(Part 3) of speech by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lin Kit Siang, in the Dewan Rakyat on the Royal Address debate on Wednesday, April 28, 1993
DAP calls on all Cabinet Ministers to publicly declare their assets to set high moral and ethical standards to all sectors of society
The Prime Minister, Datuk Seri Dr. Mahathir Mohamed, yesterday called for high moral moral and ethical standards were low, “sooner, rather than later, such a society will destroy itself.”
It is significant that the Prime Minister was addressing his remarks to businessman as he was addressing the seminar on “Business ethics: Leadership and corporate responsibility” jointly organized by PNB Corporate Development Sdn. Bhd. and the Harvard Club of Malaysia.
However, it would be more pertinent for the Prime Minister to also address the political leadership.
Can we claim for instance that the highest political leadership in government, as represented by the Cabinet, sets the highest moral and ethical standards in the country?
We do not have to ask the people, let us have a secret vote in the House as to whether the Cabinet sets the highest moral and ethical standards in the country – and I am sure the result is a thumping no.
We have a Cabinet Minister who had been investigated for a year by the Anti=Corruption Agency, and who seems to regard it as a badge of honour!
We have another Cabinet Minister whose own integrity had been challenged by his own party leaders in the run-up to party elections which as subsequently aborted, and who do not feel any moral or ethical compulsion to clear his own name.
We have Cabinet Ministers who have never heard of the “Look East Policy” who regard scandals in their Ministry as part of their inalienable Ministerial rights, and there seems to be a competition among Minister as who can chalk up the scandals in their Ministry.
Unless and until the Cabinet is recognized and acclaimed by all sectors of society as setting the highest moral and ethical standards in society, no amount of the speeches like the one made by the Prime Minister yesterday is going to have any effect.
In view of the Prime Minister’s speech yesterday, let the Cabinet set the highest moral and ethical standards and for a start, DAP calls on all Cabinet Ministers to publicly declare their assets.
On Sunday, when the Minister for Energy, Telecommunications and Posts, Datuk Seri S. Samy Vellu spoke of mega-projects of international standards which would be undertaken by the government in the near future, it conjured images of mega-scandals and mega-kickbacks unless there is a satisfactory system of checks and balance to entrench the principles of public accountability, responsibility and transparency.
DAP calls for establishment of a Parliamentary Committee on Corruption and Malpractices headed by an Opposition member to inquire into all mega scandals, tender irregularities and malpractices
DAP calls for the establishment of a Parliamentary Committee on Corruption and Malpractices headed by an Opposition member to inquire into all mega scandals, tender irregularities and malpractices as all existing mechanisms, checks and balances had failed to make a serious dent on the problem of graft and corruption – which has not only become more rampant but reached a mega scale unknown in Malaysian history.
The Cabinet Committee on Corruption and Malpractices headed by the Finance Minister, Anwar Ibrahim, has gone into hibernation, and in any event, cannot make any impact when the Chairman is unable to give a satisfactory and acceptable accounting of the Bank Negara foreign exchange losses ranging from RM10.1 billion to RM12.8 billion.
The Anti-Corruption Agency has also failed to measure up to public expectations although the Director=General Tan Sri Zulkifli Mahmood is very serious about the fight against corruption and has done a lot to raise the morale of the ACA officials.
However, unless the ACA could pass the acid test in its investigation into the MAIKA Telekom shares hijacking scandal involving the MIC President and the Minister for Energy, Telecommunications and Post, its credibility and integrity, which have come under a cloud, would suffer a grievous setback and all the good work Tan Sri Zulkifli had put into ACA would be wiped out.
What is the outcome of the year-long ACA investigations in Samy Vellu and the MAIKA Telekom shares hijacking scandal?
Recently, the Anti-Corruption Agency director-general, Tan Sri Zulkifli Mahmood, urged the Malaysian public to collectively shoulder the responsibility of wiping out corruption to preserve and enrich their way of life and contribute towards attaining Vision 2020.
He reminded Malaysians that they had a responsibility to perform and should be aware of the dire consequences of corrupt practices. Economic and social system of the nation would collapse if corruption was allowed to thrive and be left unchecked.
The Malaysian public wants to co-operate with the ACA to combat corruption in high political places, but such co-operation would only, be forthcoming if it enjoys full public confidence in its integrity, credibility and effectiveness.
I want to ask in this House what is the outcome of ACA investigations into Samy Vellu and the MAIKA Telekom shares hijacking scandal, as it coming to one full year since I raised this issue in Parliament last April – which resulted in my arbitrary and undemocratic suspension from attending Dewan Rakyat for nine months until the end of last year, and I hope a definitive and categorical reply will be given this time and that there would be no more “political Tai-Chis”.
What is Finance Minister’s stand on the tender irregularities in the RM200 million Mobikom tender exercise
The Finance Minister should explain his stand on the irregularities in the RM200 million supply contract for Mobkom, the third cellular-phone operator. It has been alleged that after the shortlisting of three of the six bids for a supply contract, changes were made to specifications of the supply contract.
Although the RM200 million Mobikom tender is not a government tender, public funds are involved because the people, through the Ministry of Finance, are the majority shareholders in thereof the Mobikom consortium companies.
The scandal of the RM387 million difference between negotiated bid and open tender
I understand that in 1992, the Minister for Energy, Telecomunications and Post, Datuk Seri Vellu Tenaga Nasional Bhd to negotiate directly with ABB for the conversion of its gas turbines at the Paka and Pasir Gudang Power Stations into combined cycle plants.
The ABB negotiated price inclusive of all fees was RM 910 million. TNB and the Ministry of Finance however refused to accept this ABB negotiated bid despite pressure to conclude the contract on the ground of impending energy crisis, and TNB was directed to invite competitive bids for the same project known as TNB 341892 Paka/Pasir Gudang Project.
Will remember that the acquisition of the original ABB gas turbines for about RM1 billion was questioned in this House by DAP MP for Petaling Jaya, Dr. Kua Kia Soong, in Januart 1991, and although Datuk Samy Vellu promised in the Dewan Rakyat on 29th January 1991to give a fuller explanation in writing to Dr, Kua Kia Soong and the TNB scandal raised by them, this, had not been done.
During the January 1991 debate, Datuk Samy Vellu had defended the RM1 billion TNB purchase of the gas ABB-NET turbines, claiming that they were each over 100 megawatts.
Now, I understand that these ABB turbines are 87-mw units, but could also produce 78 megawatts and this under-capacity had not been rectified. The conversion of the gas turbines to combined cycle plants is to add a steam turbines and then spend another RM910 million just to get 30 per cent extra capacity.
Be that as it may, tenders for the conversion project were opened on Thursday, 11th March 1993, and the prices were in accordance with TNB’s estimate of Rm550 million.
The bidders and their prices were:
1. Transfield/Fuji RM523 million
2. Mitsubishi RM539 million
3. Parsons RM564 million
4. Sankyung RM624 million
5. Sumitomo RM637 million
6. ABB RM685 million
From these competitive prices from an open tender, it is obvious that there is a colossal difference of RM387 million between the RM910 million negotiated bid by ABB and the lowest tender bid of RM523 million put in by Transfield/Fuji.
Even ABB reduced its price by RM225 million, coming down to RM685 million, when negotiated bid was replaced by open tender.
These competitive prices from an open tender has illustrated why negotiated contracts are clearly against the interests of the people and country. Parliament is entitled to a full explanation for the vast difference in the ABB negotiated price of RM910 million from the open tender bids, and the position of the Minister for Energy.
This would be an apt subject for investigation by the parliamentary Committee into Mega-scandals and Malpractices to determine why there could be such a vast difference in ABB’s negotiated price and the open tender bids, whether ABB should be barred from all future government tenders, and who are the people in government in collusion with ABB.
Are Japanese contractors and manufacturers positioning to monopolise the RM2.3billion Kapar III Power Plant Project?
I now come to the award of the consultancy contract for the RM2.1 billion 1,000-megawatt Kapar III Power Plant to Electric Power Development Corporation International (EPDCI) of Japan. This consultancy contract is worth RM40 million plus reimbursable expenses. If we go by EPDCI claims on Phase II of the same project, where they were also the consultants, the total fees for Phase III will be in excess of RM60 million.
Explanation is clearly called for as to why EPDIC was awarded this contract although it was evaluated No. 4 in the shortlist, after Black Veach International, Tata and Snowy Mountain of Australia.
All these three consultants were evaluated as to be technically more competent than EPDCI by Tenaga Nasional Bhd, but Japanese financial muscle and political lobbying seem to have won the day against technical matters.
As a result, there is strong suspicion in the industry that EPDIC would favour Japanese manufacturers and contractors. I understand that the evaluation of the various contracts (at least six in number) are all done in Japan, emphasizing that EPDCI does not have facilities to have facilities to have a joint evaluation with TNB. May be, the tenders would have to be submitted in Japanese!
It is most extraordinary that after building 20-odd power stations and their evaluations, the evaluation of Kapar III power plant project cannot be held in Malaysia. Are the Japanese manufacturers going to assist in this evaluation?
EPDIC was the consultant of the Kapar Phase II project. What has happened to the transfer of technology or has that been degenerated into a mere catchphrase to be included in documents to clinch mega-projects?
I understand that since their appointment early this year, EPDCI has managed to write specifications to contracts worth in excess of RM1.5 billion within three months. Suspicion is rife in the industry that these tender documents were obtained from specifications from Japanese manufacturers, thus making international competition a mockery, as other manufacturers would find it difficult or expensive to comply.
Tender documents for Boiler and Turbines were issued on 5th April 1993. On close examination, I am advised that it confirms that the specifications were tailor-made for Japanese manufacturers.
Another curious factor in this project is the so-called untied OCEF (Overseas Economic Cooperation Fund of Japan) loan of RM40 million – which is a drop in the ocean of the RM2.1 billion Kapar III power plant project. It would appear that through this untied RM40 million loan, the Japanese EPDCI will ensure total monopoly of contracts to Japanese manufacturers and contractors.
The speed and haphazard manner in which the pre-qualifications are executed leave a lot to be desired. On the piling contract for the project, 32 firms applied and 32 were pre-qualified. In such a case, why was a pre-qualification called for in the first place.
On the plum boiler and turbine contract worth in excess of RM1.5 billion, there are six to eight manufacturers in the world for 500MW machines, yet all those who paid RM6000, totally 16 in number, were pre-qualified. Surely EPDCI did not have to be paid to carry out such a pre-qualification.
There is strong suspicion among the non-Japanese Competition that the leader Japanese boiler and turbine manufacturers including representatives of various trading houses frequently meet EPDCI officials for briefing on the latest developments on the contracts.
As a result, there is strong belief that Phase III would be a repetition of Phase II with Boiler going to IHI (Ishikawajima Heavy Industries), the Piling to Hazama, the Civil Works to Japanese Development Corporation (JDC) and Mitsubishi getting the turbines.
What makes the situation blatant is that the specification deliberately places the coal-handling contract together with the boiler contract. This is normally a separate contract, and lumping it together would be worth RM1 billion.
I understand that at this juncture, IHI is the only manufacturer in the world to make both boiler and coal-handling systems. This would give them an unfair advantage vis-à-vis the others, and the irresistible conclusion is that specifications were deliberately written in this way by the Japanese consultants for the Kapar III power plant.
The question therefore is whether the Japanese manufacturers and contractors are positioning themselves to monopolise the RM2.1 billion Kapar III power plant.
A full review of the appointment of Japanese consultants and their impartiality is also warranted.
Why no open tender for the consultancy contract for the new high voltage 500 KV transmission line
I next come to the consultancy contract for the new high voltage 500 KV transmission line and want to know why TNB had abandoned its tender exercise.
In September 1992, TNB invited consultants to submit pre-qualification documents to select one to undertake engineering design for the 500KV transmission line, which is expected to cost more than RM1 billion, and imposing stringent qualifications.
This pre-qualification was submitted in September 1992 and by December 1992 a short list of nine consultants was prepared and submitted to the Board.
These nine were supposed to be issued tender documents, and on the basis of their submission, one of them was to be selected for the consultancy contract based on the basis of technical and financial merit.
However, the Board decided to abandon the tender process altogether on the grounds of lack of time. In March 1993, the pre-qualification process was aborted and one consultant, Black Veach international (BVI) together with Ranhill Bersekutu (RB) was chosen for the TNB to negotiate for the consultancy contract.
Without the benefit of a tender process, BVI and RB submitted a price of RM32 million plus reimbursable expenses. This would mean that the final cost to TNB could be in excess of RM50 million, which does not include claims and extensions of work.
As a sweetener, BVI has secured the assistance of the United States Government to sponsor two TNB engineers to the USA for three weeks’ training.
There seems to have been a deliberate delay in the pre-qualification process, as tenders could have been issued and evaluated by March and the successful biddr started work by now
I understand that the budget and costing of other consultants are approximately RM15 million.
Last Saturday, TNB made a public announcement that the 500 KV transmission line would cover the west coast of the peninsula, spanning from Penang to Johore.
I understand the reason the 500 KV transmission line was first conceived was to link Lumut in Perak to Ipoh then to Kuala Lumpur and finally to Yong Peng in Johore to enable the second Independent power Producer (IPP), Sikap Power, to transmit its power.
There should be a full and proper adult, taking all factors into consideration, whether undue advantage is being taken of the national energy crisis to enter contract arrangements with independent power producers which are in the long-term inimical to the interests of the consumers and the nation.
For instance, I understand that it will cost TNB minimum extra cost of RM200 million a year as result of the contract it had entered with the first Independent Power Producer, YTL Power Generation Sdn. Bhd.
Furthermore, YTL would be using TNB land and other facilities to build its two power stations, one in Paka, Terengganu and the other in Pasir Gudang, Johore.
DAP calls for a Commission of Inquiry into the entire the National Energy Crisis in Malaysia
The National Energy Crisis in Malaysia is one of the most scandalous chapters in Malaysian government.
Firstly, the Minister of Energy, Telecommunications and Posts, Datuk Samy Vellu, allowed the country to be plunged into a national energy crisis. Then because the country is facing a national energy crisis, it is used as a justification to abandon all checks and balances to commit the country to mega-projects involving billions of ringgit.
Samy Vellu must accept full and personal responsibility for the national energy crisis. In August 1991, he headed a special task force precisely with the mission to save the country from a national energy crisis.
As Samy Vellu announced it himself, the task force would look into the short and long-term energy needs of the country, devise ‘step-by-step’ plans and strategies for the next five years to meet the increasing demand and supply and map out contingency plans to overcome the expected shortfall in the supply of electricity.
Samy Vellu said:” If we do not anything urgently now, there will be blackouts in the middle of next year because of a short – fall is expected by then.”
Samy Vellu and his task force has failed in its mission, but we do not see Samy Vellu accepting any responsibility for the national energy crisis, but blaming everybody else except himself!
There must be a full Commission of Inquiry into the national energy crisis, which should ensure in particular that the national energy crisis is used to create proper accountability and transparency.
All the issues which I had mentioned should be investigated by the Commission of Inquiry, to ensure that mega-projects is not the womb for mega-scandals taking Malaysia into Vision 2020.
Of late, there seems to be a general practice not confined to the Ministry of Energy, Telecommunication and Post where emergency situations are allowed to occur in mega projects by not taking adequate preparatory steps beforehand so that a crisis atmosphere is generated which would justify the disregard of normal procedures and processes, such as the negotiated contracts instead of open tender on the ground that the mega-project is running out of time.
Liong Sik should explain whether it is true that RM6 billion worth of preliminary works for the International Airport at Sepang had been award without open tender
There are indications that this is happening in many mega-projects in the country, including the Kuala Lumpur International Airport at Sepang and the Commonwealth Games facilities.
In this connection, I call on the Transport Minister, Datuk Dr. Ling Liong Sik, to explain whether it is true that RM6 billion worth of preliminary works for the Kuala Lumpur International Airport worth of preliminary works for the Kuala Lumpur International Airport in Sepang had been farmed out without open tender – and what safeguards are there to ensure that the public interest is safeguarded that to ensure those given these RM6 billion worth of preliminary works are most competitive.
Or has this become the most profitable source for the donations which the MCA had been able to amass, such as the RM25 million Tunku Abdul Rahman College expansion project, the RM20 million for its Langkawi Project, not to mention other MCA funds?
Why is the Treasury overruling the three appeals of Penang Port Authority in the award of the RM43 million Gantry cranes contract for North Butterworth Container Terminal to give it to GEC of Australia which has no track record?
There are so many irregularities and improprieties in government that some satisfactory mechanism must be established to check against abuses of power and misuse of public funds.
For instance, I called for an explanation as to why the Treasury is overruling the three appeals submitted by the Penang Port Authority and is awarded the RM42 million contract for the three Gantry cranes for North Butterworth Container Terminal to GEC of Australia which did not meet the specifications of the tender.
In 1991, tender was called for the three Gantry Cranes and the Penang Port Tender Board recommended Takraf of Germany, which met all the specifications.
This was however overruled by the Treasury which was in favour of GEC of Australia although GEC of Australia was never a crane manufacturer. It has no proven track record as required by the specifications and a check with all the ports in Australia showed that it had not supplied cranes to Australian ports.
As the period for delivery is 20 months from contract, this will mean that when the North Butterworth Container Terminal is completed in June 1994, this will mean that when the RM300 million North Butterworth Container Terminal would have no cranes to operate for at least six months.