Despite MoF official’s ‘bold and strong advice’ to PM against RM1.25b project, letter of approval issued

Datuk Othman Semail (Photos by Shahrin Yahya/The Edge)

Datin Seri Rosmah Mansor

Datin Seri Rosmah Mansor

Rosmah's yellow handbag

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KUALA LUMPUR (Feb 20): A Finance Ministry official told the High Court that despite giving “bold and strong” advice to then-prime minister and finance minister Datuk Seri Najib Razak, the Education Ministry decided to go ahead with the issuance of the letter of approval to Jepak Holdings Sdn Bhd for the solar hybrid project in late 2016.

The ministry's deputy secretary-general (management) Datuk Othman Semail said he had advised the former premier against the project as he had doubts over the ability of Jepak — a transport and car rental firm — to undertake the RM1.25 billion project.

“The Education Ministry issued the letter of approval (surat setuju terima (SST)) on Nov 10, 2016 despite my reservations, which were also acknowledged by Najib who accepted my views,” he said in response to questions from Rosmah's counsel Datuk Akberdin Abdul Kader.

Othman, who previously was the secretary of the Government Procurement Division of the Finance Ministry, said he had issued several memoranda to Najib stating that he opposed the project on the grounds that it did not follow requirements, and that it was the subject of direct negotiations.

Moreover, Jepak did not negotiate the RM1.25 billion price tag with the Education Ministry, while the ministry did not undertake the measures outlined in his memorandum.

Being the secretary of the Government Procurement Division then, Othman said he must make sure the projects are viable and the funds for them are spent wisely.

The seventh witness called by the prosecution said that one of the requirements for direct negotiations was that the price must be negotiated by both parties, but this was not done.

“The Finance Ministry should be the authority to decide on direct negotiations. In this case, there is no value management done for the project. I, or the ministry, am concerned about the possible failure of the physical project, and this would lead to losses to the government and lead to wastage,” he added

Othman agreed with Akberdin that even Najib was in agreement with him to not go ahead with it despite authorising for the implementation of the project in Dec 16, 2015.

He added the former finance minister took into consideration his views and even appeared to oppose the project.

The witness added the SST issued to Jepak was not done according to procedure as the Finance Ministry thought the Education Ministry did not have the budget for it, hence it was not viable. 

As a result, with the issuance of the SST by the Education Ministry later in 2016, the government had to allocate additional funds for the project.

Witness opposed RM130m advance to Jepak
Othman said the Finance Ministry opposed Jepak’s request for an advance of RM130 million to undertake the project in 2017, as the insurance on the project was insufficient and their request went against the ministry’s limit of RM10 million.

He later found out that Najib agreed to former education minister Datuk Seri Mahdzir Khalid’s request that Jepak be exempted from providing certain documents to secure interim payments.

Mahdzir, who had testified earlier, said Jepak representatives sought his help to obtain the exemptions so that they may receive interim payments of RM92 million.

When asked by Akberdin about the status of the project, Othman replied that as far as he knew, the schools were still using the diesel generators, and no solar hybrid power system was in place.

During re-examination by deputy public prosecutor T Deepa Nair, Othman agreed that despite various assertions made by the defence, Najib had approved the project.

The hearing before Justice Mohamed Zaini Mazlan continues on March 9 to 12.

The witness was testifying in Datin Seri Rosmah Mansor's graft trial where Najib's wife is charged with trying to solicit RM187.5 million from Jepak, and obtaining RM5 million in December 2016 and RM1.5 million in September 2017 from the company's managing director Saidi Abang Samsudin.

Read also:
Rosmah's graft trial: Saidi told me RM5m was for 'RM' — witness