Bumi contractor: Bank Negara destroying us

A bumiputera building firm has accused Bank Negara Malaysia of trying to suffocate the firm to bankruptcy to avoid footing the bill for construction of the new Financial Services and Resource Centre (FSRC).

The firm, engineering and construction contractor H&I Niaga Sdn Bhd, today said Bank Negara’s refusal to pay for work done has left the company in dire straits.

H&I Niaga added that Bank Negara had also misled it into signing a "one-sided" supplementary agreement in September 2009, which among others required the company to pump its own money into the project and give up its right to retention cost - based on assurances that it would receive payment.

Instead of doing so, said the company, Bank Negara abruptly terminated its contract on April 27, 2010 and replaced H&I Niaga with another company while retaining most of the latter’s subcontractors.

At press conference at the DAP headquarters this afternoon, Petaling Jaya Utara Tony Pua (right),  accompanied by H&I Niaga managing director Ismail Mohd Hisham and executive director Amerudin Ismail, alleged that Bank Negara was refusing payment until the company goes bankrupt so that the matter can be buried.

Pua added that Bank Negara’s non-payment has left the company unable to pay its creditors - which have filed suits amounting to RM60 million - on top of facing an attempted wind up by Affin Bank over an outstanding amount of RM12 million.

‘Bank Negara destroying company’

"Bank Negara has not only caused losses to an honest company, but has single handedly destroyed everything that these two men have built over the past 24 years.

"Ismail and Amerudin have bent over backwards and taken all necessary steps to ensure that the FSRC gets completed, despite the tens of millions of ringgit of additional financial cost they had to bear to cope with the delays in the project caused by Bank Negara’s management," alleged Pua.

The amount which H&I Niaga claims Bank Negara owes is RM131.9 million in outstanding payment, prolongation costs and damages.

The RM320.3 million project was awarded to the company on September 14, 2005 and was supposed to have been completed within 22 months, but faced numerous delays and was not completed even by 2009.
Amerudin (right) blamed this on Bank Negara’s management, which was unable to make prompt decisions and had attempted to dictate FSRC's facade design. 

As a result, he said, the company had to foot extra costs due to the delays.

"The deputy governer was there almost every evening giving instructions and their project director was stationed in the building until 3 to 4am. We were doing construction round the clock," he said.

Replaced at eleventh hour

Furthermore, said Amerudin, Bank Negara had wanted the building's construction to be sped up for the Islamic Finances Board Conference on November 23, and the company had obliged by pumping an extra RM18 million out of its on pocket based on assurances from Bank Negara.

"We felt that we would get our money back due to the assurances from Bank Negara so we pumped in our money, we could have just walked out at that time and sued Bank Negara but if we had then Bank Negara would not have been able to hold its function in November," he said.

However, despite completing 97 percent of the work, H&I Niaga received a slap in the face when its contract was terminated and replaced with Putra Perdana Construction Sdn Bhd, which finished the remaining work worth RM72 million.

"This dispute has caused the complete collapse of H&I which was a highly successful bumiputera construction company, with more than 60 staff (reduced) to only three today. 

"The government talks about protecting, supporting and promoting bumiputera entrepreneurs... and yet, what we are witnessing here is the complete opposite - the victimisation and destruction of an honest and competent 100 percent Class 'A' contractor," he said.

H&I Niaga is a company with 14 years experience, having handled projects worth RM460 million including the construction of the RM164.7 million engineering complex for Institut Teknologi Mara.

MACC report lodged

Following this, the company filed a lawsuit at the Kuala Lumpur High Court on June 20 against Bank Negara for RM81.9 million in outstanding payments, including costs for project delays and out-of-pocket-expenses, and RM50 million for financial and reputational damage.

It is also seeking a court declaration that the defendants have made fradulent representations to H&I Niaga and seeking a ruling on aggravated damages.

The case is fixed for July 4 for case management.

In addition, a police report and Malaysian Anti Corruption Commission (MACC) report was also lodged on June 27.

The move comes, said Pua, after all resources and means for an amicable solution had been exhausted and the company was now "desperate".

"We call on Bank Negara not to act as big bully in its relations with its contractors, and to negotiate a fair settlement for the outstnading sum due to H&I Niaga," he said.