LUMUT: Greed, corruption and mismanagement caused the failure of PSC-Naval Dockyard Sdn Bhd to build six offshore patrol vessels (OPV) for the Royal Malaysian Navy (RMN) under a RM5.4bil contract.
According to the Public Accounts Committee (PAC), the Government needed to pump in at least RM80mil to pay the local vendors, suppliers and contractors and another RM120mil to salvage the first two vessels, which were nearing completion after seven years.
The PAC will recommend to the Government that it takes over management of PSC-Naval Dockyard to avoid “good money from being used to chase after bad money”.
Committee chairman Datuk Shahrir Abdul Samad said PAC had found the management of PSC-Naval Dockyard to be weak, causing a hitch in building the six OPVs for the RMN.
He added that the company also owed RM80mil to local contractors, vendors and suppliers.
The conclusion was made, he said, after a briefing by the Economic Planning Unit (EPU) on the privatisation of the naval dockyard to PSC-Naval Dockyard at a cost of RM300mil.
The PAC team comprising six members headed by Shahrir was also briefed by PSC-Naval Dockyard workers, union officials and officers of the naval base on the effects of the privatisation.
Shahrir said one of the main causes for the failure of the privatisation was greed and weakness on the part of the top management of the company.
“The failure is not due to its workers, the skills of the workers or the management at the lower or middle levels, but at the top level.
“When it (PSC) paid RM300mil to take over the privatisation project, it was promised a contract of RM5bil (to complete the construction of six patrol vessels) at the initial stage, followed by another RM25bil (to build 21 more vessels) later.
“He (the person given the contract) saw (and said) ‘wow, I am going to be rich’ and ate it fast but did not think that this was a big and heavy responsibility which had to be carried out in the best manner,” Shahrir told newsmen after the briefing and a visit to the dockyard here yesterday.
He said the RMN had expressed dissatisfaction over the services rendered by PSC-Naval Dockyard while the union clearly stated the privatisation did not achieve its objective.
“From the briefing, the PAC has today made a conclusion that PSC-Naval Dockyard has failed the Government,” he said.
Shahrir said the PAC would request the Finance Ministry, the EPU and the Defence Ministry look at avenues the Government could use to terminate the privatisation of the dockyard.
Shahrir said the PAC suggested that the Government crack down on the company if criminal elements such as breach of trust and fraud were involved.
Shahrir added that PSC-Naval Dockyard also had debts with foreign contractors, vendors and suppliers, causing a delay in the handing over of patrol vessels 1 and 2 which were 95% complete.
To complete these two patrol vessels and to pay off the RM80mil in debts, he said, more than RM200mil would be needed.
“We now first want to save patrol vessels 1 and 2 and only after that will we think of the other four vessels under construction,” he said, adding that patrol vessels 3 and 4 were 50% complete while vessels 5 and 6 were only 8% and 10% complete, respectively. PSC-Naval Dockyard Sdn Bhd is a subsidiary of PSC Industries Bhd (PSCI), of which Tan Sri Amin Shah Omar Shah is the executive chairman.
Boustead Holdings Bhd recently increased its equity interest in PSCI to 32.72%, just shy of the 33% threshold that would require the conglomerate to make a general offer for the rest of the PSCI shares it does not already own.
The market had hoped that an institutional investor like Boustead would take over the helm of PSCI to overcome problems affecting the RM5.4bil contract.
For the year ended Dec 31, 2004, PSCI recorded a net loss of RM425.7mil with bank borrowings of nearly RM1.3bil.
The group continued to register a loss of RM33mil for the first quarter of this year.
It is, however, unclear how the latest development would affect the position of Amin Shah, who at PSCI’s recent AGM was re-elected director after major shareholders including Boustead, Danaharta and Telekom Malaysia Bhd were denied entry into the meeting room.
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