Malaysia's finance minister says there is nothing wrong with 'direct nego' contracts

Malaysia's Finance Minister Tengku Zafrul Aziz revealed in Parliament that the PH administration dished out RM6.61 billion in "direct nego" contracts.
Malaysia's Finance Minister Tengku Zafrul Aziz revealed in Parliament that the PH administration dished out RM6.61 billion in "direct nego" contracts. PHOTO: TENGKU ZAFRUL/FACEBOOK

KUALA LUMPUR - Malaysia's Finance Minister Zafrul Aziz on Thursday (Aug 27) said there is nothing wrong with conducting direct negotiations, despite earlier accusing the previous Pakatan Harapan (PH) government just days ago of giving out billions of ringgit worth of contracts without open tenders.

Stressing that the issue shouldn't be politicised, Datuk Seri Tengku Zafrul said there are policies which enable justification for direct negotiations under Section 6 (1) of the Financial Procedure Act 1957 (Revised 1972).

"To me, it is just factual, and a reflection of what was signed based on the data (letter of awards, or LoAs signed) that we have in the Ministry of Finance, and it should not be an issue," he told reporters at an event in KL.

He said this moments after his predecessor, Lim Guan Eng, on Thursday responded to Mr Zafrul's revelation in Parliament on Monday (Aug 24) that the PH administration dished out RM6.61 billion (S$2.16 billion) in 101 "direct nego" contracts.

Under pressure from opposition MPs, the government on Wednesday (Aug 26) released details of the 101 contracts.

Most of the RM6.61 billion, Lim told a news conference, went to legacy projects (67.7 per cent), and contracts for supplies or services (26.5 per cent) taken on during the Barisan Nasional (BN) administration.

He added that PH was only responsible for 5.3 per cent of the RM6.61 billion awarded during its 22 months in power.

The issue surfaced in Parliament on Monday when the Finance Minister was responding to queries about direct awards without open tender during the coronavirus pandemic which he said were necessary due to the urgent situation.

Mr Zafrul said PH had also engaged in direct negotiations, a claim that caused an uproar as the coalition had promised to do away with the practice in its manifesto ahead of the 2018 election.

The term direct negotiations has become a byword for corruption over the decades, with allegations of large government contracts directly awarded to crony companies.

The previous premier, Tun Dr Mahathir Mohamad, on Tuesday demanded that the Treasury make public full details of the 101 projects, while the former PH government's finance minister Lim  said that direct deals under both BN and PN should also be looked into.


Malaysia's anti-corruption commission has also said it will be studying the matter.

While the list was supposed to show PH had awarded them without open tender, it has instead revealed the shortcomings of member parties in the current Perikatan Nasional (PN) administration.

It was revealed that half of the RM352 million "new" directly awarded contracts undertaken by PH was for a project under the Housing and Local Government Ministry, headed by Selangor MP Zuraida Kamaruddin.

"Perhaps it's better for the minister, who has refuted claims of being involved in direct awards, to explain what happened," Lim said.

In response, Madam Zuraida insisted that the contracts awarded were approved without her knowledge, and said her ministry would probe the issue.

The list of 101 projects showed that two-thirds of the RM6.61 billion was for the Klang Valley Double Track Phase 2 (KVDT2) upgrade. The project was initially directly awarded to Dhaya Maju LTAT two days before Parliament was dissolved in 2018.

PH had cancelled the RM5.3 billion deal before re-awarding it to Dhaya Maju LTAT - a joint venture involving the Armed Forces pension fund - last year at a reduced cost of RM4.5 billion.

Among the other spending from the RM6.61 billion outlay was by the Defence Ministry under PH, which issued RM901 million in direct tenders.

These were largely for maintenance of aircraft that went to Airod, an outfit initially set up in 1975 by the air force to support its own fleet. Another RM223 million of the RM901 million sum was awarded to Airbus to service the A400M military transport plane that the European company manufactures.

Meanwhile, the Home Ministry had agreed a RM271 million extension with Datasonic for the supply of passport pages, with the company previously appointed by the BN government.

There was also a RM151 million directly awarded deal for police network services with state telecom firm Telekom Malaysia.

Telekom also won a RM94 million contract as the sole provider for emergency response services from the Multimedia and Communications Ministry.

The ministry also directly negotiated a RM254 million deal with MYTV, controlled by politically-linked tycoon Syed Mokhtar Albukhary, for the digitisation of television services that began during BN's rule.

Dewan Bahasa dan Pustaka, the government agency in charge of overseeing the use of the Malay language, was also directly awarded a RM70 million textbook supply contract from the Education Ministry.

Note: This story has been edited for clarity.