Thursday, June 24, 2010

Works Minister Tolerates Ali-Baba Projects


Shah Alam Hospital saga takes an 'Ali Baba' twist
WED, 23 JUN 2010 15:46
By Rahmah Ghazali

KUALA LUMPUR: The Shah Alam Hospital saga has taken an “Ali Baba” twist with revelation that the main contractor for the RM482 million project did not do any work at all and yet had made a handsome profit.

Opposition MP Tony Pua (DAP-PJ Utara) said the Malaysian Anti-Corruption Commission (MACC) should look into this matter.

Speaking at press conference at Parliament today, Pua produced two documents which clearly showed that the whole project was being carried out by the sub-contractor, GM Healthcare Sdn Bhd, and not the main contractor, Sunshine Fleet Sdn Bhd.

One document stated that a letter of award was given to a sub-contractor, Isyoda (M) Sdn Bhd, a company which eventually had to opt out after it was delisted from Bursa Malaysia.

The project was subsequently given to GM Healthcare.

“In the letter of award, it was stated that RM451 million would be given to Isyoda while Sunshine Fleet (the main contractor) would receive RM482 million from the government.

“So the main contractor gets a net profit of RM31 million… this is a clear ‘Ali Baba’ project. The PWD needs to take action against Sunshine Fleet...,” he said.

Pua said the fact that Sunshine Fleet is making a net profit without doing any work (since the whole project is handled by the sub-contractor) contradicts the terms of the contract awarded by the ministry.

Pua also said that a second letter by Isyoda to Sunshine Fleet showed that the former had promised a payment of RM46 million to the Sunshine Fleet chairman personally, and not through the main contractor.

'Unconditional payment'

The unconditional payment, according to the letter, was in consideration of Sunshine Fleet’s “efforts to procure the letter of award to be issued to us in further consideration of your future contribution and cooperation to ensure the smooth operation and success of the project”.

It also said that the RM46 million would be paid by instalments. From this amount, said Pua, Isyoda promised to pay 9.5% progressive interim payments to the Sunshine Fleet chairman totalling RM77 million.

“This is seen as a commission for this contract. But is it really a commission or a bribe? We have given this to the MACC for further investigation,” he said.

Shah Alam Hospital is reportedly bogged down in a legal tussle between Sunshine Fleet and GM Healthcare, giving rise to fears that the project will not be completed on time.

But Works Minister Shaziman Abu Mansor dismissed such fears, saying that the project is on track.

Besides, he told Parliament today that the government is only responsible to the main contractor and has no authority over payments to the sub-contractor.

It has been reported that GM Healthcare has filed a petition to wind up Sunshine Fleet over a RM10 million debt.

Sunshine was served the notice on April 1 this year after it failed to pay the RM10 million owed to GM Healthcare. The RM10 million is the bond GM Healthcare had placed with the Public Works Department (PWD) on behalf of Sunshine Fleet for the design, construction, equipping, commissioning and maintenance of the Shah Alam Hospital.

'No action against Sunshine Fleet'

In reply to Pua, Shaziman said that as long as the project is on schedule, the PWD will not take action against Sunshine Fleet.

However, he said that a new law, Construction Industry Payment and Adjudication Act, will be introduced to ensure sub-contractors are paid on time.

“This will help protect sub-contractors who do not get any payment from the main contractor,” he said.

Shaziman also said that the PWD has not detected any breach of contract allegedly committed by Sunshine Fleet.

“In view of this, the question of the project being delayed or the contract being terminated does not arise. This is because the project is on track and (the parties) have observed the terms of the contract agreed to by the government,” he said.

The hospital, which was slated to be completed in November this year, will be ready by June next year.

Opposition MPs have repeatedly raised the issue, alleging that there were discrepancies in the contract PWD awarded to Sunshine Fleet through direct negotiation in 2007.

The situation took a turn for the worse when the board of directors of Sunshine Fleet, many of are related to the Sultan of Selangor, became involved in the legal squabble.
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