KUALA LUMPUR (Nov 23): Putrajaya’s directive in 2014 for the Armed Forces Fund Board (LTAT) to take over the automated enforcement system (AES) for RM555 million was an “indirect bailout by the government”, says the Public Accounts Committee (PAC).
In its report on the AES project released on Tuesday (Nov 23), the committee also said the RM555 million consideration was “overvalued” and “exorbitant”, because the price did not follow the due diligence undertaken by independent valuer KPMG PLT, which valued the projects at a maximum of RM251 million.
This means that LTAT overpaid the project owners ATES Sdn Bhd (ATES) and Beta Tegap Sdn Bhd by at least RM304 million for the project, which had faced scrutiny due to the price tag for the nationwide automated traffic offense camera system.
Furthermore, the government actually paid LTAT a sum of RM668.9 million as compensation to take over the project in 2019. This includes an additional RM113.9 million upon appeal from LTAT to the government, based on the liabilities of the assets assumed by LTAT.
Citing KMPG estimates, the PAC report said the original AES concessionaires, ATES and Beta Tegap, only commanded a fair market value of between RM198 million (without an extension of the concession period) and RM251 million (with a 18 month extension).
The report also pointed out that the terms of the contract for the service fee that is paid to the concessionaires “did not benefit and was detrimental to the government”.
“The MACC (Malaysian Anti-Corruption Commission) must review and investigate the recurring issues on the investigation’s report, and especially this PAC report, on whether any individuals were involved in receiving kickbacks in the AES’ takeover process by LTAT,” the PAC said in its recommendation.
The parliamentary committee also recommended that the government make public the 2019 investigation into the project by a committee under the Prime Minister’s Department, namely the Investigating Committee on Governance, Procurement and Finances of the Government (JKSTUPKK).
It added that the outsourcing of the project to ATES and Beta Tegap should not have happened, and that the project should have been executed by the Road Transport Department (JPJ) instead.
In the report, JKSTUPKK's then chairman Tan Sri Ambrin Buang was quoted as saying that the original cost of the entire AES project was RM45 million.
The report noted that the Ministry of Transport had in 2008 proposed that the project be undertaken by private companies, citing among others, the high maintenance costs of up to 20% of the original estimated project cost of RM650 million.
LTAT had taken over the project for RM555 million in April 2015, in the wake of a public uproar over the fact that the concessionaires were private companies. Prior to that in 2014, the Cabinet was made aware of a takeover price of RM528 million but did not consider it, as that price tag was also deemed as too high.
Interestingly, when the government decided to take over the project from LTAT, the Ministry of Finance in December 2017 initially agreed for a compensation of RM894.3 million.
AES project “a conspiracy to cheat Malaysia”, says investigator
During the proceedings by JKSTUPKK in November 2020, investigator Datuk Dr Mohd Tap Salleh was quoted as saying that in 2008, a special committee led by then chief secretary to the government had decided it should be JPJ and the transport ministry that should be leading the project.
“But then when you fast forward, you know there is going to be a lot of money to be made. I think this is – I do not believe in conspiracy theory, but this is to conspire to cheat Malaysia, actually,” Mohd Tap was quoted as saying.
JKSTUPKK had also submitted its report to MACC in 2018 for further intervention, deputy chief secretariat Datuk Mohd Salim Ali was quoted as saying.
“…The committee is of the view that there may be a kickback, so we requested Bank Negara Malaysia to conduct a money trail [identification],” Mohd Salim said. However, during the PAC proceeding in late 2020, an ex-officio of the MACC said that the matter was “still under investigation”.
In the PAC report, it was also confirmed by KJSTUPKK that the contract for ATES and Beta Tegap was approved by the Cabinet.
In total, ATES received RM295 million payment from LTAT, while Beta Tegap received RM260 million – and this is based on only 14 cameras installed at the time. As of Dec 2020, the project has 45 cameras throughout the nation.
The payout comprised RM327.5 million directly from LTAT, and another RM227.5 million from Boustead Holdings Bhd.
In 2018, The Edge reported LTAT’s then chief executive officer Tan Sri Lodin Wok Kamaruddin as saying the price was partly based on the expected returns.
“It [was for] buying the two companies, which own the concession [for 13 years] and other assets. So, the price was based on the return that could be generated from the concession over the 13-year period,” Lodin told The Edge.
Among the original directors of ATES was Chee Chwee Cheong – an associate of Datuk Omar Mustapha Ong, who was a former aide of ex-prime minister Datuk Seri Najib Razak.
Beta Tegap shareholders then included Dr Andreas Teoh, said to be MCA-linked, and Toh Puan Rozana Redzuan, who is said to be related to former UMNO leaders in Johor.