Mindef clarifies RM571.9m missile payment not advance, made after systems passed RMN tests

KUALA LUMPUR, July 2 — The payment of RM571.9 million to the Norwegian supplier of the Naval Strike Missile (NSM) anti-ship missile system for the Littoral Combat Ship (LCS) project was not an advance payment but was made in accordance with the contract’s progress, the Ministry of Defence (Mindef) said.

Mindef said that when the payment was made, all NSM systems had been fully manufactured, successfully passed the tests set by the Royal Malaysian Navy (RMN), and were ready for delivery to Malaysia.

“Therefore, the payment was made in accordance with the contract terms, and not as an advance payment without physical progress.

“The claim that the contract did not contain clauses protecting the government’s interests is inaccurate. The contract includes provisions allowing the government to take action in the event of non-performance or breach of contractual obligations by the relevant party,” the ministry said in a written reply on the Parliament portal today.

According to the ministry, the revocation of the export licence by the Norwegian government was beyond the control of both the Malaysian government and the supplier.

In this regard, the ministry said it is invoking the contractual provisions available to safeguard the government’s interests, including pursuing claims to recover the payment and related damages.

Mindef was responding to a question from Hassan Abdul Karim (PH-Pasir Gudang) regarding the procurement of NSM anti-ship missiles for the LCS project, including allegations that the government had released the full contract payment of RM571.9 million too early and that the procurement contract lacked clauses to protect Malaysia’s interests.

Meanwhile, Mindef stressed that the issue has not affected the current operational readiness of the Malaysian Armed Forces, as the RMN continues to have existing assets and weapons systems to carry out its responsibility of defending the country’s maritime sovereignty.

“The revocation of the export licence does not affect the LCS delivery schedule. At the same time, the RMN is evaluating and assessing missile systems that could potentially replace the NSM system,” it said in reply to a question from Mohd Kurniawan Naim Moktar (BN-Kinabatangan) on the implications for the RMN’s operational readiness. — Bernama