KUALA LUMPUR: An in-depth investigation by the Malaysian Anti-Corruption Commission (MACC) has revealed that the Royal Malaysian Navy (RMN) splurged a whopping RM26.4 million to procure spare parts for one of its vessels, the KD Laksamana Hang Nadim (KDLHN).
A total 4,611 local orders were placed to secure the parts for just the Laksamana class corvette which was commissioned in July 1997.
Similarly, orders were placed in different amounts for the navy’s entire fleet of 108 vessels. Spare parts procurements for vessel refitting, in the last two years alone, totalled RM103,075,453.09.
Investigations by the MACC suggest these purchases were made via the now outmoded Quotation Management System (QMS), in defiance of a Finance Ministry (MOF) directive to use the e-perolehan system for procurement of goods and services.
Furthermore, internal audit reports from the RMN failed to detect procurements made via the QMS, and it is understood that the Depot Bekalan Armada or Fleet Supply Management (DBA) has been continuously using the outdated system, without the knowledge of the Defence Ministry (Mindef).
The absence of detailed information on spare parts procurement in audit reports has provided DBA with leeway to manipulate information.
Documents suggest that there had been instances of Mindef being fed with misleading information, such as that generated by QMS being presented as information generated by e-perolehan.
It was also revealed that the navy made no application to the ministry for exclusion from employing the government-approved procurement standards.
MACC noted that DBA had also strayed from contract terms it signed with Mindef pertaining to tender services by breaking down orders and placing them in smaller units, and also by conducting direct purchases from suppliers.
Apart from just breaching contract terms, this has also resulted in a higher cost of supplies.
This year, the government allocated RM300.3 million for the upkeep of vessels. Due to financial irregularities and a flawed ship refitting policy, recently approved by the MOF’s budget division, MACC pointed out that the actual cost was double the allocated amount.
The MACC report also revealed:
> the absence of check and balances in procurements under the QMS system, which is supervised and solely managed by an information technology (IT) expert, allows data manipulation;
> awarding of tenders to suppliers were not made by the direct purchase (DP) board, but were instead distributed to pre-selected suppliers, resulting in contractor’s monopoly and malpractices;
> the DP board claimed high volume of orders and time constraint as reasons for not having a meeting to decide on the choice of suppliers;
> no reference was made by DBA to the Malaysian Armed Forces Cataloguing Authority (Mafca) on authorised spare parts suppliers and obsolete parts that are no longer available. This paved the way for suppliers to supply low-quality parts; and
> codes of spare parts on DBA’s catalogues were amended arbitrarily.
In March, MACC arrested six high-ranking navy officers, for their alleged involvement in shady deals in the purchase of spare parts.
Investigations are continuing amid reports of widespread corruption and abuse of power by the navy’s senior officers.
It is believed that some have been leading lifestyles beyond their income, such as having luxury homes and expensive vehicles.