PETALING JAYA: Standard operating procedures were not followed, a laptop was suspiciously taken away, and numerous digital and ordinary documents were destroyed to suppress evidence in the littoral combat ship (LCS) project.
These were among several attempts by key figures to conceal and destroy evidence, according to a declassified forensic audit report.
The report said the first sign of a cover-up appeared in the shareholders agreement, where Contraves Advanced Dynamics (CAD) had all vested powers, even though BHIC Defence Technologies Sdn Bhd was the majority shareholder.
The report also said provisions in the shareholders agreement were drafted in such a manner that Boustead Heavy Industries Corporation (BHIC) could not get access to any information in relation to procurement on behalf of Boustead Naval Shipyard (BNS), financial matters and the use of generated funds, or banking information.
“Numerous variation orders (VOs) were issued without following standard operating procedures and without examining in detail their validity by the designated team (technical, commercial and procurement team),” it added.
The report, which was partially redacted, noted a suspicious incident where an unknown person took away the official laptop provided to the former LCS programme director.
The identity of that person was redacted in the report, which also noted that there were incidents where electronic evidence and numerous documents were destroyed, an indication of a cover-up.
“The lack of cooperation and the hesitation to come forward by a few of the subordinates might be further indication of an attempted cover-up,” the report read.
The report also found that CAD and its wholly-owned subsidiary Contraves Electrodynamics Sdn Bhd (CED) were involved as intermediaries to compromise transparency.
It said the terms of most of the letters of award (LOAs) and VOs issued to CAD and CED were more favourable to these two companies and not in the best interest of BHIC or BNS.
“The involvement of a few companies providing technical evaluation services related to second generation patrol vehicles (SGPVs) and to provide false addresses and different bank accounts is the sign of suppression of the identity of the beneficiary for the diverted funds,” the report read.
The report also noted anomalies in the approval of transactions, authorisations for payment and instructions to the bank for the release of funds, as these were made in a different address of the company without approval from the procurement team or technical committee.
“It is important to note that the board of directors had neither approved such consultant’s engagement nor authorised anyone to negotiate the fee charged by such a provider of the consulting services,” it said.
The report also said clauses in LOAs were poorly drafted and their scope was vague and weak.
“The terms of most of the LOAs and VOs were not in the best interest of the company and were most favourable to CAD and CED, thus limiting the exposure of the perpetrators.”
According to the report, although various red flags were raised by former officers, associates, the chief integrity officer, and a special group internal audit report that highlighted irregularities and wrongdoings, there were no corrective measures taken by the management or the chairman of the board.
“Such failure to stop the abuse of power was a clear act of cover-up by the then MD (managing director) and his immediate subordinates,” the report read.
The report also noted multiple important positions in the LCS project were left vacant, although they were crucial to support the management of the project.
“This (the vacancies) appeared purposeful so that fewer people were involved and less of a paper trail was created,” the report read.
The forensic audit was conducted on BHIC by Alliance IFA(M) Sdn Bhd and it was declassified on orders of the Cabinet.
BHIC had said it handed over the report to the Public Accounts Committee on Monday.