Malaysia’s ex-navy chief pleads not guilty to 3 charges in ships contract scandal

A 2011 file photo showing then Malaysian Defence Minister Zahid Hamidi (left) and then managing director of Boustead Naval Shipyard, Ahmad Ramli Mohd Nor, looking at a model of a patrol ship. PHOTO: FOTOBERNAMA (2011) HAKCIPTA TERPELIHARA

KUALA LUMPUR - A former Malaysian navy chief, who was also previously a high-ranking official in contractor firm Boustead Naval Shipyard (BNS), on Tuesday (Aug 16) pleaded not guilty to three charges of criminal breach of trust in connection with the littoral combat ship (LCS) scandal.

Ahmad Ramli Mohd Nor, 78, was charged with approving payments of RM21.08 million (S$6.5 million) to three Singapore-based companies without the agreement of the company’s board of directors.

One of the charges against the former BNS managing director involved a payment of about RM13.5 million to Setaria Holdings Limited that was allegedly done without BNS board approval.

Two other charges involved payments of RM1.36 million to JSD Corp and RM6.18 million to Sousmarin Armada, purportedly without BNS board approval.

All three offences were alleged to have taken place between July 2010 and May 2011.

Ahmad Ramli was BNS managing director from 2005 until 2019.

The three companies had no business dealings with BNS, said a source from the Malaysian Anti-Corruption Commission (MACC).

Ahmad Ramli was formerly navy chief from October 1996 until his retirement in 1998 after having served the Royal Malaysian Navy for 35 years.

The criminal breach of trust offence falls under Section 409 of the Penal Code and carries a maximum 20 years’ imprisonment, whipping and fine upon conviction.

Judge Suzana Hussin set bail at RM500,000 for Ahmad Ramli and fixed Nov 24 for the case to be mentioned.

Last week, the MACC said it had completed investigations into the delay of the RM9.13 billion LCS project.

Six ships were commissioned in 2011, without open tender, to be built by BNS and delivered from 2019.

So far, RM6 billion of the RM9 billion cost has been paid out, but the designs for these vessels have yet to be completed.

Since these facts were revealed earlier this month by the bipartisan Public Accounts Committee, there have been growing calls to institute criminal proceedings and set up a royal commission of inquiry into the troubled deal.

In a 2013 photo, then BNS managing director Ahmad Ramli Mohd Nor (right) speaks to the late Tuanku Abdul Halim Mu'adzam Shah (left) about the littoral combat ships at an exhibition in Langkawi. PHOTO: BERNAMA

The scandal first broke out on Aug 4 after the PAC presented a report to Parliament revealing that some RM1.4 billion in government allocation for the LCS project had been used for other purposes, including cost overruns.

Opposition Malaysian United Democratic Alliance (Muda) committee member Lim Wei Jiet on Tuesday said that the charges did not address the issues highlighted in the PAC report, noting that none of the companies to which Ahmad Ramli is accused of channelling money were mentioned in it.

"If we look more deeply, it is clear that the main leakages and misuse identified by PAC are not reflected in the accusations against Tan Sri Ahmad Ramli today," he said.

"Among them are: Why was the design of the Sigma type ship chosen by the Royal Malaysian Navy suddenly changed to Gowind in July 2011, so much so that Tan Sri Abdul Aziz Jaafar, Commander of the Navy at that time, said 'something is gravely wrong'?" he added.

"Muda advises MACC to ensure that the real masterminds behind the LCS scandal are accused and tried in court. Let's not make one of the officials a scapegoat for only a small transaction, with the intention of obscuring the public's mind that all those guilty in the LCS scandal have already been brought to justice."

Senior Defence Minister Hishammuddin Hussein has said the first of these ships is now scheduled to be ready only “in one or two years”.

He, as well as other Umno bigwigs who have helmed the defence portfolio, such as former premier Najib Razak and party president Ahmad Zahid Hamidi, are now under fire for signing off on the deal and its payments.

Shipbuilder BNS is a subsidiary of LTAT, the armed forces pension fund.

There has been much finger pointing over the stealth frigates, and memes abound on social media about "invisible ships". 

Zahid, who headed the Defence Ministry from 2009 to 2013, when letters of intent and the award were handed to BNS, has denied responsibility.

He said that he was not defence minister at the time the project was awarded in 2014.

The opposition has said the project was first approved by Zahid when he was defence minister in 2011 and that he had approved of the change from the initial Sigma design, as chosen by the navy, to the Gowind model, based on BNS' recommendation.

 Najib was prime minister and finance minister from 2009 to 2018. By 2018, the project was 30 per cent behind schedule.

About the case

The scandal over Malaysia’s multi-billion-dollar navy ships goes back to more than a decade, when six littoral combat ships were commissioned to be built in 2011. 

The contract was awarded – without open tender – to Boustead Naval Shipyard, which promised to start delivering the vessels from 2019, with the last one due next year. 

To date, RM6 billion of the RM9 billion contract has already been paid out, but even the ship designs have yet to be completed. 

The long-delayed vessels have now ignited a blame game in Malaysia’s Parliament, threatening ruling party Umno’s hopes of holding an early election this year and winning it.

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