Several exceptions were noted in the defence by the Penang Chief Minister on the direct negotiation deal struck by PDC with Umech Construction Sdn Bhd for the sale of state-owned land in Byram, South Seberang Perai.
Again, the much abused use of the sentence ‘The selection was also made following proper procedures and a thorough due diligence process was carried out’ was used.
Of course, a thorough and transparent process was undertaken.
No one doubted that.
Every Malaysian was also led to believe that Kumpulan Wang Amanah Pencen (KWAP) carried out a thorough and transparent process in approving the loan of RM4 billion to SRC International Ptd Ltd.
But in the trial, during the cross examinations, a different picture emerged of the so-called thorough and transparent process claimed by the government under PM6 those days.
It was a revelation for him to say that direct negotiation projects are one of the methods to secure favourable deals.
Favourable deal for who? The state and people of Penang?
Even if the project is initiated by the proposer, it should not be negotiated directly.
The best outcome should be that the proposer is given a first right to participate and renegotiate their offer if it is not the highest provided the differential prices between them and the top 3 are not substantial and is only marginal.
Literature across the world will confirm that the closed nature of direct negotiations creates opportunities for dishonest and partial conduct and is more likely to lead to allegations and perceptions of corrupt conduct.
Direct negotiations are highly sought after and it is not a surprise if MACC can confirm that most of the investigations undertaken involve attempts to avoid negotiations in public procurement.
The corruption risks associated with direct negotiations are significantly higher than those associated with open processes such as tendering and other forms of market testing. Direct negotiations can also be detrimental to the public interest; for example, by undermining the potential for government to realise the full value of public assets.
According to their agreement, Umech is obligated to notify and obtain PDC’s approval in the event of any changes in the company’s shareholding structure.
The Penang CM said these changes occurred before the agreement was signed and thus it is beyond PDC’s control.
PDC has written to Umech seeking clarification on this and will determine its next steps after reviewing Umech’s clarification.
In this instance, the power is in the hands of the state.
The state through PDC can object and reject the change in shareholding and terminate the agreement.
The state has no obligations to consent and agree to the change of shareholding.
Does the state intend to concur with the change of shareholding or consent to it?
The Penang CM said the state government has reviewed Umech's proposal and found that they are financially capable of meeting its obligations as set out by PDC to them.
Malaysia Airport Holdings Bhd (MAHB) said the same thing about Pestech Bhd who won the tender for the installation of the aerotrain at KLIA.
Eventually, MAHB has to terminate the contract and initiate the process of securing a reliable third-party contractor to undertake its KLIA aerotrain replacement programme, in an effort to prevent further delays in the completion of required infrastructure projects.
The giveaway by the Penang CM was the involvement of Sunway, a large conglomerate listed on the Main board of Bursa Malaysia.
In case those in the state government and PDC are not aware, Sunway Berhad and Sunway Construction Group Berhad (SunCon) were among the Top 30 companies with best corporate governance disclosures out of total 866 public-listed companies (PLCs) in Malaysia assessed by MSWG in 2019.
As their President Chew Chee Kin of Sunway Berhad said at the award, corporate governance goes beyond regulations and compliance at Sunway.
They viewed it as the foundation for sustained competitive advantage that strengthens our business as well as management of sustainability-related risks.
And both companies again repeated the feat in 2020.
With such a stellar reputation, it is inconceivable for Sunway not to undertake a thorough and extensive due diligence on Umech and probably obtained official confirmation from the state government and PDC that the change in shareholding would not affect the sale to Umech by PDC before they make the official announcement.
The CM said PDC has written to Umech seeking clarification on this and will determine its next steps after reviewing Umech’s clarification.
Come on la….the ordinary rakyat are not like those of the yesteryears lapping up every word and nonsensical answers given by the politicians in this country anymore.
The ordinary rakyat is also waiting for the CM’s clarification and will determine their next steps in the next General Election.
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