‘Sick’ projects, sick nation

The government is still awarding the building contracts of hospitals to obscure and inexperienced companies.

Every year the Auditor-General’s Report shows that the federal government is not prudent in spending the people’s money and it is no different this time around. The Health Ministry, for instance, is also one of the ministries that is guilty of spending money unwisely and this article attempts to look at the wastages committed by the ministry, most notably involving botched-up hospital projects.

Queen Elizabeth Hospital (QEH), Kota Kinabalu, Sabah (October 2008)

There was infrastructure failure in this hospital which was caused by poor maintenance and planning, which led to the intensive care unit (ICU) and surgical units being shut down. A few hundred of the hospital’s patients were transferred after three blocks were declared unsafe by structural engineers. The hospital’s management had reported the deteriorating conditions as early as 2000. The Health Ministry was supposed to have carried out maintenance and repair work on the hospital from time to time through its concession company, Syarikat Faber Mediserve Sdn Bhd.

Pekan Hospital, Pahang (March 2007)

This hospital located in the parliamentary constituency of Prime Minister Najib Tun Razak was scheduled for completion in 2003 but was only finally handed over to the Health Ministry in March 2007. Among the defects were leaking pipes, collapsed ceilings and problems with the main water tank.

Sultan Ismail Hospital, Johor (April 2007)

In September 2004, the hospital which cost RM550 million was shut down for 17 months due to a fungus problem. Two years later, large sections of the ceiling had to be removed due to structural problems. The company responsible for maintenance work was Pantai Medivest.

Sultanah Bahiyah Hospital, Alor Setar, Kedah (March 2007)

Built at a cost of RM550 milion, the hospital was opened four years after its scheduled completion date. The then health minister, Dr Chua Soi Lek, stated that the contractors lacked the necessary expertise.

Sultan Abdul Halim Hospital, Sungai Petani (February 2007)

Human faeces was found to be overflowing from a toilet and this forced an ICU unit to be closed temporarily. This hospital, built at a cost of RM450 million, was hailed as a state-of-the-art hospital. Another leakage had also occurred in the hospital cafeteria due to a defective sewerage pipe and there were also collapsed ceilings.

Ampang Hospital, Kuala Lumpur (March 2007)

This hospital was scheduled for completion in 2004 but it only opened its doors in 2007. The pediatric ward was ridden with fungus and the ceiling was similarly infected besides having the usual problem of leaking sewerage pipes. Then health minister Dr Chua Soi Lek commented that teething problems were to be expected in new buildings!

Despite the existence of such problematic hospital projects, the government is still awarding the construction of public infrastructure projects and building contracts of hospitals via direct negotiations, often to obscure and inexperienced companies. This practice is absolutely unacceptable and has resulted in losses amounting to billions.

None of the above contracts was awarded based on open competitive tenders and the cost of these “rent-seeking and patronage” is now taking a heavy toll on the nation’s economy. And what is worse is that the government still has the audacity to expect the rakyat to pay for its faults, follies and foibles by introducing new and higher types of taxes such as the credit card tax, the real property gains tax and the soon-to-be implemented goods and services tax (GST).

One special hospital project that should be mentioned here is the Shah Alam Hospital that has an “Ali Baba” twist, where the main contractor for the RM482-million project did not even lift a finger to do any work at all and yet made a bountiful profit.

This hospital project was awarded to Sunshine Fleet Sdn Bhd, a company which had no experience whatsoever in the construction of buildings, not to mention the highly specialised skills required in the building of a public hospital. The construction and commissioning of the hospital project was then fully sub-contracted to a financially-distressed Isyoda Corp Bhd in November 2007. In the letter of award, it was stated that RM451 million would be given to Isyoda while Sunshine Fleet would receive RM482 million from the government. This means that the main contractor gets to make a net profit of RM31 million, making it clearly an “Ali Baba” project. Despite the Works Ministry having the knowledge of such information and that it goes against the existing government policy of open tenders, the Works Ministry has refused to take any action against Sunshine Fleet.

However, Isyoda was unable to complete the project and it filed winding-up proceedings against Sunshine Fleet. The case was settled out of court in May 2009 and the project was subsequently awarded to GM Healthcare Sdn Bhd. Sunshine Fleet terminated this sub-contractor in August 2010 and till today the building of the hospital has been temporarily halted.

What was most damning was the fact that Isyoda had issued a letter to the chairperson of Sunshine Fleet promising a payment of RM46 million to her personally. In the letter it was stated that the unconditional payment was in consideration of Sunshine Fleet’s “efforts to procure the letter of award to be issued to us in further consideration of your future contribution and co-operation to ensure the smooth operation and success of the project”.

What do you call this type of payment?

Lackadaisical attitude

As these documents have been in the public purview and in the hands of the Malaysian Anti-Corruption Commission (MACC), it is extremely disappointing to note that no action whatsoever has been taken by MACC to investigate this matter and bring the relevant parties to book. PAS Shah Alam MP Khalid Samad has also lodged a report with MACC on this hospital project as it is located in his parliamentary constituency.

Despite the ongoing legal tussles between GM Healthcare and Sunshine Fleet, Works Minister Shaziman Abu Mansor had claimed in Parliament in June 2010 that the project is right on schedule. GM Healthcare has filed a petition to wind up Sunshine Fleet over a RM10 million debt but the Works Minister told Parliament that the government is only responsible to the main contractor and has no authority in regard to payments to the sub-contractor. Shaziman also informed Parliament that the Public Works Department has not detected any breach of contract by Sunshine Fleet.

The poignant question to ask is, why is Sunshine Fleet given such special “privilege” by the government?

The above examples only go to show that the BN federal government is negligent, to say the least, and that is only the tip of the iceberg regarding the workings and goings-on in only one ministry.

The time has come for Malaysians from all walks of life to take the government to task over its lackadaisical attitude in managing the nation’s finances, which is also the rakyat’s money.