Declassified report shows Zahid changed LCS ship design against navy’s wishes

Former Defence Minister Datuk Seri Ahmad Zahid Hamidi changed the design of the littoral combat ship (LCS) from Sigma to Gowind in 2011, contradicting the opinion of the navy.

(Sinar Daily) – This was revealed in the governance, procurement and finance committee declassified report on the construction project of six LCS ships.

The report said Zahid at first agreed with the navy’s opinion to choose the Sigma design from the Dutch after being briefed by the navy on May 26, 2011.

However, two months later on July 11, 2011, he decided to take the Gowind design from France on upon recommendations from Boustead Naval Shipyard Sdn Bhd (BNS).

“The Investigative Committee also found the determination of BNS to pick the Gowind design was because they have done prior discussion and negotiations to proceed with the construction of the LCS.

“This can be proven when BNS issued a letter of intent to French naval company DCNS on July 13, 2011 which was two days after Zahid agreed to a recommendation by BNS,” the report stated.

It was clear from the report that the decision to assign the design specification of the ship and its equipment was done through a series of discussions between the navy and BNS before the letter of acceptance was issued to BNS..

“Based on the initial planning, BNS was required to decide a partnership and ship design options based on the presentation done by BNS before Jan 31, 2011.

However, BNS failed to present their selection to navy within the stipulated time,” it said.

Price negotiations

The committee report also revealed price negotiations between BNS and the Defense Ministry (Mindef).

“On July 10, 2013, it was decided from the agreed RM9.693 billion to be lowered to RM9 billion which is a reduction of RM693 million or 7.15 per cent,” it said.

According to the report, the investigative committee believed that the price negotiation by BNS was unrealistic and the cost was given within a one-day on Oct 15 and 16, 2012 with a price difference of RM224.59 million.

It said, even though the initial cost was decided at RM9.472 billion.

“It was found that the second negotiated price of RM9.765 billion was RM203 million more than the initial negotiated price of RM9.472 billion.

“The negotiation process lasted for nine months before it was approved by the finance ministry (MOF),” it said.

According to the report, the committee found that the price negotiation process was done after the initial issuance of the letter of consent was issued on Dec 16, 2011.

It said the price negotiation process should be done and finalised before the letter of consent is issued.