UMNO President Ahmad Zahid Hamidi Respond to PAC over RM9 Billion LCS Project

Dec 18, 2020: Former Defence Minister Datuk Seri Ahmad Zahid Hamidi and several individuals will be questioned by the Public Accounts Committee (PAC) over the 9 billion ringgits littoral combatant ship project (LCS) that was commissioned in 2014.

In a media statement regarding this issue, Datuk Seri Dr Ahmad Zahid Hamidi wanted to clarify that he held the post of Minister of Defence from April 2009 until May 2013, and the supply failure by Bousted arose only in 2019 in which he was no longer the Minister of Defence.

As to the issue of periodic payments to Bousted, he emphasized that the payment was made in 2019 in which he reminded that he has resigned from Minister of Defence, therefore the issue was beyond his knowledge.

Referring back to the two audit reports raised by WB Wong, Ahmad Zahid Hamidi stated that in accordance to the Guidelines for the Procurement of Direct Negotiation Procedures dated April 17, 2002 it states that direct negotiations can only be made by the approval of Ministry of Finance not the Ministry of Defence.

At the end of the statement UMNO President concludes that he respects the jurisdiction of the PAC in ensuring continuity of government structure and management but believes that PAC should be more sensitive in handling the investigation process.

In addition, PAC Chairman YB Wong Kah Woh said former navy chief admiral Tan Sri Abdul Aziz Jaafar and a representative from Boustead Naval Shipyard Sdn Bhd (BNS), main contractor of the LCS, will be questioned in the proceedings that will resume in early January.

The following is the full Media Statement:

MEDIA STATEMENT DATO ‘SERIES DR. AHMAD ZAHID BIN HAMIDI ON THE ISSUE OF SUPPLY OF SIX (6) SECOND GENERATION SHOP LITTORAL COMBATANT SHIP (LCS) BY THE MINISTRY OF DEFENSE MALAYSIA

I take note of the statement of the Chairman of the Public Accounts Committee (PAC), YB Wong Kah Woh through a press conference on 17.12.2020 regarding the issue of failure of Boustead Naval Shipyard (BNS) Sdn Bhd (“Boustead”) to supply six (6) ships second generation patrol Littoral Combatant Ship (LCS) to the Ministry of Defence Malaysia (MINDEF).

2. As is well known, I held the post of Minister of Defence from April 2009 until May 2013. I would like to clarify that this supply failure by Boustead arose only in 2019 where at that time I no longer held the post of Minister of Defence.

3. I would also like to emphasize that this LCS was built by Boustead Naval Shipyard (BNS) owned by Boustead Holdings Berhad where the largest shareholder is the Government-owned Armed Forces Fund Board (LTAT), while its second largest shareholder is KWAP which is also Government-owned.

4. Referring to the two audit reports raised by YB Wong, here is my explanation:

a. The awarding of the contract to Boustead is in accordance with the Guidelines for the Procurement of Direct Negotiation Procedures dated 17.04.2002 which it clearly states that direct negotiations can only be made after obtaining the approval of the Ministry of Finance and not the Minister of Defence, and

b. On the issue of late fines to the Boustead company, I believe the Ministry of Defence has provided further information on the status of the issue. The Ministry has also stated that a Letter of Claim has been prepared and submitted to the “Controlling Officer” for approval.

5. With that, I would like to emphasize that I resigned as Minister of Defence in 2013 and did not serve in 2019. Certainly, this issue is beyond my knowledge.

6. Finally, regarding the issue of periodic payments to Boustead, I also emphasize that this payment was made in 2019 where I no longer hold the position of Minister of Defence. Therefore, I have no knowledge and control over any decision made by the Ministry on the issue of periodic payments.

7. I truly respect the role and jurisdiction of the PAC in ensuring the continuity of government structure and management.

8. However, I believe the PAC should be more sensitive in handling the entire investigation process, especially national security issues as it is still at the investigation stage.

9. I would like to emphasize that this explanation does not change my intention to continue to cooperate and assist the PAC in completing its investigation.
Thank you.