Tan Sri Lodin Wok Kamaruddin could emerge as the one to help shed light on the RM9 billion Littoral Combat Ship fiasco if a Royal Commission of Inquiry (RCI) is convened.
Lodin was Lembaga Tabung Angkatan Tentera (LTAT) chief executive officer from 1982 to 2018. He was also the group managing director of Boustead Holdings Bhd.
Lodin’s unique perspective – by being inside LTAT and Boustead Holdings during the time when the LCS contract was awarded, could theoretically, provide the authorities with some valuable insights into the inner workings of the programme and help them unravel the entire mess.
Last week, however, he told reporters that he was unable to provide any details, as the alleged incidents happened more than a decade ago.
“This happened 12 years ago, and I can’t remember,” he said.
“I don’t have the minutes of the meetings with me.”
Lodin was commenting on PKR deputy president Rafizi Ramli’s latest revelation in the LCS scandal, in which the former Pandan MP revealed that there were plans to hide irregularities in the project through the engagement of two subcontractors – Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED).
In response, Lodin had asked how Rafizi had gotten hold of the minutes of the board’s meetings.
Perhaps Rafizi could send Lodin a copy to help refresh his memory.
LTAT owns controlling stakes in several listed companies, including Boustead Holdings Bhd, and Boustead Heavy Industries Corp Bhd (BHIC).
The contract to build the LCS was formally awarded to BHIC in 2014, even though the initial work began in 2011. Boustead Naval Shipyard Sdn Bhd (BNS), a subsidiary of BHIC, was given the work to build the frigates.
Lodin stepped down from all his positions effective Dec 31, 2018, due to an “early mutual termination agreement”.
As a side note, Lodin was also chairman of 1Malaysia Development Bhd (1MDB) from December 2009 until May 31, 2016, when the Finance Ministry took over the fund.
Since the Public Accounts Committee published its damning report on the scandal-plagued LCS programme, a phalanx of lawmakers from both sides of the political divide has called for the PAC report – in its entirety – to be declassified and published without redactions, and for an RCI to be established.
The bipartisan call to establish an RCI is gaining traction, with Umno Youth being the latest to join the fray.
Its chief, Datuk Asyraf Wajdi Dusuki, had called for “an independent and comprehensive probe to be done in the interest of the public”.
A protest, attended by dozens of individuals in black t-shirts, was held outside the Sogo shopping mall in Kuala Lumpur yesterday.
In April, Twentytwo13 highlighted a number of irregularities within the LCS programme.
The PAC report, published a week ago, uncovered a litany of improprieties, including:
i. A design that had not been finalised
ii. Deficiencies in the planning and acquisition process
iii. Stop-work order on the lead boat by the LCS’ subcontractors
iv. Variation orders and changes in specifications for the primary components
v. Weaknesses in the contract clauses
vi. Payment disbursements not based on the actual work done
vii. Switching of the initial Sigma design by Damen Group (the Netherlands) to the Gowind design from Naval Group France, by the then minister of defence, and;
viii. Cash flow problems affecting Boustead Naval Shipyard
It all began in early 2011, when Malaysia announced its Second Generation Patrol Vessel programme, which later morphed into the LCS, with an initial budget of RM6 billion.
Later that year, it was announced that the Gowind-class had been selected, and that the contract to build the ships had been awarded to BHIC through direct negotiations, and not an open tender process.
The work would be undertaken by BHIC through its subsidiary, BNS. The designer of the Gowind-class – French shipbuilder DCNS (now NGF – Naval Group France) – was brought in as a technology partner. The price tag soared to RM9 billion and included intellectual property rights and technology transfers. All six ships would be built in Lumut.
Later, however, it emerged that the end user – the Royal Malaysian Navy (RMN) –had picked the Sigma-class design by the Damen Group of the Netherlands. But this was arbitrarily changed two months later by the then defence minister Datuk Seri Ahmad Zahid Hamidi, in favour of the French Gowind-class.
The PAC report on the scandal quoted Guna Aruralan David, the deputy chief secretary of the special investigation committee on governance, acquisition, and finance, who testified that: “On May 26, 2011, minister Dato’ Seri Dr Ahmad Zahid bin Hamidi concurred with the TLDM’s choice of the SIGMA design (from Damen Group), and the Combat Management System from Palais, France.”
“However, on July 11, 2011, Dato’ Seri Dr Ahmad Zahid bin Hamidi changed it to the GOWIND design (from Naval Group France). On Sept 26, 2011, the Combat Management System was also changed to the SETIS system, from France. Both recommendations came from BNS (Boustead Naval Shipyard).”
Guna further asserted in the PAC report that the RMN did not agree with the decision but had to accept it as “the decision was made by the top management at Mindef (Defence Ministry)”.
Since then, Zahid has sought to distance himself from the scandal, saying that he was not involved in the process, and that he was not the defence minister when the contract was signed in 2014.
However, he was in 2011, when the decision to overrule the RMN was made.
Former Navy chief Tan Sri Abdul Aziz Jaafar, in his testimony, told the PAC that: “Something is gravely wrong” with the decision by the Defence Ministry and BNS to ignore the RMN’s views when it came to the procurement of its assets.
Abdul Aziz added that he had written 10 letters voicing his “deep concerns” about the risks and non-compliance of the LCS project. The letters were addressed to, among others, the chief secretary of the Defence Ministry, the defence minister, the chief secretary to the government, the prime minister, and the deputy prime minister, but nothing was done.
Abdul Aziz was among the nine witnesses in the PAC proceedings.
The PAC was also told by BNS that RM396 million from the LCS project was used to pay off debts and interest that had been accrued from the earlier Next-Generation Patrol Vessel (NGPV) project.
The project was originally undertaken by PSC Naval Dockyard but had stalled and was taken over by Boustead. Of the planned 27 Kedah-class boats, only six were delivered.
“Paying off those debts resulted in BNS facing a cost overrun of RM1.4 billion. The equipment stockpiled for the LCS project are estimated to be worth RM1.7 billion … and an estimated 15 per cent are already obsolete,” said PAC chairman Wong Kah Woh.
Additionally, the shipbuilder had also taken loans to manage the cash flow for the LCS project, but this resulted in the need to pay interest of RM571 million by February 2020. This had not been considered, when the contract was being negotiated.
As a result of these cash flow problems, vendors, and original equipment manufacturers (OEMs) for the LCS project were not paid, leading to work stoppages, and delays.
“The due diligence conducted by the government on BNS failed to detect the company’s financial problems. This was proven when the government was required to pay a deposit of up to RM1.36 billion to BNS, which was contrary to Treasury Circular No. 5/2007, which was in effect at the time,” said Wong, who is also the Ipoh Timor MP.
Wong added BNS was in a critically weak financial position due to abuse of power and weaknesses in managing its finances.
As of 2018, BNS’ debt to the OEM was RM801 million, while owing RM956 million to financial institutions.
