RM13.4mil loss traced to unilateral forex decision by ex-MD

PETALING JAYA: A decision by Tan Sri Ahmad Ramli Mohd Nor to pay for the purchase of parts of the littoral combat ships (LCS) in euros instead of the ringgit cost Boustead Naval Shipyard Sdn Bhd (BNS) a net loss of RM13.4mil.

Ahmad Ramli was the former managing director of Boustead Heavy Industries Corp Bhd (BHIC) and ex-chairman of BNS, a unit of BHIC.

According to Prabhat Kumar of Alliance IFA, which carried out a forensic audit, the loss was a result of currency fluctuation, and could have been avoided.

Ahmad Ramli, he said, had agreed to a change of payment for the letters of award (LOAs) in the purchase of the towed array sonar and main surveillance radar system, following a request by Gordon Hargreave, who was the chief executive officer of Rheinmetall Defence Electronic.

BHIC was the 51% partner in Contraves Advanced Devices Sdn Bhd (CAD) and Contraves Electrodynamics Sdn Bhd (CED), with Rheinmetall having 49%.

CAD and CED are the two contractors in the LCS project.

“The chairman (Ahmad Ramli) could have suggested plenty of available measures to minimise the loss. For example, booking the foreign currency in advance and so on,” said Prabhat, adding that the burden was pushed to BNS “without informing and seeking approval from the BNS board”,” he told the Public Accounts Committee (PAC).

He also said Ahmad Ramli could have considered the larger interest of BHIC group, which he was representing, rather than CAD.

The BNS audit committee, he said, raised concerns about the impact of forex losses on the profitability of the LCS project.

“But it was in vain – nobody took any action. As a result of his unilateral (and) detrimental commitment, it was noted that the currency of the said two LOAs were changed from ringgit to euros and resulted in a net loss of RM13.4mil to BNS on that day itself based on the difference in the currency rate,” he added.

Prabhat said Ahmad Ramli’s decision gave the impression that “Tan Sri was more inclined to safeguard the interest of CAD”.

“This resulted in an additional liability on the record of increased ringgit value of the said procurements.”