RM12 million diverted from PISB

I held a press conference on Monday on Perangsang International Sdn Bhd again. Below is the report by the Malaysiakini today.

RM12 mil ‘missing’ from PISB records

Kuek Ser Kuang KengAug 9, 06 11:31am

Did the Selangor government divert RM12.11 million in revenue from Perangsang International Sdn Bhd (PISB) to other channels after the subsidiary company was sold? Teng Chang Khim, the DAP assemblyperson for Sungai Pinang, has claimed to have obtained new information showing that the sum was due to PISB from completed projects. However, the revenue was not recorded in relevant documents, he told malaysiakini.

This, he said, has raised suspicion that moves were made to relieve PISB of financial liability and to divert its revenue before it was sold to a ‘shell company’. It was then renamed and liquidated in 2004, apparently in order to free the state government of creditors and losses.

Teng said he has submitted the information to the Securities Commission (SC). It is already investigating issues linked to delayed construction of the Malaysian External Trade Development Corporation (Matrade) building, for which PISB was the original contractor.

Explaining, Teng said PISB could have claimed a retention sum and performance bond amounting to
RM12,110,937.98 this year from two unrelated projects.

The first was the Sungai Selangor Water Supply Scheme Phase 3, for which the performance bond and retention sum amounted to RM3,330,468.99. It was completed in June 2004.

The second project was a distribution piping system in Bukit Badong Phase 1 and 2, for which the retention sum was RM5,450,000.00. This was completed last year. (A performance bond and retention sum are deposits paid by a contractor when it is awarded a government project.

Both deposits are only refunded when the project is completed without defects.)

‘Allegation proved’

PISB - a subsidiary company of the Selangor government’s investment arm Kumpulan Hartanah Selangor Bhd (KHSB) - was awarded a contract in 1994 to construct the Matrade building by 1997.

By the time the building was completed last month by other contractors, the cost had shot up to RM287.5 million, with RM64.8 million being spent on repairs and another RM95 million owed in late delivery charges.

In the meantime, PISB was sold to RM2 ‘shell company’ Tajuk Modal Sdn Bhd, which was later renamed and wound up before it could be forced to pay off its debts. This not only freed the company from paying a penalty of RM159.8 million imposed by the federal government, but also a debt of
RM22 million to creditors.

Teng claimed that the sum was not recorded either in the KHSB financial report 2004 or the acquisition agreement between KHSB and Tajuk Modal.

In fact, the acquisition agreement states that all projects handled by PISB had been completed and that there would be ‘no further revenue’ to be claimed by PISB.

“This information proves my allegation that this was a plan premeditated since 2003 by the state government,” alleged Teng, He had earlier questioned if the sale, renaming and winding-up process was intended to ‘cheat’ the federal government of compensation.

The Anti-Corruption Agency and Companies Commission of Malaysia are other agencies involved in investigations, following Teng’s reports lodged in June.

Work Minister S Samy Vellu has pledged to get to the bottom of the matter and take action against the PISB directors.

The KHSB management has remained tightlipped, while one of the two directors of Tajuk Modal has claimed that he knows nothing about the deal.