Monday, August 30, 2010

Award of Contracts to Umno-Owned Companies: Conflict of Interest?

Pakatan seeks probe on Umno-corporate nexus
By Boo Su-Lyn August 29, 2010

KUALA LUMPUR, Aug 29 — Pakatan Rakyat (PR) leaders are demanding a probe into Umno-linked companies being awarded lucrative government contracts, but conceded to the complexities in such an exercise and the difficulty in proving that corruption was involved
The links between Umno and certain conglomerates were revealed further in a High Court hearing last week involving the past shareholders of Realmild Sdn Bhd, the shadowy company that took over media giant The New Straits Times Press (Malaysia) Bhd in 1993, and Malaysian Resources Corporation Berhad (MRCB).

“There has to be a comprehensive investigation because for the last 30 years, there has been such a far-ranging nexus of Umno companies and the role they play not only in corporate but also government-linked company (GLC) transactions,” DAP advisor Lim Kit Siang told The Malaysian Insider.

“There is no proper accountability in the whole process,” said Lim, adding that this was the reason why Malaysia’s integrity rating took a nosedive in the past three decades.

The Ipoh Timur MP pointed out that it was difficult to identify the boundaries involving the government, the political party, and the individual in companies owned by Barisan Nasional (BN) parties.

DAP national publicity secretary Tony Pua said that there was a clear conflict of interest when the government awards contracts to Umno-linked companies.

“Whatever the government awards benefits companies [owned] by Umno and other ruling coalition parties,” said Pua.

Realmild, originally a RM2 company, was the majority shareholder of MRCB, which is now developing the KL Sentral commercial and transport hub in Brickfields.

The Petaling Jaya Utara MP added that the probe should focus on identifying the stakes in the Umno-linked companies.

“The National Audit Department should run a check on all companies where Umno holds a stake, direct or indirect, and verify them against contracts awarded by the government,” he said, adding that this must apply to all ruling parties including PR if they should capture Putrajaya.

Pua, however, admitted that the probe would be a “complicated” exercise as he claimed Umno hides their holdings under various companies.

“Trying to unravel the entire network of Umno’s ownership in many companies would be a major exercise,” he said, pointing out that the complexity was shown by the court dispute where some shares that were meant to be proxy shares were retained as personal shares.


Pua said that laws should be put in place to ban or restrict political party involvement or ownership in business interests as mere guidelines were unlikely to prevent abuses.

“In a case where the government is awarding contracts to an Umno company, it becomes complicated. The minister may step away from (making) the decision, but civil servants are under pressure to award the contract as they are under the purview of the minister,” he said.

Pua also noted that although companies participating in government tenders could be forced to disclose political party ownership, most Umno-linked companies avoided such disclosures as their shares were usually held in proxy.

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