Power play at Prasarana

Charges of political interference threaten to derail the national transport operator

Power play at Prasarana

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Newsbreak: Lembaga Tabung Haji (LTH) executive director (investments) Hizamuddin Jamalluddin has been nominated to be the new chief executive of Urusharta Jamaah Sdn Bhd, sources said. If he takes up the job, Hizamuddin is expected to clock in on January 15. Owned by the Ministry of Finance Incorporated, Urusharta was set up in late 2018 to nurse LTH’s non-performing assets.

Prasarana Malaysia Bhd has been subject of bad press since Pasir Salak MP Tajuddin Rahman took over the helm as chairman on May 11 last year, especially over claims that the Umno warlord has been overstepping his boundaries by getting involved in executive decisions.

This is no mere storm in the teacup as the latest flashpoints call to question the political interference in the national transport operator, which in turn casts doubt over its fiduciary duty to the Malaysian public.

Just last week seventeen contractors appointed to complete the Light Rail Transit 3 (LRT) sent appeal letters to Putrajaya’s highest officials, urging them to step in and release more than RM700 million owed for works done on the project.

The three letters dated December 30 and signed by the companies’ chiefs were addressed to Prime Minister Muhyiddin Yassin, Finance Minister Tengku Zafrul Tengku Aziz and Transport Minister Wee Ka Siong, titled “Constructions and Completion of Guideway, Stations, Park and Ride, Ancillary Buildings an Other Associated Works for Light Rail Transit Line 3 from Bandar Utama to Johan Setia: A Plea for the Release of Payment for Work Done.”

The signees are:

  1. Minconsult Sdn Bhd chief executive Datuk Dennis Ganendra
  2. MMSB Consult Sdn Bhd Datuk Ashok Kumar Sharma
  3. MRCB George Kent Sdn Bhd project director Hwang Chee Leong
  4. Reaplite Industries Sdn Bhd executive director Sebastian Then
  5. Mudajaya Corporation Bhd operations director Anthony Teoh
  6. WCT Bhd executive director Liang Kai Chong
  7. Gabungan Strategik Sdn Bhd operations director Bakri Ishak
  8. Apex Communications Sdn Bhd executive director Datuk Ahmad Amer Awang
  9. Rahimkon Sdn Bhd operations director Mohd Khalil Dan
  10. Sunway Construction Sdn Bhd operations director Liew Kok Wing
  11. Pembinaan Jaya Zira Sdn Bhd operations director Datuk Adi Munawar Md Din
  12. SN Akmida Holdings Sdn Bhd operations chief Datuk Shukry Md Saad
  13. Trans Resources Corporation Sdn Bhd executive director Datuk Abdul Aziz Mohamad
  14. Emrail Sdn Bhd chief executive Amrish Hari Narayanan
  15. Hisniaga Sdn Bhd operations director Datuk Habib Ismail
  16. Primercon UTEC Consortium director Chan Wai Meng
  17. Blueprint Projects Sdn Bhd director Datuk Mohamad Ariff Abdullah

The contractors claimed that Prasarana had not paid them since July and the accrued amount Prasarana confirmed but still withheld up to October was more than RM700 million. This amount is expected to balloon to RM1 billion as of December 31 last year, taking into account work done up to that point.

The livelihood of 10,000 workers as well as financial commitments to subcontractors, suppliers and stakeholders as well as banks are at risk, said the companies, adding that they had to rely on internally generated funds to ensure targets set by Prasarana are met.

Coupled with the Covid-19 crisis, the contractors, including their Bumiputera peers, said they were facing tight cash flow and might not be able to complete the project on time. LRT 3 is 43.24% done and is expected to be completed in 2024.

Tajuddin has also been accused of involving himself in two major decisions: the suspension of its president and the possible termination of a development project.

The suspension of Prasarana president and group chief executive Muhammad Nizam Alias is believed to be because he showed signs of insubordination when the board and Tajuddin instructed him to investigate MRCB George Kent over LRT 3. Nizam is also said to have a tense relationship with Tajudin especially over the awarding of contracts.

Further, Tajuddin has sought to terminate the contractors involved in transport-oriented development Latitud8, situated on the site of the Dang Wangi LRT station, and is pushing for Prasarana to play a more prominent role in the project and eventually move its headquarters there.

The public transport operator is expected to pay as much as RM80 million in compensation to terminate the joint land development agreement. According to business publication The Edge, citing documents, Prasarana’s owner, the Finance Ministry, had given tacit approval for the company to move there.

The joint venture developing Latitud8 is Intan Sekitar Sdn Bhd, owned by Crest Builder International Holdings Bhd’s unit Crest Builder International Sdn Bhd (51%) and privately held Detik Utuh Sdn Bhd (49%).

Detik Utuh is a Tajuddin family company. Tajuddin himself was a director until October 2013 while his daughter, Sri Rahayu Tajuddin, remains a board member.

The company’s shareholders are Tindakan Juara Sdn Bhd (40%), Obata-Ambak Holdings Sdn Bhd (35%) and Vignesh Naidu Kuppusamy Naidu (25%).

Tindakan Juara is another Tajuddin family company that counts Sri Rahayu, Tajuddin’s wife Rohkiah Abd Samat and Firdaus Tajuddin as shareholders.

Intan Sekitar won the bid to develop Latitud8 at end-March 2012. Prasarana, the owner of the land, was expected to receive RM46.64 million or 21.2% of the project’s estimated RM220 million gross development value.

Since Tajudin was only appointed Prasarana chairman in May this year, he and his family were involved in the project even before holding the position.

According Crest Builder’s listed parent company, in its 2019 annual report, main building works at Latitud 8 had commenced.

But various media reports show that the project’s deadlines had been consistently shifting. The development was set for launch by end-2016. That never happened, instead construction was brought to a halt with the relaunch date some time last year. Now it’s set to take place in two years’ time with the delay being attributed to tough market conditions.

At the time of writing, it is not known whether Crest Builder and Detik Utuh have been informed of the possible termination of Latitud8.

Prasarana currently maintains and operates Malaysia’s two LRT networks, namely the Kelana Jaya line and Ampang-Sri Petaling line, as well as the KL Monorail, bus rapid transit Sunway line, and bus services in Kuala Lumpur, Penang, Kuantan and Kamunting. It is also the operator of the mass rapid transit service in the Klang Valley.

But, the group has been bleeding red since 2014. According to its latest financial results ended December 31, 2019, Prasarana registered a loss of RM3.61 billion on the back of RM842.09 million in revenue. Its total liabilities for the year stood at RM35 billion compared to total assets of RM1.29 billion.

External auditor Ernst & Young PLT, in Prasarana’s 2019 annual report, said as liabilities exceeded assets, “these conditions indicate the existence of material uncertainties that may cast significant doubt on the group’s and the company’s ability to continue as a going concern and, therefore, the group and the company may be unable to realise their assets and discharge their liabilities in the normal course of business”.

Editor's note: Tajuddin is expected to hold a press conference at 4pm today to address some of these allegations.

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