Guan Eng trial: Court told Consortium Zenith BUCG signed MOU with Penang months before open tender process for undersea tunnel began

Former Penang executive councillor Lim Hock Seng is pictured at the Kuala Lumpur High Court July 15, 2021. — Picture by Yusof Mat Isa
Former Penang executive councillor Lim Hock Seng is pictured at the Kuala Lumpur High Court July 15, 2021. — Picture by Yusof Mat Isa

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KUALA LUMPUR, Aug 19 — Beijing Urban Construction Group Sdn Bhd (BUCG), which was awarded the contract for three roads and the Penang undersea tunnel, signed a memorandum of understanding (MOU) with the Penang government in 2011 for feasibility studies on the mega project, months before it was offered up for open tenders, the Sessions Court heard today.

Former Penang exco member Datuk Lim Hock Seng, when questioned during re-examination by Deputy Public Prosecutor (DPP) Wan Shaharuddin Wan Ladin, confirmed that communications between the Penang state government and BUCG existed since January 2011 as the latter explored the possibility of solving the traffic situation experienced on the island.

Hock Seng, who was the Penang state executive councillor of public works, utilities and transportation, when answering fellow DPP Nik Haslini Hashim, then explained the nature of the MOU signed between both parties.

He stressed that it in no way suggested that BUCG would be automatically awarded the mega project, despite having prior communications.

Haslini: The MOU was signed when the company expressed their interest to cooperate which was agreed by both parties, you agree?

Hock Seng: The MOU was only to carry out the study (on how to alleviate the traffic congestion) that was the objective of the MOU. Whatever developments that were made later, it was not included in the MOU.

When asked, Hock Seng then affirmed that the state government started accepting tenders for the mega project only in November 2011, and how BUCG’s proposal eventually outscored the other contractors and four finalists shortlisted, before they were awarded the contract in July 2012.

To this Wan Shaharuddin then questioned Hock Seng if it was explicitly mentioned in their MOU that the mega project meant to serve as a solution to the traffic congestion would be offered through an open tender.

To this Hock Seng answered in the negative.

Wan Shaharuddin: In all the MOUs you referred to, was it stated this project will be given through an open tender?

Hock Seng: No

Wan Shaharuddin (referring to copies of the MOU): Did it (the MOU) state this project will be given through an open tender?

Hock Seng: According to this report here, no, it was not said.

Wan Shaharuddin: Then, is there something sinister to give the project through direct negotiation?

Hock Seng: No, disagree.

Hock Seng again stressed to the court how the feasibility studies by BUCG was not a confirmation of being awarded the project, adding how the costs of the study undertaken by the Chinese company would have to be reimbursed by the entity that secures contract for the project.

“So we signed the MOU for the study to be carried out by BUCG, the cost of which must be paid back to BUCG by the company that will be appointed later,” he said.

Hock Seng explained how then chief minister Lim Guan Eng had during state exco meetings stressed that the project must be awarded through an open tender and not direct negotiation.

“The chairman at the state exco meeting, who is also the chief minister, said there is a possibility that what was designed by BUCG might not even be used by the final contractor, as conflicts might arise from the technical, construction and technological aspects.

“So this is to say that BUCG, who were present in the meetings would not necessarily be awarded this project,” Hock Seng explained.

BUCG is one half of the Consortium Zenith BUCG joint venture which was awarded the RM6.341 billion project to build three roads and the undersea tunnel in Penang.

In this trial, Guan Eng is accused of seeking and accepting bribes from the Consortium Zenith BUCG’s managing director, Datuk Zarul Ahmad Mohd Zulkifli.

The former Penang CM is facing four charges, one under Section 16(a)(A) of the Malaysian Anti-Corruption Commission Act for having allegedly solicited kickbacks of 10 per cent of future profits from Zarul as a reward to help the latter’s company secure the project in March 2011, as the then CM.

He is also facing a charge under Section 23(1) of the same Act for allegedly receiving RM3.3 million in kickbacks from Zarul between January 2011 and October 2017 for allegedly helping the latter’s company secure the mega project.

The trial before judge Azura Alwi continues on Friday.

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