Zahid said wasn’t defence minister when billions paid despite warships’ non-delivery, but will help in PAC probe

KUALA LUMPUR, Dec 18 — Datuk Seri Ahmad Zahid Hamidi today clarified that he was not the defence minister when the government paid out over RM6 billion for warships that were not delivered as part of a RM9 billion project awarded to a company.

Zahid however said he would still cooperate with the Public Accounts Committee (PAC) in the bipartisan Parliament watchdog’s inquiry on the RM9 billion project.

Yesterday, PAC chairman Wong Kah Wong had provided updates on an ongoing PAC probe on the non-delivery of the warships, noting that the project worth more than RM9 billion was awarded through direct negotiations in 2014 to the main contractor Boustead Naval Shipyard (BNS) Sdn Bhd for the supply of six units of second-generation Littoral Combatant Ships (LCS) warships to the Royal Malaysian Navy.

In this project which is the largest-ever acquisition by the Defence Ministry, Wong said RM6.083 billion had been paid as of October 2020 but without a single LCS delivered by BNS, despite the schedule requiring two LCS ships to be completed by now and requiring the first ship to be delivered in April 2019.

Today, Zahid stressed that he was only defence minister from April 2009 to May 2013.

“It is wished to be explained that the failure of supply by Boustead arose only in 2019 where at that time I was no longer holding the position as defence minister,” he explained in a statement posted on his Facebook page.

Zahid also noted that BNS is owned by Boustead Holdings Berhad, with the latter’s largest shareholder being the government-owned Lembaga Tabung Angkatan Tentera (LTAT) and the second-largest shareholder also being the government-owned civil servants’ pension fund Retirement Fund Incorporated (KWAP).

Zahid then referred to the two existing audit reports on the warship’s non-delivery as cited by Wong — the Auditor-General’s Report (LKAN) 2019 Series 1 (Compliance Audit of Ministries/Federal Departments) as well as the Governance, Procurement, and Finance Investigation Committee (JKSTUPKK)’s report.

When commenting on the two audit reports, Zahid said the government’s 2002 guidelines for procurement through direct negotiations state that such procurements can only be made after obtaining the Finance Ministry’s approval, and that the defence ministry had already provided further explanation on the status of the issue of late fines to Boustead, and that the ministry had also stated that it had prepared a letter of demand and handed it over to the controlling officer for approval.

Again highlighting that he was only defence minister until 2013, Zahid said that this issue is beyond his knowledge and that the scheduled payments to Boustead were made in 2019 when he was no longer holding the ministerial post.

“Therefore, I have no knowledge and no control on any decisions made by the ministry regarding the issue of scheduled payments,” he said.

While saying he respected the PAC’s role in ensuring continuity in the government’s structure and management, Zahid however said it should be “more sensitive” in handling the investigation process especially regarding the issue of national security as it is still at the investigation stage.

“I wish to stress that this explanation does not at all change my intention to continue to provide cooperation and help PAC in completing its investigation,” he said.

Yesterday, Wong had said that the PAC had so far held four meetings and proceedings with witnesses for its inquiry on the warships project, with proceedings during the November 5 to November 16 period attended by individuals such as Auditor-General Datuk Nik Azman Nik Abdul Majid, Defence Ministry secretary-general Datuk Seri Muez Abd Aziz, and JKSTUPKK chairman Tan Sri Ambrin Buang who is also the former auditor-general.

Wong had said the PAC proceedings on the warships will continue in early January next year with more witnesses to be called, including Zahid as the former defence minister, former Malaysian Navy chief Tan Sri Abdul Aziz Jaafar and representatives from the main contractor BNS Sdn Bhd.

Wong said PAC will also visit the LCS shipbuilding site in Lumut, Perak in January 2021, with the watchdog intending to expedite the proceedings to present a report to the Dewan Rakyat.

Former deputy defence minister Liew Chin Tong had in September told the Dewan Negara that Putrajaya’s special investigation committee on procurement, governance and finance, had discovered that RM1 billion of the RM5.94 billion paid for the warships could not be traced, and had in October urged the government to investigate the missing RM1 billion.