Media Statement by DAP National Publicity Secretary and Member of Parliament for Damansara, Tony Pua, in Kuala Lumpur on Dec 8, 2021
Clarification with regards to negative aspersions cast by former Pakatan Harapan prime minister, Tun Dr Mahathir Mohammad against me in his upcoming book (Part II)
As highlighted in the Part I of my statement yesterday, MalaysiaNow reported that former Pakatan Harapan prime minister, Tun Dr Mahathir Mohamad made public his ‘grouses’ in his upcoming book with references clearly targeted against me, even though I was not specifically named. His additional remarks to the press on Tuesday (Dec 7) in response to my statement however, confirmed that I was the intended target.
I have clarified on Tuesday that I have never threatened the developer referred to by Dr Mahathir, Djoko Tjandra, because I have never met or spoken to him. All discussions and negotiations sanctioned by the then minister of finance, Lim Guan Eng, were led by top ministry officials and I was never present on those occasions. I am disappointed that Dr Mahathir continues to believe the words of a crooked Indonesian businessman, who is now behind bars in Indonesia for fraud and corruption, instead of trusting his own members of parliament.
Based on the excerpts from his book published by MalaysiaNow, Dr Mahathir also claimed that “there were also occasions when this adviser spoke publicly on behalf of the government despite having no standing to do so”.
In this case, Dr Mahathir would be referring a specific statement, or ‘open letter’ which I had issued on Oct 10, 2018 to the ‘Directors of MMC-Gamuda’ with regards to the MRT2 project. This letter is attached at the bottom.
I remember clearly that Dr Mahathir was absolutely livid after the letter was published, summoning Lim to admonish him for my action. It was a letter that lived long in Dr Mahathir’s memory. Even late in 2019, more than a year after the letter was published and the matters involved were long resolved, Dr Mahathir was still griping about it in his conversations with Lim.
It was well known in the industry even prior to 2018 that MMC-Gamuda had the inside track with the Najib Razak adminstration to be awarded the Project Delivery Partner (PDP) of the extremely lucrative MRT projects via direct negotiation. The ministerial reply to me in parliament then specifically confirmed that MMC-Gamuda was awarded the project because it was the first to propose it.
Given the size and scale of the MRT2 project which will indebt the government by at least RM50 billion (inclusive of land acquisition costs and interest payments), Lim directed the ministry to carry out a study to determine if the cost of the project was a fair price and whether any significant savings could still be achieved, given that the project at that stage was already 40% completed.
One of the largest engineering consulting firms in the region was appointed to carry out the review. The study concluded that there were very significant savings to be achieved via a re-negotiation, restructuring or a re-tender without sacrificing the functionality, viability and operations of the project. In fact, the study discovered that comparative figures with regional MRT or equivalent projects which purportedly showed that the Malaysia’s MRT1 and MRT2 projects were among the lowest price presented by the consulting engineers of the project were concocted.
To be absolutely certain, the Ministry of Finance (MoF) even secured written confirmations by other large-scale contractors that they were prepared to bid at a lower price in the event of a re-tender for the balance of the project.
Extensive negotiations took place with the top management of MMC-Gamuda. In the end, as stated in my open letter, the MoF accepted a 23% reduction of the cost of the MRT2 above ground works from RM22.64 billion to RM17.42 billion, saving the tax-payers RM5.22 billion.
However, MMC-Gamuda was not prepared to significantly reduce the cost of the MRT2 underground (mainly tunnelling) works. They made the final offer of a RM2.13 billion ‘discount’ to the cost of RM16.71 billion.
The study by the consultants, however estimated potential savings of between RM4.2 billion to RM5.8 billion – after taking into consideration all penalties and potential financial settlement to MMC-Gamuda in the event of a termination per the terms of the contract. The question then was whether we were to give up an additional RM2 billion of savings.
The above was presented to the Cabinet for a decision, and it was decided on Oct 8, 2018 that the MRT2 underground contract with MMC-Gamuda will be terminated per the terms of the contract, and there will be an open tender issued to complete the remaining works.
Stunned by the news, MMC-Gamuda immediately launched a massive public relations and social media campaign with the hashtags #pray4MRT2 and #save20kjobs. This was to gain public sympathy over the termination, in an attempt to reverse the Cabinet decision. In the process, it demonised the government as cold, heartless, irresponsible, reckless and perhaps even vindictive.
Perhaps under the old Barisan Nasional crony-friendly regime, such a campaign would have immediately caused capitulation and ultimately a U-turn on the decision. However, this wasn’t a BN government and the additional billions of savings for the Malaysian tax payers are well worth fighting for. The finance minister refused to take the public affront lying down and instructed that I refute the public allegations, which I duly did with the open letter to the MMC-Gamuda directors.
The public support for my open letter was overwhelming. MMC-Gamuda responded immediately, halting its campaign, to seek re-opening of negotiations with the MoF.
To cut a long story short, we successfully reduced the cost of the MRT2 underground contract by an additional RM1.47 billion and reinstated MMC-Gamuda to complete the project.
Overall, the MRT2 review exercise saved tax-payers a massive RM8.82 billion, excluding savings on interest cost. It must be emphasised that this was achieved without sacrificing functionality, viability and operations of the project, or caused any job losses for the workers. The project has since proceeded smoothly and is due for completion by January 2023, after some Covid-19 enforced delays.
It proved beyond doubt the excesses of the past under the Umno-BN crony-capitalism regime. The billions saved could now be spent on even more projects creating even more benefits and jobs for Malaysians, boosting the economy further.
Appeasing Dr Mahathir
The entire review exercise was completed in a little more than three months. (Yes, you can be assured that the then newly appointed finance minister worked his team really, really hard – and this obviously wasn’t the only project we were working on concurrently).
However, things were not smooth behind the scenes. As was only to be expected, the directors of MMC-Gamuda had direct access to the prime minister. Throughout the entire negotiation process with the MoF, the directors made countless trips to lobby Dr Mahathir. He was fed with many half-truths to justify the project cost. And each time, the prime minister will demand answers from Lim.
This is where I must give full credit to Lim. Each time, the team will scramble to prepare the immediate formal and detailed response for the minister to bring to the prime minister. Each time, Lim will patiently and diligently explain these issues to Dr Mahathir, even when some of the issues raised have already been previously (repeatedly) explained. It was a thankless task. It would have been so easy for the minister to just give up and move on. After all, whether we save ‘only’ RM1 billion or we save RM8 billion, the rakyat would be none the wiser.
As tedious and as frustrating as it was – this was obviously not the only issue Lim had to appeal or explain to the prime minister (e.g., The Exchange 106 project), he persevered and he was determined to achieve the maximum possible savings for Malaysians. To do so would help reduce the country’s debt and to have more funds for more projects and social programmes for the people. I was genuinely ‘relieved’ that I wasn’t the wearing his minister’s shoes, and I had the much ‘easier’ task of being his assistant to gather all the relevant facts and information for the cause.
Ultimately, the finance minister succeeded in convincing the prime minister (perhaps, reluctantly), and subsequently the Cabinet, that the best course of action was to terminate and re-tender the MRT2 underground contract.
However, when Dr Mahathir read my open letter, he blew his top. The only reason why I was not fired as the political secretary to the finance minister, an appointment under the prime minister’s purview, is because Lim told him that I wrote the letter under his instructions (which was the truth).
After MMC-Gamuda sought to re-open negotiations, Dr Mahathir had advised Lim not to press too hard. He even told Lim how much is ‘enough’. Lim led the final negotiation with MMC-Gamuda himself and the final ‘discount’ was arrived at relatively quickly and amicably to the satisfaction of all parties. The directors even assured the minister that despite the significant cuts to the cost, the project is still profitable.
More than a year later, late in 2019, Dr Mahathir still griped about the open letter to Lim. If I don’t recall wrongly, it was part of their conversation about being a ‘business-friendly government’. He took offence at the fact that I used the word “hell” in my statement, although he couldn’t remember the context in which the word was used.
Even I couldn’t remember using the word when Lim relayed the conversation to me. I checked, and this was what I wrote, “RM2 billion is hell of a lot of money when I see my MoF colleagues who are struggling and scrimping to find RM50 million savings here, and RM80 million cuts there for the upcoming Budget”. I’m pretty convinced that the term “hell” here is more than justified.
I have no regrets writing the open letter, even if Dr Mahathir is still pissed about it (so much so that he actually included it in his memoirs – insert roll-eyes emoji here). It says a lot about the man when he chose not to record the RM8.82 billion savings for the rakyat for the MRT2 project under his premiership in his memoirs, but instead whine about an apparently irritating political secretary.
On the other hand, I am extremely proud to be part of the team that brought these mega multi-billion ringgit savings to the people, all within a very short 20-month stint at the MoF. Even if it wasn’t instructed by the minister, I see nothing wrong with a political secretary or even a backbencher member of parliament defending and explaining the policies of the government. Isn't that precisely our role? In my personal view, if there was a particular weakness in Pakatan Harapan’s time in government, there were too few leaders who were willing to stand up and be counted in times of controversy, for fear of rocking the boat.
But Dr Mahathir would have none of it. Instead, he claimed that I “spoke publicly on behalf of the government despite having no standing to do so”. It is really odd, and admittedly very disheartening, that defending the Cabinet decision is deemed an offence. Perhaps it is so, if his circle of business friends were at the end of the stick.
Stay tuned for Part III?
An Open Letter to MMC-Gamuda
By Tony Pua
Political Secretary to Minister of Finance
Member of Parliament for Damansara
10 Oct 2018
Dear Directors of MMC-Gamuda,
Let me applaud you for putting up a great show since the Minister of Finance, Lim Guan Eng announced the Cabinet decision to:
i) accept the offer from MMC-Gamuda to reduce the cost of the MRT2 Above Ground works by RM5.2 billion to RM17.4 billion (23% reduction) in the form of a turnkey contract and
ii) terminate the Underground contract as both parties could not reach an agreement on the required price reduction.
You have issued a letter proclaiming innocence, claiming that you were awaiting for an offer from the Ministry of Finance (MoF). You questioned the qualifications of the independent engineering consultant we have engaged. You implied that the decision to terminate was hasty and ill-conceived. You sought sympathy claiming the loss of jobs for no less than 20,000 people (wow!). Your social media actively promoted a campaign to “Save 20,000 Jobs” asking Malaysians to sign the petition. There are viral Whatsapp letters from first class honours engineers regretting support for Pakatan Harapan in the last general election.
The performance and mobilisation of the above campaign are nothing short of impressive. The question of cost of the project to the Government was conveniently ignored.
We had no intention of engaging with you in a public war of words. We tend to reserve that for our political opponents. And after all, we wanted to continue the good working relationship to complete the RM17.42 billion worth of Above Ground works.
However, the obvious brazen attempt to paint yourself an innocent victim to an unjust Harapan government required a response to set the facts right and record straight.
1. The original Underground contract was awarded for RM15.49 billion. MRT Corp awarded additional RM1.2 billion of variation orders which resulted in the revised contract value of RM16.71 billion.
2. After numerous meetings and discussions, you wrote to the Minister on 15 August to offer a revised price of RM15.1 billion. This was mostly a result of shelving the 2 underground stations at Bandar Malaysia North and South.
3. Subsequently on 7 Sep, you offered to reduce the price further to RM14.58 billion for the Underground contract (making it RM32 billion for the entire MRT2 project). This represented a cost saving of RM2.13 billion or a 12.7% reduction. In the words of the Gamuda director at the meeting with the Minister on 4 Sep – “we offer what we can offer, but anything beyond that will be meaningless to continue”.
4. However, based on the study by the independent engineering consultant, MRT Corp should expect total savings between RM4.19 to RM5.79 billion for the estimated remaining 60% portion of works yet to be completed. Yes, this potential savings is just for the balance of works to be completed. Imagine the potential savings if it was for the entire contract.
So the question to be deliberated upon by this new Pakatan Harapan government is very simple.
A. Do we say, “it’s OK la, let’s just accept the RM2.13 billion reduction offered by MMC Gamuda”? After all, we can take this figure and boast to Malaysians of our ‘magnificent’ achievement, for they would know no better that we might have left another RM2 billion of potential savings on the table. Furthermore, it will certainly save us the trouble of having to deal with the negative publicity and the new international tender exercise which has to be carried out. Too much work... Or
B. Do we honour the mandate and trust the people has given us and maximise the savings we can reasonably derive from the project? RM2 billion can pay for 5 hospitals, or 50 schools. RM2 billion is hell of a lot of money when I see my MoF colleagues who are struggling and scrimping to find RM50 million savings here, and RM80 million cuts there for the upcoming Budget.
The Cabinet obviously made the decision to pick the latter. And you seriously telling Malaysians to blame the Cabinet for the termination?
Or would you then pick a different target, as you implied in your media statement, that the independent consulting engineers aren’t sufficiently qualified – despite employing more than 500 staff with a track record of having completed more than 80 projects in 24 countries outside of Malaysia?
Or was it because the government-appointed independent consulting engineer exposed the frequently expounded lie that the cost of MRT1 and MRT2 are well-below the average cost of construction of various Asian Metros, because no one was actually able to substantiate the data provided?
Should we instead question why MMC Gamuda had initially agreed to, but subsequently refused to share costing data with the independent consulting engineer to justify its cost, claiming “trade secrets”?
To the 26 year old first-class honours engineering graduate, I empathize the turbulence you are facing in your life today which is due to no fault of yours. However, should Gamuda decides not to retain your services, it would only be their loss, because you would build an equally successful career in many other companies.
To the purported 20,000 workers who, according to MMC Gamuda, would lose their jobs as a result of the underground contract termination, let me emphasize that the Malaysian government is not terminating the project. You will find plenty of opportunities when the new project is awarded at a lower cost, while the savings generated would mean even more projects for the future.
But perhaps, instead of starting a petition on Change.org to seek the Government to reverse its decision on the termination, it might be more productive to start a petition to ask your bosses at MMC Gamuda to make the Malaysian government an offer they cannot refuse.