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Ministry under fire for wrong decision in project awards

KUALA LUMPUR: The Urban Wellbeing, Housing and Local Government Ministry came under fire yesterday for awarding two incinerator projects worth RM88.74 million to a small, relatively unknown contractor, which had earlier experienced two failed pilot projects.

The Public Accounts Committee (PAC) chairman Datuk Nur Jazlan Mohamed (BN-Pulai) questioned the ministry’s award of the two incinerator projects to XCN Technology Sdn Bhd (XCNT) via direct negotiation.

He also raised concerns over how the ministry had approved the use of “unproven” incinerator technology by XCNT in the two projects.

In 2007, XCNT was awarded two projects to build incinerators in Langkawi (RM68.4 million) and Pangkor (RM20.34 million), in addition to a RM34 million contract to improve a thermal oxidation plant in Labuan. The latter project was later aborted.

XCNT was also appointed the technology provider for two incinerator projects undertaken by Sumur Mutiara Sdn Bhd in Pulau Tioman (RM22.8 million) and Cameron Highlands (RM42.2 million).

“The technology proposed was lauded as local technology, but its (XCNT) pilot projects had [earlier] failed,” Nur Jazlan told reporters in Parliament after chairing a PAC meeting yesterday.

PAC also noted that the ministry had failed in its due diligence to carry out proper inspection at the site of the two failed pilot projects before awarding the contracts to XCNT.

“The government should award a project [only] after the first project is successfully completed. However, it had awarded these projects to the company at one go,” said Nur Jazlan. He added that upon investigation by PAC, it is clear that XCNT “is not in good standing, had no background of building incinerators and is not qualified for the projects”.

A check with the Companies Commission of Malaysia (SSM) revealed that XCNT is 51% owned by Dawn Holdings Sdn Bhd, a company controlled by former Navy chief Tan Sri Abdul Wahab Nawi and his family.

The remaining 49% take in XCNT is held by Clean Earth Technology Sdn Bhd, which is providing the incinerator technology. SSM filings showed that Clean Earth Technology is owned by the Khoo family — Gideon (15%), Caleb (20%) and Priscilla (15%), and major shareholder Teng Sui Kit (50%).

When asked if there has been any abuse of power or corruption involved in the awarding process, Nur Jazlan said: “We are not clear, which is why we ask the government to take action.”

“It is up to the government to instruct a probe by the Malaysian Anti-Corruption Commission,” he added.

The issue was in the limelight again after a second series of the Auditor-General’s Report 2012 highlighted the weaknesses in the award of the contracts. The PAC report also found that XCNT had failed to complete the work on time and that the incinerators did not begin its operation according to schedule.

PAC said the government should take action against XCNT, the government agencies and experts involved in the planning and implementation of the projects.

 

This article first appeared in The Edge Financial Daily, on November 12, 2014.

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