Who is responsible for the RM1.4 billion LCS project cost overruns?

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Ahmad Zahid Hamidi Faces Scrutiny Over RM1.4 Billion LCS Project Cost Overruns

Datuk Seri Ahmad Zahid Hamidi has been implicated in the controversial RM1.4 billion cost overruns of the Littoral Combat Ship (LCS) project, with allegations that he approved the project and decided on system changes during his tenure as Defence Minister in 2011. While Ahmad Zahid has denied direct responsibility for the project's failure, stating he was not the minister when the contract was awarded, his period as minister (April 2009 to May 2013) overlaps with key decision-making phases. The Public Accounts Committee (PAC) is set to summon him, along with former Royal Malaysian Navy (RMN) Commander Tan Sri Abdul Aziz Jaafar and contractor Boustead Naval Shipyard Sdn Bhd (BNS), for further explanation.
Allegations of Project Approval and System Change

Liew Chin Tong, former deputy defence minister, asserted that Ahmad Zahid Hamidi approved the LCS project in 2011 and was also responsible for changing the system from Sigma to Gowind. These decisions, Liew contends, make Ahmad Zahid accountable for the misappropriation of funds and the project's subsequent failure. The PAC chairman, Wong Kah Woh, previously detailed that the total cost overruns amounted to RM1.4 billion, with RM400 million specifically allocated to settle outstanding debts from a previous patrol vessel project.
Ahmad Zahid's Defence and Tenure as Minister

Ahmad Zahid Hamidi has countered these allegations by stating that he was not the defence minister at the time the project was awarded. However, he acknowledged serving as the Minister of Defence from April 2009 to May 2013. He has indicated his readiness to provide evidence and explanations to the PAC to clarify the situation, emphasizing that any party responsible for the construction delays should come forward.
Project Scale and Lack of Deliverables

The LCS project, the largest procurement undertaken by the Ministry of Defence, carries a total contract value of RM9 billion and was initiated in 2013 with a ten-year delivery timeline. The expectation was for six LCS ships to be built and delivered by the end of 2023. However, a significant portion of the project's equipment, valued at RM1.7 billion, has become obsolete due to prolonged delays.
Contract Award and Payment Status

The contract for the LCS was awarded to Boustead Naval Shipyard Sdn Bhd (BNS) through a direct negotiation process. Despite payments totalling RM6.083 billion having been made, not a single LCS ship has been delivered to date. The initial timeline projected the completion and handover of five LCS ships by August 2022, a target that was not met.

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Who is responsible for the RM1.4 billion LCS project cost overruns?

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