Mida D-G in RM5.5 million fraud?

The Malaysian Industrial Development Authority (Mida) office in Jalan Duta is buzzing with allegations of fraud over a RM5.5 million public relations contract awarded, without tender, to an advertising company.

Alleging power abuse and acts of swindling, several officers claimed that Mida director-general Jalilah Baba was well aware of the goings-on in the organisation and was in fact involved in the case.

A report in Harakahdaily quoted several unnamed officers who alleged the fraudulent activities involved a company called Friends Advertising Sdn Bhd (FASB) which was appointed to handle Mida’s public relations activities in Malaysia and abroad.

According to a document dated June 17, 2009, Mida not only appointed FASB via direct negotiation, but it also offered the company other lucrative jobs, which were outside its scope of work.

Among the jobs given to FASB were publishing and printing Mida materials, preparing exhibition panels and promotional collaterals such as buntings, greeting cards and corporate brochures.

"All these were contracts awarded without open tenders. There is only one company now handling the entire job,” said an officer involved in the selection process.

“Changes have taken place here since Jalilah took over the technical and pricing committee. We’ve cancelled the tender process to enable her to directly appoint the company,” said another officer.

Citing an example, he said, Mida had appointed FASB for the “Rebranding of Mida & Malaysia” job (under its media plan 2010) for RM15,000 a month.

Going against procedures

The officer said according to a notice dated Dec 28, 2009, Jalilah had approved a FASB proposal worth RM5.5 million without a tender process.

"This is against government and Mida’s finance procedures. It is clearly stated in our guidelines for government procurements that the director-general's authority to approve projects without tender is limited to RM50,000.

“In this case, the director-general had approved RM5.5 million.

"This has given FASB the upper hand. Riding on its special status, it has now doubled the cost price of the projects at its whims and fancies. For instance, FASB charges RM15,000 for designing an advertisement when the market price is between RM1,200 and RM2,500.

“There is also a directive from Jalilah that all purchases of video clips from TV1, TV2 and TV3 be made through FASB, which charges an additional 17.6% service fee.

He said that in the past, Mida’s media and communication division used to buy these clips directly from the stations at a lower cost minus the 17.6% service fee.

“None of the current projects are awarded via open tender. Even a mock-up design for investment advertisement worth RM200,000 is awarded on direct negotiation," said the disgruntled officer.

Harakahdaily said allegations of swindling within Mida were common knowledge among the staff, especially since moves to corporatise Mida was put in place.

On July 9, Harakahdaily quoted Jalilah as saying that moves to corporatise MIDA was underway and legal scrutiny of the process was mandatory.

She, however, declined to reveal details of the process which were announced by International Trade and Industry Minister Mustapa Mohamed on May 28.

However, it is understood that Jalilah and her team have been given the responsibility of preparing amendments to the Federal Industrial Development Act 1965 (amended in 2000) to enable the organisation “to be truly free” in corporate governance and no more under the ministry.

The move to corporatise Mida is likely to leave some 500 employees in limbo. The new entity is expected to retain only 300 of Mida’s 800 staff.

courtesy of FMT