The Minister of
Finance reported on Monday, 24 August 2020, that the PH Government had awarded
RM6.61 billion contracts (101 in number) by way of direct negotiations. This
was during the 22 months PH was in power. Is that true? And under what criteria
could a Government conduct direct negotiations?
The Ministry of
Finance (“MOF”) has five conditions for direct negotiations:
i.
Urgent
need;
ii.
Compatibility
issues;
iii.
One
supplier for product/service;
iv.
Security/strategic
importance; and
v.
Bumiputra
party has fulfilled all requirements
Perhaps, one
could add that if intellectual property rights or real property rights are
unique for the project; competitive process is too expensive; and, where competitive
process will fail to produce a satisfactory offer into the above list. (These
are conditions for consideration and not part of the MOF’s current criteria).
The term “direct
negotiations” refers to exclusive dealings between an agency of the Government
and a counterparty without undergoing a competitive process. The closed nature
of direct negotiations can create opportunities for dishonest (or partial
conduct) with allegations (or perceptions) of corrupt conduct. Measures could
be taken to mitigate the risk of corruption and ensure adequate levels of
integrity.
There were twenty
Ministries responsible for the 101 projects that were awarded via direct
negotiations, from May 2018 to February 2020. Of this, five Ministries had
projects worth more than RM100 million in total.
|
No.
|
Ministry
|
No. of
Contracts
|
Value (RM’m)
|
|
1
|
Ministry of
Transport
|
4
|
4,478.1
|
|
2
|
Ministry of
Defence
|
6
|
900.9
|
|
3
|
Ministry of
Home Affairs
|
8
|
517.7
|
|
4
|
Ministry of
Communications and Multimedia
|
12
|
380.1
|
|
5
|
Ministry of
Housing and Local Government
|
2
|
170.8
|
|
Total
|
6,447.30
|
The total of RM6.45 billion constitutes 97.6% of the grand total of RM6.61 billion in question. Two ministries – Home Affairs and Housing and Local Government – have Ministers in the present PN Government.
Under the
Ministry of Transport (“MOT”), the
single largest project was the Klang Valley Double Tracking (Phase II) worth
RM4.475 billion. This project constituted 68% of the total of RM6.61 billion
listed under direct negotiations. The double tracking contract was originally
awarded by BN and PH negotiated down the price from RM5.3 billion to RM4.5
billion, or a “savings” of about RM800 million. The shareholders include LTAT.
Surely this must have cleared the Cabinet of that time!
Then the Ministry of Defence
awarded Airod Sdn Bhd (“Airod”) contracts worth RM670 million. Airod is owned
by NADI Malaysia, which is the vehicle of MOF (and Tan Sri Ahmad Johan).
Others include Datasonic Technologies
(RM270.7m), TM (RM251.2m) and MYTV (RM254.5m) -- a Syed Mokhtar company which
had its original award in 2014. If it is a GLC or a MOF-owned, then the
taxpayer still benefits. Otherwise, one could allege perceptions of the wrong
kind.
Whatever the
case, it seems the boomerang launched by MOF is coming home to roost! Couldn’t
the Minister review the direct negotiations contracts done by PH and that of BN
and presented how respectable PN is compared to the earlier administrations?
Reference:
1. Direct Negotiations: Guidelines for
Managing Risks, Independent Commission Against Corruption, New South Wales,
August 2018
2. Siaran Media, Menteri Kewangan Malaysia,
26 August 2020
3. The Star, 27 August 2020
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