Scandal in Malaysia’s biggest defence deal bogs down Umno ahead of polls


A multibillion-dollar scandal over long-delayed naval vessels has not just ignited a blame game in Malaysia’s Parliament, it threatens ruling party Umno’s hopes of holding an early election this year and winning it.

Six littoral combat ships (LCS) were commissioned in 2011, without open tender, to be built by Boustead Naval Shipyard (BNS) and delivered from 2019. So far RM6 billion (S$1.86 billion) of the RM9 billion cost has been paid out, with little to show for it. Not even the designs for these vessels have been completed.

Since these facts were revealed last week by the bipartisan Public Accounts Committee (PAC), there have been growing calls to institute criminal proceedings and set up a royal commission of inquiry on the troubled deal.

Senior Defence Minister Hishammuddin Hussein has said the first of these ships is now only scheduled to be ready “in one or two years”.

He, as well as other Umno bigwigs who have helmed the defence portfolio, such as former premier Najib Razak and party president Zahid Hamidi, are now in the firing line for signing off on the deal and its payments.

The fallout could shake up Umno’s hierarchy and even plans to call national polls in November ahead of the September 2023 deadline.

“It depends how it’s played out in the next few weeks, but yes, a delay is possible as the people implicated are the same ones calling for an earlier general election,” BowerGroupAsia political analyst Adib Zalkapli said.

Prime Minister Ismail Sabri Yaakob is already struggling with runaway inflation, especially on food staples, and soaring fuel subsidy payments.

Another scandal revived from his party’s six-decade rule as head of the Barisan Nasional alliance could well dash hopes of it returning triumphant, after its stunning defeat in the 2018 polls to Pakatan Harapan (PH).

On Wednesday (Aug 10) he announced that Cabinet had called on the anti-graft commission to expedite investigations and declassify reports released in 2019 on the LCS project governance and procurement as well as a forensic audit, pending agreement by the Attorney General and Auditor General.

These reports detail controversial decisions made by Najib and Zahid.

Shipbuilder BNS is a subsidiary of LTAT, the armed forces pension fund. BNS has had to fend off attempts to wind up in recent years, and a government-commissioned independent study in 2019 found the firm to be insolvent.

Zahid has denied responsibility despite heading the Defence Ministry from 2009 to 2013, when letters of intent and award were handed to BNS. Najib, was prime minister and finance minister from 2009 to 2018, by which time the project was 30 percent behind schedule.



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