS during the 2011-2014 periods, the implementation of the project stretched on at least until 2018.

“The report found that as long as all related transactions and activities, as well as its implementation, have not been thoroughly investigated, there is a possibility that important facts to prove criminal activity could be left out,” Wong said.

Wong said the PAC will ask cabinet to call for a follow-up forensic audit to be carried out by BHIC to complete all transactions and LOAs from 2015 to date.

He also said cabinet will be urged to declassify the special committee’s reports on the Navy’s previous project involving New Generation Patrol Vessels (NGPV), as well as its Integrated Logistics Support and Commercial Package Programme.

He said this was due to the existence of an additional contract for the NGPV project which involved an RM1.4 billion allocation, which led to its value increasing from RM5.35 billion to RM6.75 billion with the job scope and number of patrol vessels remaining the same.

He added that the sixth NGPV was delivered to the Navy in 2010, before the LCS project was given to BNS in 2011.

The Vibes had reported that CED was established a mere 45 days prior to its appointment as a subcontractor.

These parts of the internal forensic audit report also sync with what PKR deputy president Rafizi Ramli has exposed, that CAD, on the same day it was appointed as the LCS project subcontractor, also appointed CED as its (CAD’s) subcontractor.

Rafizi said CED then awarded the two packages of work worth RM1.185 billion that CAD was given, to French naval vessel maker Naval Group (formerly DCNS) valued at RM397 million.

In effect, the Malaysian government was charged three times more, he said.

Separately, BHIC issued a statement saying the forensic audit conducted by Alliance IFA Sdn Bhd was declassified today, following cabinet’s decision on the matter on August 17.

Due to the decision, BHIC said the contents of the report were now considered an “open document”.

“The forensic audit report on the LCS was submitted to PAC today. BHIC will leave it to PAC to determine when and how the said document can be accessed by the public.” – The Vibes, August 22, 2022