Two sub-contractors sues Boustead, subsidiary on LCS deal

KUALA LUMPUR: Boustead Heavy Industries Corporation Bhd (BHIC) and Boustead Naval Shipyard Sdn Bhd (BNS) have been sued by two sub-contractors who were involved in the controversial littoral combat ship (LCS) project.

In a filing to Bursa Malaysia yesterday, BHIC said the suit was filed at the Kuala Lumpur High Court on September 27 by its 51 per cent-owned Contraves Electrodynamics Sdn Bhd (CED) and Contraves Advanced Devices Sdn Bhd (CAD).

The suit named BNS, BHIC, BHIC Defence Technologies Sdn Bhd (BHICDT) and BHICDT nominee directors Salihin Abang and Syed Zahiruddin Putra Syed Osman.

Under the writ of summons and statement of claim (WCCS), CAD and CED claim that BNS’ decision to retract 12 letters of awards (LoA) for the LCS project was invalid.

They had been tasked with purchasing equipment from original equipment manufacturers (OEMs) for the naval frigates.

The LoAs were reportedly cancelled by BNS last month following allegations of misconduct and fraudulent dealings.

CAD is seeking RM880,068.21, 39.87 million euros, 3.78 million British pounds and 55.94 million Swedish kronor in alleged outstanding amounts from BNS, while CED is seeking RM216 million.

BHIC controls a 27.77 per cent stake in BNS, the Defence Ministry’s contractor, for constructing six frigates under the LCS programme.

The Public Accounts Committee’s findings revealed discrepancies and delays in the RM9 billion LCS construction project since 2017.

The contract was awarded to BNS via direct negotiation, with the government paying RM6.083 billion, but not one LCS has been delivered thus far.

According to the declassified report by the governance, procurement, and finance investigation committee, the cost of completing the six LCS may balloon to RM11.145 billion.


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