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2nd September 2020

The recent barrage of negatives news pertaining to Boustead Holdings Bhd and its subsidiary, Boustead Heavy Industries Corp Bhd (BHIC), conveys an impression of haplessness on the part of the management going for cop out. As Boustead Holdings is rich in assets and the listed flagship company of Armed Forces Fund Board (LTAT), Patriot is naturally concerned and cautions against conduct of criminal breach of trust.  
The Star article, ‘LTAT’s Dilemma’ on August 29 reported that LTAT has received “an offer from a group with strong links which is seeking to acquire a 20% stake in Boustead with the intention of restructuring the ailing conglomerate”. Besides, the report also mentioned another offer from a private equity firm to fund the privatisation and restructuring of Boustead, and also the possibility of Boustead management buyout.  
In all likelihood, deals and backroom board decisions have already been made before bits of information are released to the media, in particular concerning the group with strong links acquiring 20% stake of Boustead. The others are mere red herrings. Whatever the decision, LTAT and the armed forces personnel must not lose out. The national interest and the strategic defence business monopolised by Boustead Holdings Group must be protected.   
For the past few months Patriot has issued several statements to caution against price suppression of BHIC shares to deft ears. BHIC is a small-cap listed company that has contracts to build six littoral combat ships and contracts for long-term maintenance, repair and overhaul (MRO) of military assets. Together with its parent company, it owns the most advanced shipbuilding yard in the country located within the Lumut naval base. As such, BHIC is corporate gem but vulnerable for hostile takeover.   
The offer by the ‘group with strong links' for a 20% stake in Boustead Holdings is very little money against the potential immensurable benefits. There are four listed companies under the Boustead umbrella – Boutead Plantation, Pharmaniaga, Affin Bank and BHIC, plus several unlisted companies in properties, retail chain, and prime land. With the group’s successful entry and after privatisation and delisting, Boustead’s board decisions and transactions would be opaque to public scrutiny and oversight. The unscrupulous see the listed companies as opportunities to manipulate the casino of stock market.   
The successful party could help to play down the shares price of BHIC to say 50 sen. They then marked down the book value of investment to market. Thereafter their investment could be sold off to certain preferred parties at a small premium. This would end up in big loses to LTAT, in the end, resulting in LTAT crying to the government for bailout. This eventuality should not happen and must not be allowed to happen.  
The crux of the problem surrounding the troubled littoral combat ships (LCS) project lies in Mindef’s yet-to-recognise the Variation Orders for the LCS, and delay in approving the contractor, Boustead Naval Shipyard’s request for extension of time (EOT). It was unfortunate that the previous government was on the verge to approve the VOs amounting to RM 1.4 billion early this year but did not materialise. 
With the RM1.4 billion, BHIC could bring a portion of it into book profit, pay off debts to contractors, and seek bridging loans to complete the LCS project. Interested parties with business acumens know they can do a lot with the VOs once approved.  
Media announcement like bringing a civil suit against the former chairman of Boustead and five others for alleged breach of fiduciary duties without writs of summon and no statement of claim is an appalling lack of sense of fairness. Likewise, Mindef’s consistent putting blame on the contractor for delivery delay of the LCS and cost overruns without first admitting itself is part of the problem, is equally appalling.  
Being strategic thinking minded, Patriots view those as creating thunder in the east while making stealthy maneuvers in the west. It is better to come clean and get the job done for the good of the armed forces and the country. From the perspectives of national interest, Patriot strongly feels Boustead Naval Shipyard and BHIC should be allowed to continue with the LCS project. We have the necessary manpower skills and experience. But a new project team and a new management team must first be emplaced.  
Patriot would like the see the Boustead flagship steered by honest and steady hands. 
BG Dato Mohamed Arshad Raji (Rtd) 
Persatuan Patriot Kebangsaan