Malaysian defense ministry seeks damages in submarine contract

DCNS photo of Malaysian Navy submarine KD Tunku Abdul Rahman

Malaysian company Boustead Heavy Industries announced on June 11 that its joint-venture company with French shipbuilder DCNS (now Naval Group) received a letter from the Malaysian defense ministry (MINDEF) seeking damages in a Scorpene submarine contract.

According to BHI, the MINDEF is seeking approximately USD34 million in damages for a breach of obligations under a 2010 contract for in-service support of the countries’ two Scorpene submarines.

The company did not specify what breaches had been made but said it had adequate basis to defend and to appeal against the claim. The company further said it expects the claim to have a material financial and operational impact for the financial year ending 31 December 2017.

BDNC is a joint venture company between BHIC Defence Technologies Sdn Bhd (60%) – a wholly owned subsidiary of BHIC and DCNS S.A. (40%).

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