KUALA LUMPUR (Aug 22): Boustead Heavy Industries Corp Bhd (BHIC) could potentially lose RM890.22 million due to group mismanagement and irregularities involving the littoral combat ship (LCS) project, according to BHIC's declassified forensic audit report on the project.

According to the report, BHIC is estimated to have lost RM23.37 million due to alleged dummy payments made to three companies for technical services related to second generation patrol vessels (SGPV) from 2011 to 2012. 

"Invoices for such non-existing services were used as a mode to siphon out the funds, as these companies had provided false addresses on their invoices and the payment was diverted elsewhere. One of such companies belonged to the same person who was also involved in Alizes Marine (Ltd). The entire money released for Alizes Marine was suspected to be received by a company registered in Labuan," the report read.

The report also noted that there was an overlapping Letter of Award (LOA) issued in favour of BHIC's 51%-held Contraves Electrodynamics Sdn Bhd (CED) in April 2012 for Boustead Integrated Technology Centre (BIT), which amounted to RM305 million, though the cost of this BIT was already incorporated in an original RM898 million LOA issued by Boustead Naval Shipyard Sdn Bhd (BNS) for combat management system to Contraves Advanced Devices Sdn Bhd (CAD).

The RM898 million LOA, together with another RM287 million also for combat management system, was reassigned from CAD to CED and endorsed by Tan Sri Ahmad Ramli Mohd Noor on behalf of BNS on April 9, 2012.

BHIC also incurred an estimated loss of RM537 million due to double claims for the same services with different nomenclature related to services costs and combat system integration, which was confirmed by new BNS chief executive officer Azhar Jumaat.

“During our review and discussion with Azhar, we noted that RM1.185 billion for combat management system, several components amounting to RM537 million approximately appeared as a duplicate with different nomenclatures for the same component. One should note that the management of BNS agreed and issued LOAs, which directly impacted the whole LCS programme,” said the report.

On top of that, BHIC further faced potential losses of RM4.58 million due to additional variation orders issued in favour of IHC Metalix BV for Mill Certificate during 2017, despite its cost being part of the original request for quotation.

There is also a potential loss of RM13.49 million due to change in currency from ringgit to euro for LOAs issued in favour of CAD for main surveillance radar and towed array sonar in 2013. The currency of the LOAs was changed without any written request from CAD and discussion in the BOD meeting of BNS, according to the report.  

In addition, there is a possible loss of RM6.78 million to Boustead Penang Shipyard due to the reorder of 23 non-delivered items by Alizes Marine.

Read also:
LCS forensic report: Vendors were chosen before Malaysian govt issued LOA 
LCS: Evidence of irregularities, lack of proper governance gathered as early as 2010, says Audit Report 
PAC calls for further forensic audit of LCS and declassification of NGPV probe report