The Star Online > Nation
Saturday July 16, 2005
http://thestar.com.my/news/story.asp?file=/2005/7/16/nation/11505030&sec=nation
Greed and graft in dockyard scandal
BY KULDEEP S. JESSY
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.
Shahrir: The failure is not due to the workers
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 PSCIs 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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