In the shadows

As the race to award the NIIS heats up, all roads lead to the prime minister’s son-in-law

In the shadows

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Today’s newsletter is about Prime Minister Muhyiddin Yassin’s son-in-law Muhamad Adlan Berhan and his influence in the RM1.2 billion National Integrated Immigration System (NIIS) concession.

It is believed the tender will be awarded soon and news flow seem to indicate such with government and business contacts having made mention that listed tech company Iris Corp Bhd is in pole position to snag the tender. Things are fluid. But, for now, that seems to be the general consensus.

The focus, however, is not so much who wins the NIIS project but the hidden hands that stand to ultimately benefit from this because this is a potentially lucrative business and a strategic one to boot — it deals with national security.

The NIIS contract is to build, install and commission the system at all gateways, including airports and land crossings. There will be a separate maintenance contract.

Adlan’s name has been bandied about by insiders and participants as early as when Muhyiddin, then home minister under the Pakatan Harapan (PH) government, called for a request for proposal (RFP) last year.

The local scuttlebutt had it that Adlan was seeking to either directly bid for the project through S5 Holdings Inc or piggyback off a friendly party.

But the businessman’s role in the process has been hard to prove; he is not a greenhorn operator. But there is a hint as to the level of influence he might have on NIIS deliberations. And, regardless of who snags the tender, Adlan stands to gain.

Two developments are in his favour. Firstly, a relationship with existing bidders. For example, there’s Orenda Sdn Bhd, wholly owned by Maju Holdings Bhd, which in turn is controlled by Abu Sahid Mohamed, a corporate known for helping Dr Mahathir Mohamad during his first stint as prime minister (1981-2003) by bailing out steelmaker Perwaja Holdings Bhd.

When Adlan was actively involved in Australian investment holding company Chapmans Ltd, Abu Sahid emerged as a substantial shareholder of the company by purchasing a 5% stake in 2017. Chapmans would eventually be delisted last year from the Australian Securities Exchange.

Then there’s mysterious S5 Holdings Inc, touted to be among the NIIS finalists. The company, which bills itself as a security solutions provider, counts as shareholders S7 Holdings Sdn Bhd (76.38%), Merrington Assets Ltd (10%), MyEG Services Bhd’s subsidiary MyEG Capital Sdn Bhd (10%) and Avocat Sdn Bhd (3.62%).

Adlan is connected to Avocat’s sole director and shareholder, Lim Beng Guan, who is also the founder of boutique finance house ZJ Advisory Sdn Bhd. Both men are involved in Agathistwo Jio Sdn Bhd. Lim is a director while Adlan, a shareholder. Adlan was also a director but resigned on September 21, 2018, yet remains an owner of the company.

As for S5 Holdings’ major shareholder Merrington, its owners are: Vent Millions Sdn Bhd and Barolagun Sdn Bhd while directors are Rizwan Rashid and Darul Ehsan Ahmad.

Checks on Vent Millions and Barolagun did not yield any names but British Virgin Island entities Oriental Heart Holdings Ltd and Max Hill Worldwide Ltd as shareholders. Another S5 Holdings subsidiary, S5 Systems Sdn Bhd, also has an offshore owner, NSA Technology (L) Inc.

Secondly, the nature of the RFP. NIIS was mooted by Muhyiddin after cancelling its predecessor, Sistem Kawalan Imigresen Nasional (SKIN), due to inflated costs.

Estimates put the NIIS at about RM1.2 billion, a 66% discount from SKIN’s RM3.5 billion. Prestariang Bhd, which was directly awarded the SKIN contract from then Barisan Nasional government in 2017, is suing Putrajaya for RM732.86 million in damages.

But the RFP also allows for a consortium of companies to bid for the project. Business publication The Edge, citing sources, reported on August 24, that Iris had put in a bid through a consortium with S5 Holdings being a party.

Further, its fingerprints seem to also be present in all the other major bids such as those put in by MyEG and Heitech Padu Bhd. Muhyiddin’s son-in-law, again, stands to win.

Two things to note about S5 Holdings: the company will be embarking on a reverse take over of Ancom Logistics Bhd (ALB), one of the three listed entities controlled by Siew Ka Wei, a friend of former prime minister Najib Razak.

Siew is also close to Syed Mohamad Hafiz Syed Razlan, a key corporate player in S5 Holdings and who sits as a director on the company's subsidiaries, having worked together in previous projects.

Some trivia here: Muhyiddin's medical doctor Ampikaipakan S Kandiah has been appointed independent non-executive director of ALB effective July 24.

Transparency will be an issue here given S5 Holdings’ opaque shareholding structure. And not the first time.

In July 2016, Goodway Integrated Industries proposed to buy S5 Holdings for RM900 million. The purchase price was to be affected with an issuance of new shares in the listed rubber products maker that would have seen the entry of S5 Holdings’ major shareholder.

Seven months later, the deal was withdrawn due to “additional time that was needed to enhance the disclosures and provide the required information”.

In its filing then, Goodway said it had also mutually agreed with Maybank Investment Bank Bhd, the bank that was involved in the deal, to terminate the latter’s service as its principal adviser with immediate effect.

The other thing to note is that S5 Holdings is the current contractor of the immigration security clearance concession. According to a 2017 Public Accounts Committee (PAC) report into the Malaysian Immigration System (MyIMMs), the programme NIIS is seeking to replace, RM105 is charged on every foreign worker entering the country.

As an aside, there’s a neat little Bersatu circle here. Muhyiddin and Home Minister Hamzah Zainuddin are party president and secretary-general, respectively.

While Adlan’s political affiliation is unknown, Syed Mohamad Hafiz’s father Syed Razlan Syed Putra Jamalullail is the younger brother of Raja Perlis Tuanku Syed Sirajuddin Putra Jamalullail and former Arau MP. Syed Razlan joined Bersatu from Umno on July 15, 2018.

The system which NIIS intends on replacing, MyIMMs, has been a procurement basket case. The system, implemented in 1993, is maintained by Heitech Padu Bhd. Close to RM600 mil had been spent on myIMMs since Heitech was awarded the project in 2010, according to the 2017 PAC report.

But the programme has been unstable, going by the numerous findings of the PAC and the National Audit Department, leading to multiple incidents of sabotage and shutdowns, meaning authorities could not account for the thousands of foreigners entering and exiting the country.

In 2016, for example, news reports detailed how the MyIMMS was susceptible to power outages, allowing syndicates to siphon off more than RM1 billion, and that terrorists and human traffickers had slipped in and out of the country during such system failures, a claim that then home minister Ahmad Zahid Hamidi denied.

According to the Auditor General’s Report 2018 Series 3, myIMMs could not account for 198,479 foreigners who entered the country through various long-term immigration passes as at April this year.

More recently, PAC found the integration between MyIMMs and other systems to be flawed, leading to government agencies being unable to fully share documents and data. This loophole helped breed middlemen. It also encouraged criminal activity such as theft and misuse of user identification to apply for false quotas under MyIMMs.

Police reports have been filed, according to PAC chairman Wong Kah Woh, but to date, there has been no outcome from the investigations.

These remain major concerns for NIIS. Depending on who the government awards the tender to, NIIS might be doomed to repeat the same mistakes.

Some bidders have flagged political interference, and if this takes centre stage, not only will Malaysians witness more of their tax money being wasted but live in fear that, at any time, national security can be compromised at the expense of a crony or syndicate making a quick buck.

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