Monday, May 29, 2006

Analysing Matrade Fiasco

Samy Vellu finally relented; he confirmed that the government can't sue the directors of PISB as it is now insolvent.

To this, Brendan Periera had to say: Welcome to the world of Perangsang International Sdn Bhd (PISB), the contractors who clinched the deal to build the Matrade building.

Brendan recalls the History of the Fiasco

In 1993, the PWD called for a limited tender to build the Matrade building and estimated that it would cost RM175 million and take 125 weeks to complete.

After studying the 14 bids, PWD recommended that Ireka Construction be given the job. The company promised to complete the job in 138 weeks for RM157 million. The recommendation was forwarded to the Finance Ministry and was promptly dumped.

The ministry wanted the 14 companies to re-submit their bids. But two days after it issued that directive, the Finance Ministry surprisingly ordered PWD to negotiate directly with PISB.

Why this company was given the contract still stumps the people at PWD.

From the start, there were problems. PISB obtained the development order late and it needed three extensions, delaying the completion by 686 days. When it completed 98 per cent of the project in 1999, the PWD discovered cracks in the structure and ordered PISB to carry out repairs. The contractor refused, saying that it had carried out the project according to specifications.

PWD and the Finance Ministry — now under a new minister — obtained the services of Arup Consultants. Even after the consultants concurred with PWD’s findings on the structure of the Matrade building, PISB refused to carry out remedial work.

At this point, you have to sit back, digest what has happened and ask some elementary questions.

Question number 1: Why wasn’t PISB or its directors sued in 1999 for not doing their job competently? Why wait until now to visit the possibility of taking action?

Question number 2: Were the terms of the contract so generous that the contractor could walk away without agreeing to do remedial work?

Brendan posed this question to ask: Can the money be recovered?

According to Brendan: There is a better chance of Malaysia qualifying for the 2010 World Cup than PISB paying any compensation.

And here is why: PISB was sold off to Tajuk Modal on July 19, 2004, for RM2. PISB was renamed Tajuk Construction Sdn Bhd and the latter was wound up on Jan 18 this year. In short, PISB doesn’t exist anymore. In any case, it would have been tough to go after the directors of PISB. The contract was signed with the company and unless the directors gave any personal guarantees, they would not be liable in a personal capacity.

Some options appear available to the authorities.

One: Lodge a police report, find out if the decision by the Finance Ministry was above board and pursue any wrongdoing — no matter where it leads.

Two: Urge the Selangor Government to make good the RM95 million owed to the Federal Government. After all, before it tanked, PISB was a subsidiary of the State’s investment arm. Surely, the people at Shah Alam have a moral obligation to right this obvious wrong.

Would the government learn a lesson or two from this fiasco?

Or, will history repeat itself, ...sooner rather than later?

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