RM6.3 billion Penang Undersea Tunnel SCANDAL

Lim Guan Eng, we hold you to your words

Issue #1 Penang govt-run Buletin Mutiara reported not an RM2 paid-up capital company

Chief Minister Lim Guan Eng, in the Buletin Mutiara published by your Penang state government dated 4 March 2013, the Penang State Secretary announced the shareholding of the Konsortium Zenith BUCG Sdn Bhd which was appointed as the special purpose vehicle (SPV) to undertake the massive undersea tunnel project was as follows:

Zenith Construction Sdn Bhd and China Railway Construction Corporation (CRCC) (70%)

Beijing Urban Construction Group (BUCG) (10%)

Sri Tinggi Sdn Bhd (10%), and

Juteras Sdn Bhd (10%).

In 2013, Lim Guan Eng, you even said in Chinese “this is a very serious project, we have awarded the contract to two giant construction firms from China namely CRCC which is famed for constructing the Qinghai-Tibet Railway Line and BUCG which is famous for the Beijing Olympics landmark Bird’s Nest Stadium.”

Again Buletin Mutiara reported that the evaluation of this tender was based on the technical strength and financial capability of the SPV, with its total collective paid up capital which your State Secretary said was RM4.6billion.

After the promise given by you, Penang people seem to believe what you have promised. They hold you to your words.

Issue # 2 BUCG & CRCC are NOT shareholders

Today, the Companies Commission of Malaysia (SSM) has it in black and white that the BUCG and CRCC have since disappeared. CRCC has never been, and BUCG is no longer a shareholder in the SPV.

We are in great shock because just a few days ago, CRCC went on record to deny ever being a shareholder or developer of the undersea tunnel SPV.

Why has the shareholding changed?

According to the announcement by the state government, the SPV has gone through the two processes of the so-called “open tender”.

1)    Pre-qualification

2)    Request for Proposal (RFP)

Look here, Zenith Construction Sdn Bhd was only less than 3 months old then, when your Penang state government invited it to participate in the pre-qualification.

On the second process which is the Request for Proposal (RFP), even more interesting is that the Consortium Zenith BUCG Sdn Bhd was only registered on 5 July 2012, a mere ONE (1) day before your Penang state government invited Consortium Zenith BUCG for the Request for Proposal (RFP) on 6 July 2012.

Yes Lim Guan Eng, you may argue that they formed the Consortium just 1 day before to make it to the tender. However, bear in mind that your State Secretary said the Consortium was selected based on their financial and technical strength of CRCC and BUCG.

The Penang State Secretary via Buletin Mutiara reported that the collective paid up capital of the SPV was RM4.6billion. But without the participation of CRCC and BUCG, the actual paid-up capital of the other components in the SPV is actually only RM8.2 million.

Video to insert the image of the companies strike out CCRC & BUCG & left with RM8.2mil

Company                                             Paid-up Capital (RM)

1)    Zenith Construction Sdn Bhd             3.5 million

2)    Sri Tinggi Sdn Bhd                            3.7 million

3)    Juteras Sdn Bhd                              1.0 million

Total                                                    8.2 million

Please explain why TODAY the shareholding of the SPV currently is as follows:

Zenith Construction Sdn Bhd (47.12%)

Juteras Sdn Bhd (0.75%)

Kenanga Nominees (Tempatan) Sdn Bhd (38.92%)

Vertice Bhd [formerly VOIR, the fashion company] (13.21%)

It is obvious the 2 giant construction firms are not part of the SPV now.  

Why has the paid-up capital of the SPV FALLEN from RM4.6 billion on 4 March 2013 to RM70.5 million today? Please explain

Lim Guan Eng, what say you?

Issue #3 An Acknowledgement of Commitment is NOT an Agreement

Lim Guan Eng, you proudly showed that you have the documents in “black and white”, declaring CRCC’s Acknowledgement of Commitment as an “agreement.”

Please explain, how did an Acknowledgement of Commitment become a legally binding “agreement”?

If the Acknowledgement of Commitment is a legally binding agreement, where is the stamping of the documents as required for any agreement?

and which is the Court of Arbitration to arbitrate disputes?

How can an agreement be signed if the undersea tunnel project and the 3 major roads have not been finalised or approved by the related authorities including the Department of Environment (DoE) on the Environment Impact Assessment (EIA)?

Without details, the agreement cannot be finalised or signed.

Since you clearly cannot equate an Acknowledgement of Commitment as a stamped agreement, you must come clean and admit you misrepresented a not legally binding document as an agreement. 

The Acknowledgement of Commitment is only a letter of comfort or a letter of support. It is NOT an agreement per se.

In these two latest SSM searches, it has been revealed that both CRCC and BUCG are not at all represented anywhere in the Consortium, and thus are not in the SPV.

There is a significant difference between SPV and the subsequent contractor which obtains a construction job from the SPV. The state government can only hold the SPV liable for any failure in completing the 3 major roads and undersea tunnel.

In other words, the state government does not have a contractual nexus with the said contractor, but only with the SPV.

If the SPV fails to pay the contractor, the contractor can just abandon the job with no obligations to complete.

Issue #4  Guan Eng, “not even 1sen paid” ???

Lim Guan Eng, don't try to confuse the people.

In conclusion, there are many issues that the Penang state government have failed to respond or given a satisfactory answer.

Lim Guan Eng, you repeatedly said that “not a single sen has been paid.”

But Exco Lim Hock Seng on 19 March 2017 when replying in the Penang State Assembly said that a land swap has been identified to the value of RM208 million.

Now the said land has been developed and the sales of properties for the City of Dreams are ongoing. Aren’t you aware of that?
 

Why is the consultancy cost for 1 simple road more expensive than the consultancy cost for an undersea tunnel which is much more difficult to construct?

The consultancy fees for the Dual Carriage Road linking Tanjung Bungah to Teluk Bahang which stretches 10.5 kilometres of which 8 kilometres are above ground with 5 interchanges is RM120 million. But its construction cost is RM378 million. Thus the consultancy fees for 1 simple road is equivalent to 31.75% of its construction cost; whereas the cost for the tunnel which is 10 times higher  (RM3.6 billion), and yet the undersea tunnel’s consultancy fees is lower, only RM96 million.

Why is this so?

Lim Guan Eng, look at this report.
 

If not a “single sen was paid” as you insist, kindly explain and give a breakdown as to how Consortium Zenith reaped an after tax profit of almost RM60 million for the financial year ended 31 Aug 2015, as per the Summary of Financial Information submitted to and published by SSM.

Bear in mind, Consortium Zenith was incorporated for the sole purpose of constructing the undersea tunnel and 3 roads. So far, it has only conducted studies and not commenced any construction at all, but has gained a significant profit of RM60 million.   

What say you Guan Eng?

-MCA online-