Thursday, June 06, 2013

KLIA2 Scandal: Blame Game Commences

The explosive blame game between Malaysia Airports and its contractors on the delays at KLIA2 triggered by the exposes led by Pakatan Rakyat confirms incompetence and mischief at the highest levels

Finally after months of blatant denials, Malaysia Airports (MAHB) has finally conceded that the KLIA2 is severely delayed.  The current KLIA2 airport contract was scheduled to be completed by September 2011 but has been delayed at least 7 times since then.

MAHB however now claimed that the delays plaguing the completion of KLIA2 is the result of the non-delivery of parts of the project by contractors, leading Malaysia Airports Holdings Bhd (MAHB) to come out to say that it would impose liquidated and ascertained damages (LAD) on the responsible parties.

Unsurprisingly, the main contractors of the project all lined up to deny their complicity in the delays and placed the blame squarely on MAHB the project owner who allegedly made repeated variation orders to the original contract.

While we are not privy to the details of the dispute which is now triggering the blame game between the various parties, the question that needs to be asked is, after nearly 2 years of delay, why is it that MAHB is only coming out for the first time to blame the contractors?  If it is really the contractors who are at fault, why haven’t they been penalised with the LAD since September 2011?

This KLIA2 scandal has been repeatedly raised both in and out of parliament by my colleague Nurul Izzah Anwar, the Member of Parliament for Lembah Pantai and myself over the past 18 months, but never was the issue of contractor non-performance ever raised as a response both by the Ministry of Transport or MAHB.

At the end of the day, the buck stops with MAHB as the project manager and owner and the entire top management of MAHB must bear full responsbility for embarrassment and fiasco.  It is ironical that the Chief Financial Officer for MAHB, Malaysia Airports Holdings Bhd's (MAHB) Faizal Mansor was named Best CFO for Investor Relations (Mid Cap category) by the Malaysian Investor Relations Association (MIRA), when it was under his watch that the cost of the airport has increased more than 100% from under RM2 billion to the “latest” estimate of RM4 billion.

This  drastic increase in cost has resulted in MAHB having to raise bonds amount to RM3.1 billion to date, with another RM1 billion expected to be raised in the near future, causing MAHB to take on debt which may not have been necessary in the first place.  However, the ultimate losers on the “low cost” airport which busted the budget will be the Malaysian travellers who will have to bear the cost of higher airport taxes for MAHB to repay its debts.  This will also severely impact Malaysia’s competitiveness as the hub for low-cost carriers in the Asia region.

It has also been reported that the contract for current Managing Director of MAHB, Tan Sri Bashir Ahmad who has helmed the company for the past 9 years will be ending in June 2013, after having been extended last year.  It is clear that Tan Sri Bashir has failed to competently manage the single largest project by MAHB during his reign and his contract must not be renewed.  The failure and scandal of KLIA2 cannot be excused.

A competent successor must immediately be found to clean up the mess in MAHB to ensure that there are no further delays to the completion of the airport as well as capping the cost to taxpayers for the project.

Finally, it has been reported that there has been an independent report produced by KPMG over the KLIA2 project fiasco.  We call upon the Ministry of Transport to make public the report given the scale of the scandal and the public interest involved.  All those found guilty of negligence must be brought to book.  Pakatan Rakyat Members of Parliament will pursue this matter relentlessly until those who are responsible for this multibillion ringgit disaster is punished for their crimes.
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