KTMB RM85m Contract to Company Without Track Record?

Transport Minister Datuk Seri Kong Cho Ha must explain why the RM85 million Automatic Fare Collection (AFC) system is awarded to a company without the necessary track record

It has been confirmed by both the Transport Minister as well as KTMB officials that KTMB is facing investigations by the Malaysian Anti-Corruption Commission over irregularities over the award of the RM85 million “Design, manufacture, supply, installation, testing and commissioning of automatic fare collection (AFC) system for KTMB's Commuter Stations”.

KTMB is being investigated for alleged fraud in rigging the tender evaluation process to award the contract to Hopetech Sdn Bhd, despite being 18% more expensive than 2 other bidders.
Instead of suspending the project pending investigations, the Transport Minister, who is also the MCA Secretary-General, Datuk Seri Kong Cho Ha had immediately decreed that the project must proceed with the awarded contractor without delay.

In the interest of transparency and public accountability, Datuk Seri Kong Cho Ha needs to explain the reasons why the project was awarded to a company with no track record of delivering AFC systems and why no site visits to installed locations or manufacturing facilities conducted by the tender evaluation team to determine the competence of the respective tenderers. It is critical for Datuk Seri Kong to respond since the KTMB chairman, Dato' Sri Mohd Zin Mohamed, has denied any role in the award process as it was decided by the Ministry of Transport and KTMB will just be the end-user of the system.

What is perhaps more worrying and requires further investigation is the fact that the CEO and Executive Director, Mohamed Zafril bin Mohamed Zabdin and the Managing Director, Hairul Ridza Hayata bin Hayata Elias are both directors of other companies which are either facing winding up petitions or have been wound up on orders by the court.

I have been provided with financial search results which showed that Mohamed Zafril and Hairul Ridza were directors of The Royal Mint of Malaysia Sdn Bhd which was wound up by Mayban Trustees Bhd in February 2009. Hairul Ridza is also director of Southvakes Systems Sdn Bhd which was facing an on-going winding up petition as at the end of 2010.

Datuk Seri Kong Cho Ha must not shirk his ministerial responsibility to ensure that the tender processes in the Ministry of Transport and KTMB are conducted in a transparent, fair and professional manner. Continued leakages and award of contracts without value-for-money will only worsen the financial position of KTMB which has accumulated losses of RM1.45 billion as at 2008.

In addition, by choosing to proceed with the project amidst serious investigation for fraud, Datuk Seri Kong Cho Ha has also turned a blind eye on the Prime Minister's NKRA on fighting corruption. The Transport Minister's care-less attitude is not only the height of ministerial irresponsibility, but will also cement the perception that the Barisan Nasional government is not at all serious about fighting rampant corruption. The increasingly negative perception has reduced Malaysia's Transparency International's Global Corruption rankings to a record low of 56th place in 2009 from 33rd in 2003.