Navy scandal could involve more than RM48m

The Malay Mail Online

IPOH, March 17 — Investigations into the naval procurement scandal revealed a whopping RM48 million exchanged hands between the Royal Malaysian Navy’s fleet supply depot in Lumut and suppliers.

A Malaysian Anti-Corruption Commission (MACC) insider believes this could be the tip of the iceberg as the budget allocated by the government to the depot for procurement of fleet parts is RM300 million. 

He believes more navy officers could be involved in the scandal.

The insider said the figure could grow as the MACC had only been able to identify 21 suppliers since it began its investigations last Tuesday.

Yesterday, the MACC applied to extend the remand orders on six navy officers and five civilians at the lower court complex here.

Four other suspects — all civilians — were released without bail subject to them being called back as witnesses for the MACC. 

The six navy officers and five civilians have been remanded for three more days until Thursday. 

Malay Mail learnt the six navy personnel include a captain and two lieutenant-commanders.

The source said information obtained by the MACC following the arrest of the suspects pointed to thousands of false transactions that could amount to more than RM48 million.

This amount involves only 21 suppliers but it is understood there are more than 2,000 suppliers registered with the navy’s  fleet supply depot.

The source said the MACC hoped to track down other suspects.

He said  the  current    investigations included scrutinising bank accounts and also looking into movable and immovable assets, including the movement of money.

The commission will also likely look into major transactions involving those yet to be arrested.

Malay Mail had reported that millions of ringgit had exchanged hands between suppliers and members of the fleet supply depot over the past five years. 

Both parties had gone on to splurge their ill-gotten gains by buying expensive personal items and luxury vehicles.

MACC to question more senior officers over questionable Lumut naval accounts

IPOH, March 14 — The Malaysia Anti-Corruption Commission (MACC) is digging deeper into procurement malpractices at the Royal Malaysian Navy's Lumut base to determine the extent of such activities.

Malay Mail understands that MACC is wants to find out if more navy personnel were involved in the multi-million ringgit scandal.

An MACC source said the commission was expected to cast its net wider as it believed more people could have been involved.

The source said there was a likelihood that the six navy staff under remand had accomplices at the naval base.

“With many staff (working at the procurement section) there is a likelihood there are others who had been involved in these corrupt practices.”

The source said the investigation on six navy personnel and nine civilians was expected to lead to more arrests.

Malay Mail had earlier reported MACC's concern that certain documents pertaining to the illegal transactions could either be hidden or destroyed.

These include false or exaggerated claims and banking transactions.

Asked if MACC was looking at nabbing big fish, the source said the commission was not discounting any possibility.

“Nothing is precluded. If there are higher-ranking officers involved, we will nab them. However, such a move hinges on the outcome of our investigations.”

Among the six navy staff remanded until Monday are a husband and wife who are lieutenant-commanders. The couple worked in different sections at the naval base.

The MACC arrested five navy personnel, including a woman officer, and nine civilians on Monday evening for alleged involvement in the scandal.

This was followed by the arrest of another officer, the husband to the woman officer, on Wednesday.

The scandal came to light when it was discovered that some navy staff were living beyond their means by accumulating assets, including properties and expensive items such as luxury watches and cars.

Ex-admiral: Group manipulated Navy procurement system

IPOH , March 16 — The procurement method used by the navy to source parts for its fleet may have been manipulated by a small group of Royal Malaysian Navy staff and suppliers to mark up prices of certain items, claims a former high-ranking naval officer.   

Retired First Admiral Mohamad Imran Abdul Hamid, who served for several years at the Lumut naval base, said fleet procurement came under a special unit called Depot Bekalan Armada (Fleet Supply Depot).

This unit sourced parts from suppliers through a three-tier procurement system.

In an interview with Malay Mail yesterday, Imran said the three tiers of procurement were known as the Quotation Management System (QMS), e-procurement and e-bidding.

In detail, he said QMS was used to source parts which cost RM20,000 or less each.

If the part costs between RM20,000 and RM50,000, the e-procurement method is used.

E-bidding is for parts costing between RM50,000 and RM250,000.

He said the Fleet Supply Depot was headed by a commanding officer, usually a captain, with a commander as his deputy.

“Below them are the material controllers or MCs,” he said.

“Each MC is in charge of different parts or needs of the fleet.

“It is the MCs who normally send out the request for parts to suppliers using one of the three procurement methods.

“In the case of the e-bidding, when tenders have been received, a special panel consisting of the MCs, the commanding officer and the deputy will decide on the best pricing.” 

Asked how it was possible for the depot staff to mark up prices if the three-tier procurement mechanism already exist, Imran said it was not impossible provided the staff in the depot unit had “an understanding” on the matter.

He said he was aware of a particular naval part which was purchased for more than RM180,000 when he claimed it cost only RM30,000.

“I brought it up in Parliament and urged the government to tighten the naval procurement system,” said Imran, who became MP for Lumut after he retired from the navy.

He said it needed “teamwork” or “network” already established between the navy staff and suppliers over a long period of time to enable millions to change hands between the two sides.

Pointing out the probable way the two sides manipulated the system, he said this could have been done by pushing up an item fit for QMS or e-procurement into the e-bidding system.

“Let’s say one of the items to be procured is worth RM20,000.

“By right, the depot unit should use the QMS method to acquire it.

“However, this item is pushed either to e-procurement or e-bidding.

“Of course, the money is bigger in e-bidding.

He said once suppliers have locked in their quotations by the end of the tender period, the tenders are then reviewed by the procurement panel at the depot.

Since the value of items are not in millions the decision is finalised at the panel stage.

Imran, who once headed the navy’s logistics department, said once an item was purchased at a higher price, the procurement record would carry the new higher price instead of the older lower price, thus “helping” the “fixers” to reap profit from the marked-up item even for future transactions.  

He stressed the procurement method would be susceptible to manipulation as long as the same staff were allowed to work in the same unit for years.

Last week, the MACC arrested six naval personnel and nine suppliers in connection with malpractice and corruption in the order of millions of ringgit, believed to have been carried out over the past five years.

All 16 of them are remanded until today but the MACC is expected to apply for an extention of their remand period.

MACC zeroes in on major scandal in Navy

The RM48 million scandal could be the tip of the iceberg, as the Lumut depot handles an annual RM300 million budget.

LUMUT: At least RM48 million changed hands under suspicious circumstances between the Royal Malaysian Navy’s fleet supply depot in Lumut, Perak, and 21 suppliers, according to an investigation by the Malaysian Anti Corruption Commission (MACC).

The MACC has yet to comment officially but the result of the investigations has apparently been leaked selectively by concerned insiders at the commission to the media. The investigations centre on the last five years.

The RM48 million scandal, according to the leaks, “could be the tip of the iceberg, as the Lumut depot handles an annual RM300 million budget”. In that case, the list of suppliers involved would be more than the 21 identified so far since the investigations began last Tuesday. Some 2,000 suppliers are registered with the navy in Lumut.

The MACC sources were commenting on the case of six navy officers – including a captain and two lieutenant commanders — and five civilians who had the remand order against them extended on Monday to another three days.

Another four suspects, all civilians, have been released without bail but will reportedly “appear as witnesses on behalf of MACC on the case”.