BHIC aware of LCS ex-project director’s red flags since 2018

KUALA LUMPUR – It appears that Boustead Heavy Industries Corp Bhd (BHIC) had first-hand knowledge and strong evidence of power abuse involving former littoral combat ship (LCS) programme director Anuar Murad since 2018. 

This is based on the findings of a forensic audit commissioned by BHIC, which identified several major red flags in the LCS scandal that were ignored by those in power. 

BHIC is an associate company to Boustead Naval Shipyard Sdn Bhd (BNS), the firm that was awarded the contract to build the six combat vessels, none of which has been delivered to date.  

The audit report, conducted by Alliance IFA (M) Sdn Bhd, was declassified last night in line with the cabinet’s decision last week. 

According to the document, BHIC had conducted an internal investigation into Anuar in October 2018, a matter that was confirmed by the auditor after it retrieved documents from a laptop belonging to BHIC’s head of integrity, Low Koh Koon. 

This indicated that the company might have prior information of alleged wrongdoing involving the former navy captain.

“The seven-page document titled ‘Investigation against Captain (Rtd) Anuar bin Murad’ mentioned in one of its conclusions that Anuar, being one of the two directors of Contraves Electrodynamics Sdn Bhd (CED), had abused his position and power vested upon him in awarding LCS contracts to Contraves Advanced Devices Sdn Bhd (CAD)/CED,” it noted. 

CAD is the company that was appointed by BNS on April 9, 2012 to undertake two LCS work packages worth RM1.185 billion, and has BHIC Defence Technologies Sdn Bhd as its majority shareholder. 

Later on the same day, the firm commissioned its fully-owned subsidiary CED to undertake the packages. CED was set up a mere 45 days before it was awarded the contracts. 

According to the forensic audit, Low had then suggested that Anuar’s criminal wrongdoings required an investigation by the Malaysian Anti-Corruption Commission for proper action. 

However, to date, only former navy chief Tan Sri Ahmad Ramli Mohd Nor has been charged in court over the LCS scandal. He was slapped with three counts of criminal breach of trust charges on August 16. 

Anuar is understood to have vacated his post as LCS programme director sometime in 2017. 

The auditor further noted that the investigation report by Low in 2018 had also detailed out his suspicion over a RM305 million payment made to CAD for “ownership of property” without the approval of BNS’ board and LCS’ steering committee. 

“It further mentioned that Low had raised this matter with Ramli (who was then BNS managing director), and he was told that it was a pre-arrangement set by the Defence Ministry while awarding the LCS contract to BNS.

“During our review and analysis, we did not find any document confirming Ramli’s statement on the above matter,” it said. 

Red flags raised by contractor ignored

Separately, the forensic audit report noted how several irregularities raised by Tellus Asia Sdn Bhd owner Syed Saadun Tarek Wafa, who was involved in various LCS project packages as an external supplier, had been ignored. 

This is despite him writing a letter addressed to BHIC then chairman Tan Sri Lodin Wok Kamaruddin on June 1, 2016. 

Among other things, Syed Saadun had pointed out how lucrative equipment contracts were diverted away from BHIC and BNS to CAD, despite the former having the capability to undertake the tasks on their own. 

“It (letter) also mentioned that CAD intended to novate certain contracts to a new entity which would change CAD’s equity structure and would be detrimental to BHIC and BNS because of diluted controlling interest. 

“Despite this, BHIC and BNS did not interfere with Anuar’s decision (to novate the contracts) and allowed him carry out structural change which had the potential to cripple BNS, in terms of control over joint venture companies.”

Additionally, the letter to Lodin had highlighted the dubious decision made by then CAD chief executive officer Gordon Douglas Hargreave to elevate his secretary to his position before he moved to Singapore. 

“This raised serious doubts about CAD’s intention in having the company run by a well-experienced technical person. This jeopardised the company’s future, which posed a significant financial risk to BNS. 

“Lodin was well-expected to discuss all these matters with the board of directors and LCS steering committee for necessary actions and to determine the strategy to have control over CAD, but unfortunately, the latter was put in cold storage.” – The Vibes, August 23, 2022