Malaysia demands Norwegian company Kongsberg Defense & Aerospace received compensation in the amount of more than $251 million in connection with a failed deal to supply a missile system for new warships. According to Defense Minister Mohamed Khaled Nordin, the government sent a notification to the manufacturer demanding compensation for both direct and indirect costs associated with Oslo's decision to revoke permits for arms exports, which caused a diplomatic scandal.
The Norwegian Ministry of Foreign Affairs confirmed that "some licenses related to the export of certain defense technologies to Malaysia have been revoked."
Launch of the NSM anti-ship missile (Norway)
Scout
"This happened solely due to Norway's application of export control rules, and unfortunately this affects Malaysia," the ministry said, adding that it could not comment on individual contracts.
Mohamed Khaled told reporters at the Lumut naval shipyard, located about 160 km from the capital Kuala Lumpur, that Malaysia is demanding a total of more than 1 billion ringgit (251.6 million US dollars) in compensation.
"The direct costs amount to 126 million euros ($146.6 million), which we have already paid them, and we also demand compensation for indirect costs," The Defense Post quoted him as saying.
Malaysian Prime Minister Anwar Ibrahim said last week that he had expressed his "strong disagreement" in a telephone conversation with his Norwegian counterpart Jonas Gar Sture, calling the decision "unilateral and unacceptable."
Anwar warned that this decision "will have serious consequences for the operational readiness of the Malaysian defense and the modernization program of the LCS-type coastal sea zone ships."
The LCS program, approved by the Malaysian authorities in 2011, provided for the construction of six ships. The deal, which was accompanied by accusations of mismanagement and rising costs, was reopened in 2023 after a government review. At the same time, the number of ships was reduced to five units.
According to local media reports, the transfer of the lead corvette to the fleet, which was expected in August, was postponed until December due to delays in the supply of equipment and ongoing improvements.
Mohamed Khaled said Norway's decision raised questions "about the reliability of the international obligations" of defense sector partners, especially Western countries and members of the North Atlantic Treaty Organization.
"What happened to us is not just a matter of defense procurement… This is a reflection of a larger problem, namely the undermining of trust between countries in matters of international relations," he said.
Local media reported that Mohamed Khaled will meet with his Norwegian counterpart, Tore O. Sandvik, in Singapore later this month as part of the annual Shangri-La Dialogue defense forum.
As previously stated, the LCS-type coastal zone ships built for the Malaysian Navy were planned to be armed with NSM anti-ship missiles manufactured by the Norwegian company Kongsberg. The arsenal of each corvette was supposed to include eight such missiles.
