'Forged bond' delays bridge in Kota Baru

The RM143 million Sultan Yahya Petra bridge project in Kota Baru, Kelantan, has been delayed because the contractor had put up a forged performance bond of RM7.15 million.

This raised a red flag with the Public Works Department (or JKR by its Malay acronym) which held back payments to the contractor, thereby leading to the project being delayed.

The performance bond serves as insurance so that the government is guaranteed compensation if a contractor fails to complete a project according to specifications, explains the Auditor-General’s Report 2011.

Aneka Prestij Sdn Bhd, the main contractor for the bridge project, had presented a performance bond that was five percent of the contract value. It was purportedly issued by the Kota Baru branch of RHB Insurance Bhd in 2007.

"However, RHB headquarters confirmed that the insurance for deposit payment and performance bond issued by the Kota Baru branch of RHB Insurance Bhd in Kelantan was false,” says the report.

"In future, JKR should get verification of the performance bond from the bank's or financial institution's headquarters to avoid a repeat of forgery of the performance bond.”

A police report was lodged on April 2009 and subsequently a new performance bond was presented by the company.

The report notes the contractor was given a 96-day extension to complete the project as JKR was late it its payments, thereby depriving the company of funds to carry out the work.

The Works Ministry explained to the auditor-general on June 15 that “the officer-in-charge had taken cautionary measures in issuing development payments".

The report could not verify the contractor's work history as it is not listed in the Contractors Service Centre and had, at one point of the project, operated with an expired business registration.

In total, the project which was to have been completed on Dec 17, 2009, has received a total extension of 891 days up to Aug 30 this year. This incurred an additional cost of RM34.76 million to RM177.76 million.

The increased cost and delay was mainly due to changes to the piles (RM20.61 million) after it was discovered that the base level of the river had changed due to third-party digging works. Furthermore, old data from 2004 had been used to determine the river base.

The RM2.8km project begins in Pasir Pekan, crosses the Kelantan River and extends to Jalan Dusun Muda.

'New Sarawak roads less than satisfactory'

As at last December, the progress on 175 road projects worth RM1.727 billion in Sarawak's interior was "less than satisfactory", according to the report.

Among the shortcomings of the contracts awarded by the rural and regional development minister were:

- 38 projects (37.6 percent) worth RM178.94 million are behind schedule by between 15 and 242 days, out of 101 completed projects valued at RM437.57 million

- 13 projects (17.6 percent) worth RM229.27 million of the 74  under construction are 20 percent behind schedule

- There is an accident risk because new roads are linked to worn-out bridges for which there has been no allocation for an upgrade

- Seven of 17 completed projects surveyed were easily damaged despite being brand new

However, a majority of respondents in a survey conducted by the audit team said they are satisfied with the roads.

'Shoddy hospital in Johor'
In Johor, the Health Ministry's new RM380.81 million Kluang Hospital, which has been leased out to Kluang Health Care Sdn Bhd, is similarly plagued by shoddy workmanship. 

Among the defects found in the building, which became operational last November, are an operating theatre that cannot be used, cracks, stagnant water, flaking paint, and door knobs fixed in the wrong direction.

The report notes that the importation of 385 pieces of equipment worth RM11.64 million also did not receive approval from the International Trade and Industry Ministry and the Finance Ministry.

The Health Ministry in its reply on June 15 explained that the contractor had purchased the equipment without the ministry's knowledge, and that this is being investigated.