More than one Minister must resign over the 10-year R400 million MATRADE Building scandal – Cabinet tomorrow should establish public inquiry to pinpoint the culprits

Media Statement
by Lim Kit Siang

(Parliament House, Tuesday): The statement by Kumpulan Hartanah Selangor – an investment company of the Selangor state government – that its subsidiary company Perangsang International Sdn. Bhd. (PISB) was being sold for RM2 as part of the group’s scheme of reconstruction, is the latest proof that the 10-year RM400 million MATRADE Building scandal hides a colossal can of worms requiring the resignation of more than one Cabinet Minister! 

Last Friday, Works Minister Datuk Seri S. Samy Vellu said PISB, the original contractors for the MATRADE Building, had been slapped with a RM80 million  fine for failure to complete the construction, with a daily penalty of RM40,000, giving the completely wrong impression that the Works Ministry has suddenly become very proactive and   tough on defaulting contractors to comply with their contractual obligations.


In fact, Samy Vellu’s announcement of a RM80 million fine on PISB is an empty and meaningless gesture, as the Liquidated Ascertained Damages (LAD) for delay in completion of the MATRADE Building had been levied on PISB at RM41,750 a day as far back as  4th January 1999, but not a single sen had been collected or is likely to be collected, especially when PISB is being sold off for a mere RM2!


As of  today, the LAD imposed on PISB comes to RM87.26 million, i.e. for 2,090 days, without a single sen being paid.  By end of the year, it will rise to RM91.26 million (for 2,186 days), reaching RM106.5 million by end of next year, and will amount to some RM120 million if the latest date of completion of MATRADE Building in mid-2006  is finally met without any more delays or problems.


Who believes that Samy Vellu or the government could get a single sen of the RM120 million fine from PISB, which is being sold for RM2?


The question is why the Finance Ministry allowed PISB to defer payment of the LAD, accummulating  by RM41,750 a day from 4th January 1999, until the completion of the project, which is still not in sight?


Up to now, the costs of the MATRADE Building, originally estimated at RM167 million, had ballooned to some RM400 million, if all the losses incurred by the seven-year delay in completion are taken into account: 


Original cost                                                RM167,000,000

After two variation orders (PISB)                RM192.221,000

After repairs 1999 – 2003                           RM221,187.000     

After further  RM64.8 million repairs           RM286,997.250


This RM286.9 million  figure does not take into account all other costs and losses, such as RM15 million as cost of MATRADE rentals at Wisma Sime Darby since 1999 which would have been saved if the new building had been completed as scheduled, and the loss of some RM12 million as rentals which MATRADE could have collected from the exhibition halls, multi-purpose halls and other spaces in the new building. 


If the some RM120  million LAD which would have to be forgone as there is no way  PISB would be able to pay the fine is also taken into account, then the total costs of the MATRADE Building scandal, including losses, would balloon into the RM400 million bracket.


What is most shocking is that up to now, Parliament and the public are completely in the dark as to how the MATRADE Building could be such a colossal blunder, and the actual role of the various  Ministries, departments and government officers at every stage of the decision-making process liable for the tragedy of  expensive errors.


The Cabinet tomorrow should take the bold decision to establish  a public inquiry into the MATRADE Building scandal to pinpoint every one of the tragedy of errors in accountability, integrity and good governance  for the future, so that it would be be a major step to eradicate the “First World Infrastructure, Third World Mentality” malaise which has afflicted the highest reaches of government.


* Lim Kit Siang, Parliamentary Opposition Leader, MP for Ipoh Timur & DAP Central Policy and Strategic Planning Commission Chairman