For decades, the vehicle fleet management company Spanco Sdn Bhd held a lucrative contract to be the exclusive provider of saloon vehicles for the Federal Government. On April 3, however, its executive director and chairperson Robert Tan Hua Choon was charged with allegedly cheating the government when the contract expired and a new concession was offered via open tender.
According to the Companies Commission’s records and as stated in press reports, Spanco’s shareholders are Jati Rata Sdn Bhd (46 percent), Tan (24.65 percent), his children Tan Han Chuan (14.67 percent) and Tan Ching Ching (9.68 percent) and Minhat Mion.
Company Jati Rata is owned by Cayaria Sdn Bhd (45 percent), Mohtar Abdullah (27.5 percent) and Shahrin Osman (27.5 percent), based on documents filed in February 2024. (This was reported by Malaysiakini on 6 April 2024). Azman Idris, Peter Lim, Md Raus Sharif, Shahrin and Han Chuan are listed as Spanco’s directors. The record states that Spanco was incorporated on Aug 16, 1988.
Since January 1994, Spanco held an exclusive 25-year concession agreement with the Government to provide vehicles ranging from official cars for cabinet members, cars for the motor pools of government departments, and police patrol cars.
Its website claims to have a fleet of over 13,000 concession vehicles and a network of more than 400 service centres. In 2015, it was reported that the Government - Spanco’s only customer - was paying RM221.66 million a year to rent 10,963 Proton cars. They comprise seven different models ranging from RM973.84 per month to RM3,288.84 per month. The first concession agreement came about amidst the government’s privatisation drive in the 1990s. This entailed the government selling its fleet of 40,000 vehicles to Spanco, which would maintain it and lease it back to the government.
In April 1994, the de facto law minister rportedly justified the move as being cheaper than the previous system for leasing vehicles. According to him, it would only cost the government RM5,000 a month to lease a Mercedes Benz that would be returned and replaced with a new one every four years, compared to RM17,000 to RM21,000 to lease it from another company.
The contract reportedly came with a clause stipulating that the government has to pay RM400 million if it terminates the contract before it expires. The contract expired at the end of Dec 31, 2018, prompting competition to bid for a new contract. The new contract is for 15 years involving about 12,500 vehicles estimated to be worth RM300 million annually starting from the fifth year. Eight companies made submissions in response to the government’s request for proposals for the concession agreement, while Spanco’s first contract was pending the outcome of the open tender.
Bidders for the new contract included Spanco, a partnership between DRB-Hicom Bhd and Sime Darby Bhd, a partnership between Berjaya Group and Naza Group, Samling Group, Comos, and Go Auto. Berjaya-Naza consortium Cekap Urus Sdn Bhd was initially awarded the contract and was issued a letter of intent (LOI) by the Finance Ministry in 2018, because it was the lowest bidder. However, after Muhyiddin Yassin became prime minister, the LOI was terminated and the tender was awarded to Spanco instead for RM700 million more.
The charges against Tan (of Spanco) pertain to a different aspect of the bidding process for the new contract. According to the charge sheet against him, he had cheated the government by claiming in the tender documents that at least 30 percent of Spanco shares are bumiputera-owned. This supposedly took place between Feb 27 and Feb 28, 2019, in the Finance Ministry’s tender room.
The move supposedly prompted the Finance Ministry to award a RM3.97 billion contract to Spanco where it otherwise wouldn’t have done so. The charge is framed under Section 420 of the Penal Code. It is punishable with between one and 10 years imprisonment, whipping, and a fine. Tan of Spanco has claimed trial.
The process of awarding contracts is well documented. The problems arise when there is political “interference”. The Madani Government could have resolved this situation without court action if the aggrieved party could be parcelled a part of the contract or such similar arrangement. But to move forward, real questions remains, why is it so hefty?
Reference:
What is Spanco and what do they do? Koh Jun Jin, 6 April 2024, Malaysiakini
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