My Anthem

Saturday, September 15, 2007

Fellow PKR saudara Kim Quek writes

I have always enjoyed KIM QUEK's writings from years back. I hope to meet him in person soon as he had recently joined Parti Keadilan Rakyat, and it's not according to the rumour grapevine, it's more a humourist's delight.

In case the subject reads this Post, please coome down, or up, to Furong next Saturday - yes, exactly one week hence! -- to attend a Book donation at the PKR Headquarters, Jalan Rahang, Seremban. THis INVITE is also extended to awe my ER, if you want more details, just present yourself in body, even without the soul, nah mind, dare.

Meanwhile, ENJOY comrade Kim Quek's writHing...sighted at Wherelse? --! I hear he is a special kind of wordsmith -- right up Desi's alley, also Eli Wong's left byway! -- an accountant by profession, and yes, he gives vivid and lucid accounts!

Najib must bear brunt of the RM6.75 billion naval scandal
Posted by: Raja Petra

Kim Quek

While the nation is still reeling from the RM 4.6 billion PKFZ “Ghost Town” scandal, another mega bombshell hits the national screen – the RM6.75 billion patrol vessel scandal. A RM5.35 billion contract to build naval vessels awarded in the nineties that has been inflated to RM6.75 billion is now teetering on failure, under circumstances that have exposed the utter incompetence and decadence of the Malaysian political leadership and administration.

The 2006 Auditor General’s Report, tabled in Parliament on September 7, has revealed astounding details that indicate dubious award of contract to an obviously unqualified contractor, failure of technical and financial management, hefty illegitimate contract price increases and overpayment, unjustifiable waiver of penalties, huge undocumented payments and complete failure of ministry oversight.

The history of this mega scandal could be traced back to the nineties when a company owned by an UMNO stalwart Amin Shah Omar Shah was awarded a contract in September 1998 to design and build six patrol vessels for the Royal Malaysian Navy for the contract price of RM5.35 billion. The company is PSC-Naval Dockyard Sdn Bhd (PSC-NDSB), which is a subsidiary of Penang Shipbuilding & Construction Sdn Bhd, a company owned by Amin Shah.

Contract breaches

Under the terms of contract, the contractor is obligated to deliver the vessels in stages, starting from March 2004 and completing delivery in April 2007. However, PSC-NDSB could only deliver the first two vessels in mid-2006, and the remaining four are still remote from their final stages of construction, with their completion assessed at 19% to 56% at December 2006. And even the first two vessels delivered were hardly operational, as they were riddled with defects (298 recorded complaints) and were found to have 100 and 383 uncompleted items respectively.

It is obvious that as far as contract performance is concerned, PSC-NDSB is a total disaster. Its failure is attributed to serious financial mismanagement and technical incompetence, the latter being apparent from its track record of only having built trawlers and small police boats in the past.

However, instead of terminating the agreement and demanding for compensation as good governance would have so demanded, the government has done the exact opposite. The Ministry of Defence has not only kept the contractor but also made hefty overpayment, increased the contract price drastically and waived all penalties, all without any justification.

The contract price was increased from RM5.35 billion to RM6.75 billion in January 2007, for which the auditor general could find no justification. Neither could he find valid ground for the generous payment of RM4.26 billion to the contractor up to December 2006 when value of works done was only RM 2.87 billion - an overpayment of RM1.39 billion or 48%. Furthermore, there was no reason for the cabinet’s decision in November 2006 to waive the imposition of penalty for late delivery amounting to no less than RM214 million.

The AG also noted the abnormally generous payment of RM1.07 billion as deposit, which amounts to 20% of contract price, upon signing the agreement. Most alarmingly, the Ministry of Defence is found to have made huge payments to the contractor without supporting documents. Between December 1999 and January 2002, fourteen progress payments amounting to RM943 million were made, for which no payment vouchers or relative documents were found.

In spite of these enormous overpayment and contract price increases, the AG found the contractor in serious financial deficit and warned the government of further losses ahead due to contractor’s weaknesses. The auditor general criticized the project steering committee – headed by Defence Minister cum Deputy Prime Minister Najib Abdul Razak – for failing to provide the necessary oversight over the project.

Government failure

Reviewing the entire fiasco, one cannot escape the conclusion that this is a classical example of contemporary Malaysian mega failure that transcends the Mahathir/Abdullah era division. It demonstrates that the weaknesses of the Mahathir era have not only been carried over but have further been compounded with new weaknesses characteristic of Abdullah’s leadership. In simple words, while Mahathirism is characterised by corruption and cronyism, Abdullah allows these characteristics to flourish and at the same time compounding them with his unique brand of hands-off leadership - indecision and indifference. Abdullah would let nature take its own course. Needless to say, such policy (or the lack thereof) would spell disaster on a mega project gone foul.

Take the present patrol vessel scandal. No doubt Mahathir is faulted for having awarded such a huge and high-skill project without tender to an obviously incompetent crony – a glaring case of corruption and cronyism, but mind you, Abdullah was the leader who allowed the failed contractor to drag on and dubiously rewarded him with contract price escalation and overpayment, entailing all sorts of irregularities with criminal implications, causing the public to loose billions with no end in sight.

Agreed that the real decision-maker in this case may not be Abdullah but Najib, but still, as the Prime Minister, he must take responsibility for having failed to provide the kind of leadership that could have averted the deterioration of this disaster. In fact, I doubt whether the cabinet has been properly briefed or consulted, much less given meaningful deliberation over the relevant issues, in spite of their stupendous nature in monetary terms. I wouldn’t be surprised if the cabinet is carrying on its traditional role inherited from the Mahathir era as largely a rubber-stamp, busy-body over trivial issues such as Namawee’s Negarakuku, but oblivious to massive haemorhage of public funds through such fiascos as this RM6.75 billion patrol vessel contract or the RM4.6 billion PKFZ “Ghost Town” project.

Najib must take brunt

There is no doubt that Najib must bear the brunt of the present disaster. As Minister of Defence and leader of the project steering committee monitoring and overseeing the progress of the project, he is responsible for major decisions and development relating to the contract. And he must now answer the following crucial questions:

· Why wasn’t the contract promptly terminated when the contractor committed a major breach through its severe failure to deliver the vessels?

· Why was the contract price increased from RM5.35 billion to RM6.75 billion? Who authorised the increase?

· Why was the penalty for late delivery amounting to no less than RM214 million waived? Who authorized the waiver?

· Why was the contractor overpaid by 48% by December 2006 – being paid RM4.26 billion for works done valued at RM2.87 billion? Who authorized the payment?

· Why were there no payment vouchers or other supporting documents relating to 14 progress payments amounting to RM943 million made between December 1999 and January 2002?

Unless Najib can provide satisfactory answers to the above question, he must resign forthwith. Meanwhile, the Anti-Corruption Agency should waste no further time in commencing earnest investigations into the many serious irregularities of this project, in particular, criminal collusions with the contractor and breach of trust by top government leaders and officials, including those relating to the award of this contract.

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