Friday, October 19, 2012

Mindef - Incorrigible Culprit in Auditor General's Report


The Minister of Defence must be answerable for the incorrigible and repeated breaches discovered by the Auditor-General on an annual basis

It no longer comes as a surprise that the Ministry of Defence is one of the biggest culprits found by the annual Auditor General Report for bad governance in its procurement and projects resulting in billions, if not billions of ringgit of losses to the Malaysian Government.

For consecutive years, the Auditor-General has discovered inexcusable practices of incompetency, mismanagement and possibly collusion or corruption with unscrupulous suppliers and contractors.  They have included maggots and expired food served to our army,

In the report for 2010 for example, the Auditor-General found that the maintenance contracts for the aged AGSVs did not have the necessary expertise to repair the vehicles and late penalties were not meted out to these contractors when they failed to repair the vehicles within the necessary time frame.

The Auditor-General had also criticised the “improper payments” of allowance to the Territorial Reserve Army personnel who according to the records, did not attend the relevant training. He had even recommended that the relevant officers be punished via “surcharge” as permitted under Section 18(b) of the Akta Tatacara Kewangan 1957.

Similarly in 2009, one of the biggest scandal exposed was the construction of a new RM256 million Skudai 7th Brigade Army Camp which was awarded in 1997 but has only achieved 18.3% completion.  This was despite the fact that the contractor, Kausar Corporation has collected their construction fees in full via a land swap deal where the company was already given the ownership of a 153 hectares piece of land.

Kausar was able to pledge this piece of land to a bank for the amount of RM465 million showing that the land which could be worth as much as RM800 million, which is well above the cost of construction of the camp.  Despite the above, to date no action to date has been taken against the developer, including terminating the contract, charging late penalties or reclaiming the land which has been awarded to them.

In the latest Auditor-General Report, the Ministry of Defence has among the transgressions cited, awarded 12 contracts to build living quarters for married military personnel has not only incurred a cost overrun of 84%.  Instead of costing RM1.74 billion, the Ministry paid RM3.21 billion, despite the delivery of shoddy units.  The most glaring aspect of the above lapse, is the fact that only 1 of the 12 contracts was awarded via open tender.

All these offenses are on top of the multi-billion ringgit scandals which have been exposed to date, including the “commissions” paid for the acquisition of Scorpene submarines amounting to more than RM600 million, the increase in the cost of acquiring 6 naval patrol vessels from RM6 billion to RM9 billion or the purchase of 257 armoured personnel vehicles for RM7.55 billion from DRB-Hicom when the latter procured these units, less certain accessories and system software from a Turkish defence company for only RM1.7 billion.

The was also the questionable deal involving the acquisition of 12 “customised” Eurocopters for RM2.3 billion or RM192 million each, when Brazil was able to procure the same helicopter, presumably “uncustomised”, for only RM82 million each.  Even the Johor Sultan has chipped in with the criticism that the Ministry of Defence has acquired four Rapid Intervention Vehicles (RIV) for RM2.76mil or RM690,000 each by the Ministry of Defence despite the fact that the Sultan was able to procure a better vehicle for only RM150,000.
Despite the above, the Defence Minister, Datuk Seri Ahmad Zahid Hamidi was only concerned that “the opposition's action aimed at gaining public support for their own political interest could undermine the image of Malaysia's defence among the international community,” as reported in the media on 14 October.

The Minister has expressed regret over the opposition using the issue for “political expediency as the general election is approaching, without considering the implications.”

The Minister of Defence must not attempt to sweep all the multi-billion ringgit scandals under his watch under the carpet by citing the fear that it will “undermine the image of Malaysia’s defence” or question “the capability of our armed forces”.

In fact, what we have harped on continuously over these scandals are specifically to raise the capability of our armed forces to ensure that they are better trained and equipped to secure our borders.  Had the above procurements be conducted with billions of ringgit of savings via open and transparent processes, without wastages, mismanagement and astronomical profits for the suppliers, the same billions of ringgit could have been utilised to acquire even more defence equipment for the army, navy and air force.

Given the flagrant breaches in the Ministry of Defence, we repeat our call to the Ministry of Defence to set up a Parliamentary Oversight Committee into Defence Procurement to ensure that our defence personnel will not be shortchanged and to ensure that every sen of our tax-payers’ monies are properly spent.  We call upon the Minister to keep his promise to “consider” the above proposal at our meeting held in January this year.
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