Challenge to Dr. Mahathir to set up a Commission of Inquiry into the UEM contract for the North-South Highway to prove that there is no unethical conduct or conflict of interest in the award, and I offer to chair the Commission of Inquiry to clear the administration’ s name if everything is above board

Speech by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, at the DAP Federal Territory Protest Ceramah on the North-South Highway held at Federal Hotel, Kuala Lumpur on Friday, 14.8.1987 at 8 p.m.

Challenge to Dr. Mahathir to set up a Commission of Inquiry into the UEM contract for the North-South Highway to prove that there is no unethical conduct or conflict of interest in the award, and I offer to chair the Commission of Inquiry to clear the administration’ s name if everything is above board

At the opening ceremony for the Air-Keroh Senawang Highway yesterday, the Prime Minister, Datuk Seri Dr. Mahathir Mohamed, challenged critics of the Government to prove their claim that certain people have profited through fraudulent means in the awarding of the contract for the privatization of the $3.4 billion North-South Highway (NSH).

He said: “Accusations that I have received money from the privatization of the highway project are outright lies.”

The Malaysian public are expecting me to respond to the challenge from Datuk Seri Dr. Mahathir for they assume that this challenge was issued to me, as I had been very articulate in public criticizing the North-South Highway privatization contract of United Engineers Malaysia (UEM).

I do not run away from a challenge, but I am not responsible for things I did not say. I have not said that Datuk Seri Dr. Mahathir had received money from the UEM privatization contract for NSH, nor did I accuse the government of ‘fraud’ in the NSH privatization contract.

I stand, however, by my allegation that there are irregularities and improprieties in the award of the NSH privatization contract to UEM, especially as there is a prime facie case of unethical conduct and conflict of interest in the tender because of the dual and conflicting roles of Dr. Mahathir Mohamed, Ghaffar Baba, Daim Zainuddin and Sanusi Junid in the Government and Cabinet on the one hand, and in UMNO and Hatibudi Sdn. Bhd (the UMNO investment arm which controls UEM) on the other.

I challenge Datuk Seri Dr. Mahathir to set up a Commission of Inquiry into the UEM contract for the NSH to prove that there is no unethical conduct or conflict of interest in the award, and I offer to chair the Commission of Inquiry to clear the administration’s name if everything is above board in the tender award.

In Parliament on July 10, 1987, I had specifically asked whether the First Law Office of the Crown, the Attorney-General and Public Prosecutor, Tan Sri Abu Talib Othman, had been consulted as to whether Section 2 of the Emergency (Essential Powers) Ordinance No. 22 of 1970 on corrupt practice, had been infringed by the Prime Minister, Deputy Prime Minister, the Finance Minister and the Agriculture Minister because of their conflicting roles in Government and Cabinet on the one hand, and in UMNO and Hatibudi Sdn. Bhd. on the other.

‘Corrupt practice’ is defined by the Ordinance to mean any act done by the Member of the administration “whereby he has used his public position or office for his pecuniary or other advantage.”

The series of High Court cases, from Haji Abdul Ghani bin Ishak v Public Prosecutor, Nunis v. Public Prosecutor and Public Prosecutor v. Dato Haji Mohamed Muslim bin Haji Othman have made it very clear that the word ‘advantage’ in the Ordinance is to be “construed widely”, that a public officer is caught by this Ordinance even if he did not get a direct pecuniary gain or benefit, provided he gets “something which is personally beneficial to him even though someone else may derive direct benefit from it.”

In Nunis v. Public Prosecutor, Federal Court judge (now Chief Justice) Abdul Hamid, gave the illustration in the case in question:

“It is a clear from the evidence that the respondent abused his public position when he assisted or gave aid to his brother-in-law. It was beneficial to him personally that be so doing he could provide benefits to close members of his family. It was undoubtedly a comfort to him to be able to effect financial gain to them or their company. To my mind, an act on the part of the respondent was an act of showing favour to his sister’s husband or the brother-in-law to effect financial advantage to him.”

The question here is whether there is a conflict of interest in the UEM contract in favour of a UMNO leaders who are also Ministers decided the contract in favour of UEM?

I had raised this same point with the Works Minister, Datuk Samy Vellu, when I met him on July 16, but who said the matter would only be referred to the Attorney-General when the contract had been finalized. Has the matter been referred to the Attorney-General, and his opinion received, or is the UEM contract going to be signed regardless of the legal opinion of the Attorney-General?

In Parliament, Datuk Samy Vellu was asked about the million-dollar sale of MIC lotteries to UEM, but there has been no direct answer or full explanation.

A government which boasts of a ‘clean, efficient and trustworthy’ administration must also explain how a company which had accumulated losses of $90 million from 1981-1985, suspended from the stock exchange, could be awarded a $3.4 billion privatization contract which would gross a total amount of $54 billion in tolls in 30 years under the original terms?

These and many other questions cry out for answer, and the Prime Minister must answer them, and the best way will be through a full-scale public inquiry into the UEM contract.

I do not deign it worthy to answer the Prime Minister’s accusation that my criticisms of the NSH project stemmed from ‘the politics of frustration’, and that I oppose economic development. I do not think any fair-minded Malaysian will pay attention to such ‘emotional outburst’.

His other assertions, however, cannot go unchallenged. Dr. Mahathir said the people should not be misled into believing that the toll rates were too high, as in some countries like Japan, motorists have to pay 13 sen per km. I say this is completely no comparison. According to the World Development Reoport1987, the per capita GNP of Japan in 1985 was US$11,300 while Malaysia’s stood at US$2,000. Dr. Mahathir should use Japan’s example to justify the toll his government is charging when he has succeeded in increasing Malaysia’s per capita GNP by more than 5 times!

Dr. Mahathir said that DAP’s call that Government complete the remaining sections of the NSH would mean that the government will have to cut allocations for schools, hospitals, clinics and others. This is incorrect.

In my statement on July 18, 1987 suggesting that the Government take over the construction of the rest of the NSH, I had given statistics and figures to show that on the original terms of the UEM privatization contract, it would be cheaper and completely within the government’s means to do the project itself.

If the Prime Minister is interested in my views, I am prepared to meet him to show him the statistics and figures.

The Prime Minister said the Government stood to gain from the NSH project as the contractor for the entire NSH, UEM, would have to pay the 40 per cent corporate tax. This applies to all companies and whichever contractor which is awarded the privatization contract.

But the Prime Minister did not mention that UEM would get a 10-year tax holiday, and even after this period, is entitled to tax exemption until it had set off all its cumulative losses by its profits. I had calculated in Parliament that under the original terms, the various tax exemptions UEM would get would cost the nation and people $2,650 million. Surely, this is not in the best interest of the nation and people?