Saturday, 15 September 2007
Tony Thien (Malaysiakini)
A DAP legislator said today that he would ask questions in Parliament and the Sarawak Legislative Assembly about the Auditor-General’s Report 2006 regarding the RM1 billion bridge replacement project awarded to a company owned by a son of Chief Minister Abdul Taib Mahmud.
DAP’s Chong Chieng Jen - the Bandar Kuching parliamentarian and Kota Sentosa state assemblyperson - told a press conference in Kuching that the AG’s report was a ‘damning audit report’ about the affairs surrounding the award of the seven-year contract.
The contract was given by the Sarawak cabinet to Kuching-based Titanium Management Sdn Bhd in 2000 to replace 384 bailey (pre-fabricated steel) and wooden bridges on a design-and-build basis with an initial contract sum of RM551.01 million.
Total allocation RM1.02b
In November 2006, the state government reduced the number of bridges to be built under the contract by 62 to 322.
However, it revised the contract sum upwards to RM947.84 million - an increase of RM396.82 million, or 72% - according to the AG’s report.
According to the AG’s report, up to December 2006, a total of 259 bridges were completed with the remaining 63 bridges under construction with interim claims totaling RM741.24 million.
It added that the state government estimated the total cost when all bridges were completed by September 2007 would be RM947.84 million.
Under the contract between Titanium Management and the state government, payment could be paid in cash or in kind (with land).
Up to December 2006, the contractor had submitted a total of 71 claims for progressive payments totaling RM741.24 million. Of the total, RM500.95 million - including RM26.97 million interests (on delayed payments) - had been paid to the company.
Chong said that based on the AG’s report it would seem that RM240 million of the total claims had not been paid. Based on the agreement, the government is liable to pay 2% interest per month on delayed payments.
The agreement states that claims for progress payments of certified work done must be paid within 26 days of the claims being received.
Ah Long’s interest rate
Commenting on this, the opposition elected representative said the interest charged - 27% per annum (compounded) - is almost equivalent to Ah Long’s interest rate.
Taib’s eldest son Mahmud Abu Bekir holds 1,430,000 shares, or more than 50% of the company equity. His major partner is Chris Chung Soon Nam (900,000 shares) and a former state director of the Public Works Department (PWD), Michael Ting Kuok Ngie (10,000 shares).
Chong, who read out parts of the AG’s report to reporters, said the report released earlier this week raised questions regarding the contract award to a company registered only in 1998 with a paid-up capital of RM2.4 million to undertake a government project valued at more than half-a-billion ringgit.
Titanium has subsequently awarded all its contract works out to 44 sub-contractors.
According to the AG’s report, the company had failed to conduct detailed and complete preliminary studies as it was required to do so before being awarded the design-and-build contract on a turnkey basis.
This had partly resulted in partly cost escalation when actual works were carried out.
However, auditor-general said the contractor’s completion rate of the bridge replacement project was satisfactory - not a single bridge project was behind scheduled time, it added.
Chong said the government must explain the serious cost over-runs as it involved the people’s money and he intended to raise the matter in Parliament and the State Assembly next month.
Meanwhile, in what appeared to be a initial reaction to the AG's report, Deputy Chief Minister Alfred Jabu, a close Taib ally, was quoted today in the Borneo Post as blaming the delay in the completion of certain federal road projects in Sarawak to the lack of planning, control and supervision of such projects given to the state government.
He said if the state had been given better control by the federal authorities through PWD and other state agencies over project planning, control, supervision and implementation some of the delays could have been avoided.
Commenting on this, Chong said Jabu - who is also in charge of public works - was only trying to divert public attention from the real issue, such as the contract award and its huge cost over-runs given to the company controlled by Taib's son.