RTM’s super expensive scanners and clocks

A4 scanner – RM14,670 each
A3 scanner – RM20,630 each
Clock – RM3,810 each
Building acoustic measuring system – RM597,330

How much can an A4 size scanner cost? Nowadays it is not so difficult to get an estimate. Just do a search online and you can get the ballpark price.

In the Auditor-General’s Report 2012 it is reported that RTM (under the Information, Communications and Culture Ministry) purchased three A4 scanners for RM14,670 each!! And this is despite the fact that RTM itself had estimated a price of only RM200 each. This means an increase of 7,235% from the estimated price!

It also need some bigger A3 scanners too which were estimated to cost RM1,000 each. RTM ended up buying 5 of these scanners at RM20,630 each!

RTM(Source: Auditor General’s Report 2012)

RTM also bought 20 wall clocks. It estimated that each clock would cost RM100 – quite reasonable. But the successful supplier charged RM3,810 each! That is 38 times the estimated price and they happily went ahead to by these clocks at this exorbitant price. Hopefully the clocks are still working. Wonder what brand are these clocks.

A Building Acoustic Measuring System was estimated to cost RM100,000 but in the end RTM ended up purchasing a system more than 5 times the estimate at RM597,330!

RTM scanner(Source: Auditor General’s Report 2012)

What is worse is that some of these expensive items were found not being used even after 3 years! They were purchased in 2009. In 2012 items delivered but not used includes one of the expensive A4 scanners. The reason? They did not know that it was in the store! How about the super clocks? 6 of these were delivered in May 2010 and in 2012 they were still not in use!

Not Used(Source: Auditor General’s Report 2012)


RM12.5Bil double-tracking project delayed and costs RM3.6Bil more

The government faces the risk of footing heavy losses because the agreements it has signed for the double-tracking project limits the compensation that can be claimed from contractors who fail to meet deadlines.

“An audit found that the cap on liability borne by the contractor… for the Ipoh to Padang Besar (double-tracking) project is fixed at 10 percent of the contract value or RM1.25 billion,” notes the Auditor-General’s Report 2011.

This, it explains, does not bode well because an exact cap for the Rawang to Ipoh segment of the project forced the government to pay RM882.01 million in compensation.

Elaborating on this, the report states: “In 2000, the electric double-tracking project between Rawang and Ipoh was carried out by the (Transport) Ministry. The audit done in 2008 found that the government suffered an estimated lost of RM1.14 billion when the contractor failed to complete the project.

“However, the full amount could not be claimed from the contractor because, according to the (terms and) conditions, the maximum liability that can be claimed is limited to 10 percent of the contract value or RM257.99 million only.”

The more recent contract signed with MMC Gamuda Joint Venture Sdn Bhd (MGJV) has similarly failed to protect the interest of the government, states the report.

“The cap on the maximum liability does not take care of the government’s interests because (it) will be forced to bear the losses if the contractor fails to complete the project according to the schedule.”

The report further questions the 0.15 percent processing fee imposed on the government by the project’s lead lender, Bank Pembangunan Malaysia Bhd (BPMB). This amounts to RM10.05 million for interim payments made to MGJV.

“The audit is unable to determine the justification for the fee amounting to RM10.05 million (for BPMB) to process interim payments which were in fact handled by the project consultant, Keretapi Tanah Melayu Bhd and the (Transport) Ministry,” it said.

It also notes that the deadline for the project, which is to be completed by Jan 7, 2013, has been extended to Nov 7, 2014, and that this is likely to incur additional costs.

To date, the RM12.485 billion project has cost already cost an additional RM3.608 billion due, among other reasons, to land acquisition and compensation for squatter relocation.

– Malaysiakini

Read more…
Double trouble for gov’t in rail contracts
Oct 16, 2012

Sarawak builds RM20mil bridge to nowhere, needs another RM50mil to connect somewhere

The Sarawak Public Works Department (JKR) had proposed the construction of the RM20.43 million Batang Strap Bridge in Sri Aman Sarawak, forgetting a link road to nearby villages, according to the Auditor-General Report 2011.

The result – a 182.4 metre concrete bridge that connects the nearby town Pekan Pantu to shrubs on the other side of the river.

“An audit survey on Dec 17, 2011 of the project site at Pantu, Sri Aman found that the concrete bridge project worth RM20.43 million could not fully stimulate the local economy after completion as the 10km road across the river to link the long houses and schools there had not been built,” the report reads.

Without the 10km road, it adds, some 23 long houses with a population of 3,000 and four schools have no access to the bridge and beyond to Pekan Pantu.

In a March 7 reply, the department said it will propose the construction of the road, estimated to cost RM50 million in the third rolling plan under the Tenth Malaysian Plan.

“As a temporary measure, JKR proposed to construct a 500m dirt road to connect to the logging road to the Batang Strap bridge at an estimated cost of RM500,000,” it said.

This was among several projects under a special RM1 billion allocation from the federal government for road upgrades and construction in Sarawak.

An audit at the federal level had rated the 175 projects as “less than satisfactory” due to delays and poor quality .

– Malaysiakini

Read more…
Sarawak builds RM20mil bridge to nowhere
Oct 19, 2012

Private homes furnished with Johor state govt property?

Meanwhile, in Johor, the Auditor-General’s Report 2011 found that state government property had mysteriously found themselves as new furnishing for private homes.

The total of 39 items worth RM55,360 supplied by the Johor Menteri Besar’s Office were intended for the premises of associations and organisations in Muar, Kluang and Ledang.

Other than furnitures and electronic gadgets, the other items include:

BOB-KA-9000 professional digital echo mixing amplifier (RM2000)Air conditioners (RM3,000);

Laptops and desktops (RM1,700 – RM5,000);

Elecreolux range hood: E11-15024 & electrolux uilt-in hub: E-10-42299 (RM4,500);

Kitchen cabinet full high (23’x108′) (RM5,000); and,

Steamer 26″ CNI (RM1,550)

“This is against the issued guidelines and therefore the targeted groups could not benefit from these equipment,” states the report.

– Malaysiakini

Read more…
Sarawak builds RM20mil bridge to nowhere
Oct 19, 2012

Defence Ministry pays RM3.2bil instead of RM1.74bil for shoddy quarters

Shoddy quarters

A Defence Ministry contract to build living quarters for married military personnel has not only incurred a bill of RM3.21 billion, but has seen the delivery of shoddy units.

The cost for the 38 projects comprising 9,455 units of quarters ranging from flats to bungalows was initially estimated at RM1.74 billion but ballooned to RM3.21 billion – an 84 percent cost overrun, the Auditor-General’s Report 2011 notes.

The Auditor-General’s Office had audited 12 of these projects, finding that these had contributed to RM1.3 billion of the cost overrun stemming from, among others, delays of up to 1,240 days for delivery.

It found that only one of the audited projects, which were part of the 9th Malaysia Plan, had been awarded through an open tender, while the rest were by direct negotiation, limited tender or by obtaining quotations.

Six of these projects are located in the Klang Valley and were awarded to Syarikat USL, a joint venture by the Finance Ministry-owned Syarikat Perumahan Negara Bhd and the Armed Forces Fund Board Sdn Bhd.

According to the audit report, Syarikat SUL was found to be “inexperienced” and “technically incompetent” to complete the projects.

It was fined RM87.12 million for the delays, but payment was later waived by the Finance Ministry following an application by the Defence Ministry.

“The exemption of the fine … caused losses and undermined the government’s interests …,” the audit report states.

“The Defence Ministry should not have accepted the final products as it had many construction faults and damages, forcing armed personnel to stay in poor quality dwellings.”

It also recommended that the contractor should be “blacklisted” for performance failure.

Photographs appended to the audit report showed ceiling boards which had rotted through due to leaks in the roof. Leaks were also found in bungalows for higher ranking personnel.

It also found that the office unit at the Jalan U Thant quarters in Kuala Lumpur had a “bad stench” due to a “leak in the sewerage system” .

Up to 2,085 complaints of damage were made for projects constructed by Syarikat SUL, but the company did not address these.

“As such, the Defence Ministry had to appoint a third-party contractor to deal with it at an extra cost of RM1.84 million,” reads the report.

Of the 38 projects, only the one in Kinabatangan, Sabah has yet to be completed.

However, in December 2011, the audit staff found that the captain’s quarters there was being inhabited by “foreign workers and their families”.

To this, the ministry responded that the contractor has been fined RM13,314.86 for each day’s delay and that project is – as at April this year – 91 percent compete.

Past problems

The audit further noted that Syarikat USL-built airforce quarters in Subang that were completed in 2006 were in poor shape. Although the USL was responsible for repairs up to July 2008, these were not undertaken.

Despite this, the ministry had issued a ‘certificate of making good defects’ (CMGD) in February 2009, to indicate that repairs had been completed.

As at January last year, the ministry estimated the cost of repairs for the Subang quarters alone to be RM5 million.

“However, the bank guarantee of RM8.56 million by Syarikat USL to the ministry lapsed in January 2009,” reads the report.

“The ministry should have seized this bank guarantee as Syarikat SUL had failed to fulfill its responsibilities.”

Furniture provided was also of poor quality. Bed frames, chairs and tables were made of “easily-broken, low quality, thin plywood”, while some could not fit into the rooms as the items did not meet specifications.

A photograph of a “new unit” at the Kementah camp dated January 2012 showed furniture which could not be used due to “disintegration as these could not withstand a termite attack”.

– Malaysiakini

Read more…
Defence Ministry pays RM3.2bil for shoddy quarters
Oct 15, 2012

Customs officer goes on RM1.82mil shopping spree – How can this happen?

A Customs officer bought hundreds of items not allocated for, raking up a bill of RM1.82 million, the Auditor-General’s Report 2011 reveals.

The officer, who is not named in the report, had placed a verbal order for the items, some of these costing several thousands of ringgit, without the procurement division’s approval, leaving the Treasury to foot the bill.

He had ordered:

An extra 50 GPS navigation systems when he was only authorised to order 30, costing RM6,174 each;

An extra 100 search lights, when he had obtained approval to order only 50, costing RM1,292.60 each;

60 beacon lights at RM1,311 each;

250 rechargeable torchlights at RM1,217.16 each; and

100 walkie-talkies at RM5,259 each.

The officer had not been authorised to order any of the last three items.

According to the audit report, the purchases were made in 2007 but the supplier, True Target Resources, could not be paid as the bill went beyond the procurement budget of the Royal Customs and Excise Department.

It added that the Treasury in in 2010 approved the payment and an investigation into how the breach of regulations had taken place was started.

The Finance Ministry on Dec 22, 2010, issued a directive to the Customs Dpartment to lodge a police report against the errant officer.

“However, no action was taken against the officer involved as he had given a 24-hour notice of resignation on Feb 26, 2008,” the audit report states.

On May 24, 2012, the Customs Department lodged a police report against the errant officer.

– Malaysiakini

Read more…
Customs officer goes on RM1.82mil shopping spree
Oct 15, 2012

RM53,525 maintenance contract for one dot matrix printer!


LQ300 dot matrix printer

The humble dot matrix printer, among the cheaper computer printing options, is under the auditor-general’s spotlight after it was found that the Lahad Datu General Hospital was paying an exorbitant amount maintaining it.

According to the Auditor-General’s Report 2011, the Health Ministry is spending RM53,525 – nearly the cost of a 1.6 manual Proton Waja – for a five-year maintenance contract for each of the Epson LQ300 printers it owns.

The report doesn’t state how many such units are owned by the hospital, but it did state that it cost RM738 per unit and thus maintaining a single unit for five years was 72.5 times the purchase price.

This is however the tip of the iceberg as there are many items on the establishment’s hospital information system (HIS) inventory which recorded highly suspicious maintenance costs.

For example, another printer, the more expensive and advanced Lexmark E332n laser printer which cost RM1,916 a unit, required RM16,455 in maintenance cost for a five year period.

One company, five hospitals

In contrast, maintenance cost of similar equipment in government hospitals in Keningau, Pekan, Sungai Petani and Selayang was a fraction of the price paid by the Lahad Datu hospital.

In a reply to the audit team on June 15 this year, the Health Ministry justified the maintenance cost, stating that the ministry had a “back to back” agreement with the supplier which includes a “comprehensive” maintenance scope.

“The maintenance cost not only includes a ‘planned preventive maintenance’ but also includes corrective (measures) and replacements of the same make or better,” said the ministry.

The Health Ministry also suggested that the variance in cost of maintaining the Epson LQ300 printer could be because the supplier for the Lahad Datu hospital obtained the contract through direct negotiation.

Of the 12 hospitals involved in the HIS maintenance work, a single company – Systematic Conglomerate Sdn Bhd – received directly negotiated contracts to work on five hospitals.

Other than the Lahad Datu hospital, the four others maintained by Systematic Conglomerate were not part of the audit. Contracts for the other seven hospitals were awarded through open tender.

Ministry: We lowered the amount

The total value of tendered contracts is RM334.02 million. Of this amount, two-thirds or RM222.19 million worth of work was given to Systematic Conglomerate.

According to the Health Ministry’s explanation, the direct negotiations with Systematic Conglomerate were done by the Finance Ministry.

“However, the (health) ministry had negotiated for a lower amount of RM222.81 million, which is lower then the price of RM483.78 million sought by the contractor.

“The (health) ministry had on Oct 13, 2011 and Feb 22, 2012 appealed to the Finance Ministry to ensure that future HIS maintenance contracts be awarded through open tender,” the Health Ministry told the audit team.

In view of this, the government had on July 9 decided not to proceed with the option to extend Systematic Conglomerate’s contract by another three years.

– Malaysiakini

Read more…
Printer maintenance is 72 times purchase price
Oct 16, 2012 – Malaysiakini

Groundbreaking study details Taib’s US$21bil empire

A ground-breaking report released by Swiss-based NGO Bruno Manser Fund (BMF) estimated the assets of Sarawak Chief Minister Abdul Taib Mahmud’s family at US$21 billion (RM64 billion).

The wealth of Taib himself has been put at a whopping US$15 billion (RM46 billion), making him Malaysia’s richest man, outstripping tycoon Robert Kuok who has US$12.5 billion.

The report entitled ‘The Taib Timber Mafia: Facts and Figures on Politically Exposed Persons from Sarawak, Malaysia’ was released today in Brussels to coincide with a visit by the Malaysian Plantation Industries and Commodities Minister Bernard Dompok to the European Commission.

It is the first report that describes in detail the business activities and personal wealth of 20 members of the Taib family in Malaysia, Australia, Canada, Hong Kong, United Kingdom, United States and other countries.

The report aimed to build international pressure against the Sarawak’s first family and provide investigating bodies, journalists, Sarawakians and interested parties with hard evidence on the Taib financial empire.

BMF estimated the combined net worth of 20 Taib family members at close to US$21 billion, spread over 400 companies around the globe – all built through their near complete political and economic control of Sarawak – one of the poorest states in Malaysia – over three decades.

However, the research is restricted to Taib’s family members and does not include the wealth of Taib’s close associates, all of whom have benefitted from the powerful chief minister’s patronage during his almost 31 years in power.

Taib holds three key posts

In particular, the family of the longest-serving chief minister in Malaysia has established monopolies over the granting of logging and plantation concessions, the export of timber, the maintenance of public roads as well as the production and sale of cement, and a number of other construction materials.

“The Taib family’s business outfits, particularly its flagship company Cahya Mata Sarawak (CMS), have also benefitted from untendered public contracts worth hundreds of millions of US dollars,” said BMF.

CMS is the largest private company in the state with net assets totalling RM2.4 billion in 2010.
It has been awarded some of the state’s largest contracts including the RM300 million construction of the state legislative assembly building in Kuching, a contract over the maintenance of all 4,000km-long state roads in Sarawak and a 15-year concession to maintain 643km of federal roads.

The report claimed that the Sarawak state government enjoys total autonomy as to the use of the state’s forest resources and state lands, while Taib has abused his triple positions as chief minister, state finance minister, and planning and resources minister, to award his family members vast timber concessions, palm oil concessions, state contracts and directorships in Sarawak’s largest companies.

“In 2009, his three ministries controlled 49.6 percent of the state’s operating expenditure of RM1.19 billion and 80 percent of the state’s development expenditure of RM3.08 billion, with the other 10 ministers sharing the rest.”

As Sarawak planning and resources minister, the report explained, Taib has ultimate control over the granting of logging concessions in Sarawak that are worth several billion US dollars.

“Already in the late 1980s, family members and clients loyal to Taib were estimated to control over 1.6 million hectares of timber concessions in Sarawak which constitute more than 10 percent of the total land mass of Sarawak”.

All in the family

The report also zoomed in on Taib’s modus operandi as to how these assets were transferred overseas to countries such as Canada (Sakto group of companies), US (Sakti Corporation and related companies), Australia (Sitehost Pty Ltd), UK (Ridgeford Properties), Hong Kong (Richfold Investment Ltd) and to a number of offshore finance centres, in particular the British Virgin Islands.

“While the above-mentioned companies officially name Taib family members as their shareholders or directors, it is believed that many other companies are held through nominees.”

Individuals profiled in the extensive 45-page report include Taib’s brother Onn Mahmud, who is second richest family member with an estimated net worth of US$2 billion, while Taib’s eldest son, Mahmud Abu Bekir Taib, a major player in the Sarawak construction, property and energy business, is ranked third at US$1.5 billion.

Next in line are Taib’s Canada-based socialite daughter Jamilah Taib Murray (US$1 billion), Taib’s brother and timber entrepreneur Tufail Mahmud (US$600 million), sister Raziah Mahmud (US$500 million), daughter Hanifah (US$400 million) and son Sulaiman (US$300 million).

Meanwhile, timber conglomerate Ta Ann founder and Sarawak Energy chairperson Hamed Sepawi, a first cousin of the chief minister, has an estimated wealth of US$175 million.

Faced with mounting criticism, Taib had last year took to the Internet to defend his family’s wealth.

In particular, Taib explained that his daughter Jamilah’s (right) business was initially funded from his income as a federal minister, which his daughter through her business acumen expanded into a global empire.

“Well, my children make money, yes, quite big. I don’t know whether what they said 100 million is correct… in Canada,” he said in a four-minute video posted on YouTube a month before the Sarawak state election last year.

“But it all started (when) I gave money to my daughter. I was resigning from the federal government. I got gratuity, I gave some money to her to start a new business, it thrived.

“It is a property development company. When our town was still small, they had foresight to buy pieces of land and sell them quickly,” he said.

BMF compares Taib’s family with the clans of former Indonesian president Suharto and former Philippines president Ferdinand Marcos – the two families had embezzled between US$15 billion and US$35 billion, and between US$20 billion and US$900 billion respectively.

“We believe our research is showing merely the tip of the iceberg as many (Taib) family assets are likely to be hidden overseas or in offshore districts where information is virtually impossible to obtain,” said the report.

“BMF is therefore calling on anti-corruption and anti-money-laundering authorities worldwide to investigate the Taib family’s business activities.”

“Groundbreaking study details Taib’s US$21bil empire”
Malaysiakini – Sep 19, 2012

Eruption of the dormant forex scandal

THE ghost of Bank Negara Malaysia’s (BNM) epic foreign exchange trading losses, said to have run into tens of billions during the 80s and 90s, has reawakened.

Like a dormant volcano whose time to re-erupt has come, the controversy involving the central bank’s infamous speculative practices blew up with such a shudder last weekend that even Tun Dr Mahathir Mohamad was called to respond.

Mahathir, who was prime minister at the time, commented to reporters that he was not afraid to be investigated. The Opposition can open any file they had on him, he said in response to DAP adviser Lim Kit Siang’s assertion that Pakatan Rakyat, should it take over the federal government, must initiate a royal commission of inquiry into the affair.

Other key figures reportedly implicated are the then finance minister Tun Daim Zainuddin and BNM governor during that period, the late Tan Sri Jaffar Hussein. A fourth person, the then BNM deputy governor, Tan Sri Nor Mohamed Yackop, is now a minister in the Prime Minister’s Department.

Although the issue has been raised before, this time it was perhaps more damning and detailed. This is because the individual who spoke about it at a forum organised by the Penang Institute, a state government think-tank, on Saturday was privy to the internal happenings at BNM until 1994.

Dr Rosli Yaakob was a senior manager during the crucial years when the speculative practices were said to occur, and was even on the panel that prepared and presented the bank’s semi-annual brief. He is currently Negri Sembilan PAS deputy commissioner.

Incidentally, Opposition Leader Datuk Seri Anwar Ibrahim, who was finance minister from 1991 to 1998, also spoke at the forum. Anwar maintained that the matter was kept from him after he assumed the post. He has however been accused of covering up for it, including by Lim – the opposition leader and DAP’s Tanjung MP in the early 90s – who held Anwar personally responsible for the losses.

The problem with this whole affair is that there has been neither an official investigation nor an inquiry into the matter to assuage public confusion and concerns. No one, aside perhaps from the perpetrators, knows how much money, if any, was lost or how this was done.

Rosli’s account, delivered to a packed hall seated in stunned silence, would have raised more curiosity about what could have occurred.

Even the volume of money that was supposedly involved has come into question. Lim has put the losses at about RM30 billion. Rosli, however, pointed out that it was once reported that at the height of the speculation BNM had spent RM270 billion. “This is no small amount,” he said.

According to Rosli, the market norm then was to trade in lots of US$1 million, US$5 million or US$10 million, but that BNM traded in US$50 million lots (up to 5-10 lots per call) and sometimes, a few “yards” (US$1 billion per yard) a day.

Its closest rivals were Japanese fund managers who also traded in lots of US$50 million, but only once or twice a year, he said.

…read more
BNM saga reawakened
6 June 2012 – The Sun

The subsidised “privatised” Senai-Desaru Expressway

One of the privatisation project covered by the 2010 auditor general’s report is the Senai Desaru Expressway Project in Johor. The purpose of this 77 km highway is to link Johor Bahru to the Desaru tourist areas. A concession company was appointed to build, collect tolls, operate and maintain the highway during the concession period.

The agreement was signed between the government and the concessionaire in July 2004. Construction is supposed to take 3 years and should have been completed in 2008. However, due to various difficulties three extensions had to be given until Dec 31, 2010 for it to be completed.

The cost to build the highway is RM1.37 billion and the original estimate of land acquisition cost was RM365 million which means the original total cost is RM1.735 billion.

Cost to build highway: RM1.37 billion
Land acquisition cost: RM0.365 billion
Total cost: RM1.735 billion

The interesting thing is although this project is privatised, the land acquisition cost is fully borne by the government!

And the more interesting thing is that the land acquisition cost “has increased from RM365 million to RM740.60 million due to payment for compensation that exceed the market price, high injurious affection and severance payments and interest payment of 8% due to payments not made within the stipulated period.”

So now what is the total cost of the highway? RM2.11 billion out of which 35% is paid for by the government (which means the taxpayers).

Cost to build highway: RM1.37 billion
Land acquisition cost: RM0.740 billion
Total cost: RM2.11 billion

Something is not right. The taxpayers contribute RM740 million to have this highway built but the public will still have to pay toll to use the highway for 33 years. Yes, the concession company is given the right to collect toll for 33 years.

OK the government will get a share of the profits – but only AFTER 15 years and only gets 20% of the profits! This doesn’t sound like a good deal for the country. If the government want to privatise the highway, privatise it all the way and let the concessionaire pay the full costs including the land acquisition. Otherwise, why privatised?

Just like the other highway concession agreements, the agreement for this subsidised “privatised” Senai Desaru Expressway probably contains some interesting details. For example, is the concessionaire guaranteed a profit? If the tolls collected are not enough will they get any compensations?

Apart from the doubling of the land acquisition cost, the auditor general’s report also highlighed the following shortcomings

– The project was not in accordance with the specifications causing damages to the road surface. Some stretches of the highway were built to less than the minimum depth of 95mm.

– The road surface is undulating at certain stretches and erosion-prevention measures at five bridges over rivers have not been incorporated.

– The highway is still considered “unsatisfactory and a danger to road users.”

– The concession agreement did not specify any liquidated and ascertained damages to be imposed in the event of delays. Aren’t these standard clauses in such agreements?

The concessionaire is Senai Desaru Expressway Bhd (SDEB) a company incorporated by Ranhill “which has long been described as UMNO-linked”.
The other main shareholder of SDEB is Yayasan Pendidikan Johor (YPJ) an arm of the Johor State Government.


Get every new post delivered to your Inbox.