Matrade RM167 Million Damages

"Even if it has been reduced to a one-sen company, we will go after them. We will go after the parent body and even its subsidiaries. They cannot just run away by reducing the paid-up Capital."

"We will show them what we can do."

- Samy Vellu

Samy Vellu said the government will go all out to pinned-down Perangsang International Sdn Bhd, a subsidiary company of Selangor government Incorporated, and the turnkey contractor for the Matrade Building.

Samy wants to make Perangsang pay RM167 million compensatory damages comprising $97.02 million for non-performance and $72.9 million for remedial works.

Boleh ka? How?

It's a $2 paid-up company! Didn't Samy understand what is $2?

They never reduced their paid-up capital, Samy! It was and had been a $2 company since the day the government decided to award Perangsang International the project.

How is it that the government could award a $167 million contract to a $2 company? Samy should answer!

The legal advisors in PWD should perform their duties by advising their boss about contract law and damage claims.

MRR2 - Cabinet Decides

New twist of events! The Board of Engineers (BEM) on instruction from the Prime Minister Pak Lah had arbitrated on the MRR2 issues and had made the final recommendations to the cabinet.

The events that lead to the Prime Minister's call to BEM to arbitrate arises because of internal disagreement between the boss - Works Minister, Samy Vellu, and his department, JKR on the structural repair reports. Samy wants to follow Halcrow's recommendation for rectification which was purportedly a face-saving (for himself) and will cost less for the contractor Bumi Hiway. Public Works Department (PWD) are convinced that the contract terms stipulate that the Turnkey Contractor is fully responsible and liable to make good the Work in full complaince of the terms of conditions of contract pertaining to design quality specified. PWD thus wants to Contractor to fulfil its obligations and ensure that the flyover meets the qualified quality specified. (read more here)

Based on the contractor's view, the repair works is basically patching and grouting the cracks. Based on Halcrow, it will be slightly more - it include some strengthening works. But based on Kohler & Seitz (the structural engineering consultant from Germany), the repair should be comprehensive to ensure the structural integrity will not be affected over a long term. However, it is estimated to cost RM40 million.

Update: I was informed that Leonard Andra & Partner is the consultant. The repair specialist contractor is yet to be appointed by tender or negotiation. Leonard Andra is not a repair specialist but a world-known structural engineering consultant. So, how the hell did Samy Vellu said today the decision was reached at the last Cabinet meeting and the ministry’s secretary-general is discussing with the consultants on the conceptual layout of the work plan, which will be ready by the end of this month and that it would cost $40 million?

Samy said: "They have assured us that the repair work on 31 pillars would be completed in four- and-a-half months."

The contractor rejected Kohler & Seitz's recommendation. Samy was sympathetic towards the contractor and got in Halcrow to conduct another study. However, JKR was of the opinion that Halcrow seemed to suggest limited repair works, sufficient (tho' inadequate) to meet the minimum requirement and compliance. JKR was of the opinion that the contract stipulates that it is design and built to the specified and agreed quality and standards and will not accept second best, just because the cost of repair will be mammoth - that's the contractor's problem and if the contractor can convince the government to pay for them using taxpayers money, and if the government agreed, then JKR had to take instruction. Samy seemed to suggest that the government had to step-in to pay for it as it would be too much for the contractor to pay. The cabinet disagreed.

The final decision:


The Cabinet has decided to appoint a German consultant to spearhead repair work on the Middle Ring Road 2 in Kepong.

Works Minister Datuk Seri S. Samy Vellu said today the decision was reached at the last Cabinet meeting and the ministry’s secretary-general is discussing with the consultants on the conceptual layout of the work plan, which will be ready by the end of this month.

"They have assured us that the repair work on 31 pillars would be completed in four- and-a-half months," he said. The cost is expected to be more than RM40 million.

Samy Vellu said the cost was initially estimated to be around RM18 million but it has more than doubled after it was decided that all the 31 pillars need to be repaired simultaneously.

So now, who is going to pay for the repair? Bumi Hiway of Government?

Maybe, Khairy can mediate and settle in the Malaysia Boleh spirit! Good luck to Bumi Hiway if they can Kau Tim this toy guy.

Read more here:

MRR 2

Samy vs JKR

MRR2 Repair to Begin

Design & Build Debacle

Problematic Projects Involve "Design-and-build" Concept - Shahrir

Public Accounts Committee Chairman Datuk Shahrir states that all projects implemented under the "design-and-build" concept had been problematic.

According to Shahrir that approach was conceivably chosen to overcome perceived inefficiencies of the check-and-balance, accountability and good governance approach in project implementation. He said that the wisdom then was that private initiative was far more efficient and giving the private contractor total control without any government oversight would see the projects completed much faster.

"Unfortunately, when things go wrong, there was no recourse to accountability," he said. Shahrir said his observation showed that what beset problem-hit projects like the privatisation of the Lumut naval dockyard and the construction of offshore patrol vessels for the Malaysian Navy, the MRR2 elevated highway, Matrade building and a hospital in Pandan, Johor, which appeared before PAC, was the belief that self-supervision would see speedier completion and delivery.

Was that the real objective when the government under Mahathir and Daim adopted the Turnkey concept, or was it a surreal reason?

The observed facts remain that Turnkey Design and Built concept was adopted to simplify and speed-up project awards which are mega in size.

First is the Vision 2020. Mahathir's dream is to make Malaysia, the new Japan in South East Asia. In order to push Malaysia to achieve a develop status by 2020, we needed a consistent minimum economic growth of 8% GDP for the next 25 years till 2020. From the government's collection of revenues from taxes and excise duties, it was be impossible to fund all those projects mega billion which will require the government to pump in hundreds of billions to generate domestic growth and development. To overcome that, the government had to get the private sector to raise the fundings for the projects and this way, it will reduce government borrowings.

Secondly, there was a fresh breed of corporate executives called the "New Entrepreneurs" groomed by Daim within Paremba and who had matured commercially to undertake bigger task to spearhead the UMNO-Daim-Mahathir Agenda. These new breed of professionals had enjoyed the political patronages and had the power and influence to get decisions made. They had the "godfather" on their side. In the name of NEP and Bumiputraship, it was a sure win situation and they sure had a fast-track generator of wealth and individual prosperity.

Thirdly, the worldwide entrepreneurs (particularly burgeoning in USA and Europe) are beginning ride the trend of the new "Billionaire Fashion parade". The rise of Bill Gates, Warren Buffet, Michael Milken and Jack Welch, Goldman Sach, Travellers & Citycorp,and the internet boom lead the pack of individuals and organization to a new era of economic explosion. The economy in USA beginning 1991 was riding an economic boom that lasted for more than a decade. This economic boom lead to the growth of massive billion dollar private sector borrowing and created readily availability of financial resources for private fundings, particularly from Junk Bonds. The merchant bankers had been successful in ballooning the US economy by way of mergers, acquisitions and "global acquisitions". These monies ultimately arrived at South East Asia with the rise of the Asian Tiger economies such as Korea, Taiwan, HongKong and Singapore. The second group of fast rising economies are Thailand, Malaysia, Phillipines and Indonesia. There were vast potential growth areas and with weak and kleptocratic governments who are prepared to "Kau Tim", the giant financiers with vast financial resources sees the opportunities to penetrate the system and "prostitute" them. Greed was the fundamental; craving was the decisive factors.

Mahathir was assisted by a coterie of jaggernauts who were more than persuasive. Thus gave rise to the "Billionaire Syndrome" in Malaysia and this in turn generated/created those mega billion projects. It was easy to get off-shore loans and bond fundings. Almost every public listed companies, big and small, jump into the bandwagon and ride the storm of economic activities. Mahathir was care-free as what he wanted was monies for development and to turn Malaysia into a new Japan in Asia. Mahathir had a Japanese economic advisor too.

What was envisage by Mahathir was pragmatic and possible. Malaysia, thus tango along the tide of globalization and liberalization. The problem was, during the fast growing phase, there was no monitoring and control system to tell the government the predictive negative outcome of decisions and actions. There wasn't enough "wisemen" who are honest to speak the bare truth and to highlight danger points. There were advisors who are "players within the same game", enjoying the milking and womenising.

Then, a new tidal wave came - the currency traders and hedge funds who saw another form of opportunites! The overheated economies of the Asian Tigers and Cubs are destined to be swallowed and trashed. It was known!

The end result - 1998 East Asian Economic Crisis and the collapse of the currencies against the USD. Malaysia was unprepared to face the hedge fund gamblers and risk-takers. The Pride and Ego of the system was too much for the body to digest. The governments were prepared to sign cheques that their body couldn't pay. It was like a cat that look himself in the mirror and saw himself a picture of a lion king. The cat believes he is a lion and fought the Manhattan leopards. The outcome: the cats were badly bruised, broken bones and broken teeth. Reality then prevailed and integrative and defensive actions within the economic zones save the situation from a total collapse.

It is now 8 years since the crisis. We are still licking our economic wounds and recuperating slowly. What next? Nothing, at this stage of hybernation and consolidation. It will take another 4 years of system adjustment and the rise of another maverick PM to see Malaysia driving another economic growth path. Pak Lah isn't good enough to play this game. He is a conservative and he lacks the muscles.

Who then can resuscitate the economic game-play? It's a million dollar guess. Another Mahathir and Daim will come along soon....

MRR2 - Damned Vinci Code

What? JKR not allowed to make an engineering design-decision regarding the methods of rectifications for MRR2 which was attributed to design shortcomings? The Prime Minister decides to mediate and calls on the Board of Engineers to be the court of final resort on the MRR2 Debacle? Isn't JKR under the Ministry?

The dispute - Works Minister wants to follow Halcrow's recommendation for rectification which was purportedly a face-saving (for himself) and will cost less for the contractor. Public Works Department (PWD) are convinced that the contract terms stipulate that the Turnkey Contractor is fully responsible and liable to make good the Work in full complaince of the terms of conditions of contract pertaining to design quality specified. PWD thus wants to Contractor to fulfil its obligations and ensure that the flyover meets the qualified quality specified.

However, Works Minister Samy Vellu admitted that some weakness in the design and climatic factors had contributed to the cracks in the Middle Ring Road 2 (MRR2) viaduct in Kepong.

"There's some problem with the design but it's the weather in this country that contributed mainly to the structural problem," Samy said.

He gave an assurance that the MRR2 would be safe for use after it was repaired in four months at a cost of RM18 million and that the viaduct could be used for 95 more years because viaducts were normally built to last 100 years.

He explained that the cracks were not on the road but on the pillars and truss of the viaduct.

What kind of bullshit explanation is this?

As a civil and structural engineering design consultant employed by the contractor, it is their professional and fiduciary duty to ensure that the structural design do take into consideration of all aspects, be they environmental, social, and operational into the design.

Samy Vellu said that although the local climate had been taken into account at the initial stage, the hot and wet weather conditions contributed to the cracks, compounded by the pipe leakage at the viaduct.

What crabs are they? This is oxymoronic reason. How can he say that although the local climate had been taken into account, the hot and wet weather conditions contributed to the cracks? The weather conditions in Malaysia has remain the same -Tropical Climate with temperature ranging between 20-36 degree and rainfalls throughout the last 35 years have been consistent; often wet and dry with intermittent rainfall. Is there a reason why the design engineers had not considered the hot and wet climate consistent conditions in existence over the last 35 years? In Law, this can amount to reckless negligence and the design engineers may be liable in an action for tort, should JKR seeks legal redress.

Samy admitted that the design factors had contributed to the cracks. Doesn't this constitute a breach of contract by the contractor? Again, this breach would also amount to reckless negligence and actionable in Contract and Tort.

The disagreement between the Works Minister and PWD seem to stem from the question of which report to follow - Halcrow or Kohler & Seitz? Both are reputable civil engineering design engineers internationally. Applying the legal principles, unless both report is factually contrary, the rights of PWD is reserved and that PWD can elect to apply the recommendations from either. It is the burden of the contractor to rebut the presumptions in the Kohler & Seitz's report if they are disagreeable with the presumptions and findings of Kohler.

However, it is observed that the Works Ministry is sympathetic towards the contractors possible hugh financial liability should the German consultant's recommendation is followed.

Isn't it absurd? Works Ministry is siding the contractor and fighting against their own department?

JKR has hundreds of PhD design engineers who are fully competent and highly skillfull in engineering design and the department is headed by the nation's best structural design engineer who happens to hold a doctorate in structural design.

By convention and the rule of law, the Works Ministry is not suppose to interfere with the engineering design aspects and decision-making. The Minister is suppose to administer the system and process and listen to their experts. If the department lacks the competency and ability, and are unable to provide a justifiable engineering solution, then only can the Minister step in to provide guidance and assistance by seeking external expertise.

However, it can be seen that non-engineers are making engineering design decisions and expert engineers are mouth-strapped and put under duress.

More puzzling is that the Prime Minister had to step in to mediate the differences and being a "Good-Guy", decided to call in the Board of Engineers to be the Court of last resort. What is happening to Malaysia? Are we having leadership crisis or a clash of civilisation?

MRR2 - Damned Vinci Code

What? JKR not allowed to make an engineering design-decision regarding the methods of rectifications for MRR2 which was attributed to design shortcomings? The Prime Minister decides to mediate and calls on the Board of Engineers to be the court of final resort on the MRR2 Debacle? Isn't JKR under the Ministry?

The dispute - Works Minister wants to follow Halcrow's recommendation for rectification which was purportedly a face-saving (for himself) and will cost less for the contractor. Public Works Department (PWD) are convinced that the contract terms stipulate that the Turnkey Contractor is fully responsible and liable to make good the Work in full complaince of the terms of conditions of contract pertaining to design quality specified. PWD thus wants to Contractor to fulfil its obligations and ensure that the flyover meets the qualified quality specified.

However, Works Minister Samy Vellu admitted that some weakness in the design and climatic factors had contributed to the cracks in the Middle Ring Road 2 (MRR2) viaduct in Kepong.

"There's some problem with the design but it's the weather in this country that contributed mainly to the structural problem," Samy said.

He gave an assurance that the MRR2 would be safe for use after it was repaired in four months at a cost of RM18 million and that the viaduct could be used for 95 more years because viaducts were normally built to last 100 years.

He explained that the cracks were not on the road but on the pillars and truss of the viaduct.

What kind of bullshit explanation is this?

As a civil and structural engineering design consultant employed by the contractor, it is their professional and fiduciary duty to ensure that the structural design do take into consideration of all aspects, be they environmental, social, and operational into the design.

Samy Vellu said that although the local climate had been taken into account at the initial stage, the hot and wet weather conditions contributed to the cracks, compounded by the pipe leakage at the viaduct.

What crabs are they? This is oxymoronic reason. How can he say that although the local climate had been taken into account, the hot and wet weather conditions contributed to the cracks? The weather conditions in Malaysia has remain the same -Tropical Climate with temperature ranging between 20-36 degree and rainfalls throughout the last 35 years have been consistent; often wet and dry with intermittent rainfall. Is there a reason why the design engineers had not considered the hot and wet climate consistent conditions in existence over the last 35 years? In Law, this can amount to reckless negligence and the design engineers may be liable in an action for tort, should JKR seeks legal redress.

Samy admitted that the design factors had contributed to the cracks. Doesn't this constitute a breach of contract by the contractor? Again, this breach would also amount to reckless negligence and actionable in Contract and Tort.

The disagreement between the Works Minister and PWD seem to stem from the question of which report to follow - Halcrow or Kohler & Seitz? Both are reputable civil engineering design engineers internationally. Applying the legal principles, unless both report is factually contrary, the rights of PWD is reserved and that PWD can elect to apply the recommendations from either. It is the burden of the contractor to rebut the presumptions in the Kohler & Seitz's report if they are disagreeable with the presumptions and findings of Kohler.

However, it is observed that the Works Ministry is sympathetic towards the contractors possible hugh financial liability should the German consultant's recommendation is followed.

Isn't it absurd? Works Ministry is siding the contractor and fighting against their own department?

JKR has hundreds of PhD design engineers who are fully competent and highly skillfull in engineering design and the department is headed by the nation's best structural design engineer who happens to hold a doctorate in structural design.

By convention and the rule of law, the Works Ministry is not suppose to interfere with the engineering design aspects and decision-making. The Minister is suppose to administer the system and process and listen to their experts. If the department lacks the competency and ability, and are unable to provide a justifiable engineering solution, then only can the Minister step in to provide guidance and assistance by seeking external expertise.

However, it can be seen that non-engineers are making engineering design decisions and expert engineers are mouth-strapped and put under duress.

More puzzling is that the Prime Minister had to step in to mediate the differences and being a "Good-Guy", decided to call in the Board of Engineers to be the Court of last resort. What is happening to Malaysia? Are we having leadership crisis or a clash of civilisation?

Levy, Levy, More Levy

RM100 for every vehicle sold. That is how much car manufacturers and importers are going to be asked to put into a road safety fund under a Transport Ministry proposal.

Vehicle manufacturers and importers said they were peeved that the authorities appear to be moving faster on this proposal than on adding meat to the national automotive plan.

Based on the sales of 400,835 cars last year, this scheme of contributing RM100 per vehicle sold would net the road safety fund a tidy sum of RM40 million. The proposal may also require insurance companies and other organisations to contribute to the fund which would further increase the coffers.

When the proposal comes into force, the money collected will be channelled towards a fund called the "Road Safety Trust". Money from the fund will be used to conduct road safety campaigns, and good news for Lim Kok Wing as he should be one of the beneficiaries.

Universiti Putra Malaysia Engineering Department head Prof Radin Umar Radin Sohadi said contribution schemes had been successfully implemented in developed countries. "In Australia, for instance, there is a body called the Transport Traffic Commission where insurance companies and other firms plough back money to educate motorists on road safety," he said. He said the additional funding had helped the Australian Government to launch several programmes that had significantly helped to reduce accidents and save lives. "For instance, they have structured programmes and equipment to teach schoolchildren road safety and the dangers of reckless driving. Their programmes have been very successful," added Radin.

Wow, Malaysia Boleh again!!!

When the Construction Industry and Development Board (CIDB) was set up to enhance the quality and skills of the construction industry, the same philosophy and ideology was preached. CIDB had collected billions of dollars of levy from contractors (0.25% of contract sum for each contract exceeding $500,000), and $250 from each worker who are required to be registered with CIDB.

However, over the two decades, what had been achieved is that CIDB has become a joint venture partner of some construction entities and are procuring projects in India and Sri Lanka. They are now scoping into Vietnam and Cambodia. But the industry is still plagued by poor quality, poor workmanship, poor safety and health environment and practices and project failures.