Thursday, July 18, 2013

KTMB's RM85m Automated Fare Collection Failure: Heads Must Roll


On 18 January 2011, I had issued a press statement seeking the then Transport Minister, Datuk Seri Kong Cho Ha to explain why a RM85 million Automated Fare Collection (AFC) System for KTM Berhad (KTMB) was awarded to a company without the necessary track record.

In fact it was then 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 was 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.

However, 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.

The project was supposed to have been completed in April 2012 but the deadline has been extended multiple times at the request of Hopetech Sdn Bhd.  The last “go-live” date was in January 2013 this year but the AFC system is no where near completion.  I have received reliable information that the situation is so bad that hardware that was procured for the project have since been damaged, stolen or lost as a result of neglect and prolonged extension.

The new Transport Minister, Datuk Seri Hishamuddin Hussein must immediately take action and bring those responsible for the above fiasco to book.  This is especially since the Ministry has been specifically warned on the competence of Hopetech, as well as the irregularities in the contract award highlighted.

In fact, I had pointed out more than 2 years ago that the Directors of Hopetech had terrible track records and were in major financial trouble.  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.

Despite the above warnings, Datuk Seri Kong and his team at the Transport Ministry persisted with the award, without any further action from MACC.  The outcome is a disaster and tax-payers’ monies are burnt.  The questions which need to be answered today are:

  1. Why is the Ministry of Transport persisting with the existing contractor instead of terminating the contract based on non-performance?
  2. Why hasn’t the Ministry of Transport imposed “Liquidated Ascertained Damages” on Hopetech for the severe delays caused?
  3. Why was there no action by the MACC despite all the evidence presented on the irregularities of the award?

All the above proves the complete failure by the Government to tackle and enforce transparency and integrity, and the failure of the MACC to serve as an effective institution to fight corruption.  While in this case, “nasi sudah jadi bubur”, it will serve as a good platform to demonstrate the government’s commitment to fight incompetence and corruption by punishing the responsible officials for the project.

It will then serve as a warning to other officers to ensure that no waste of tax-payers’ monies will be tolerated, and the Najib administration has the necessary political will to institutionalise transparency and accountability.  The move will also go a long way towards redeeming the severely tarnish image of the Government as reflected in the latest results of the Global Corruption Barometer where Malaysian’s perception of corruption has plunged from 49% to 31%.
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