‘Deputy CM’s defence of scandal a joke’

GEORGE TOWN: Deputy Chief Minister II P. Ramasamy should stop being defensive over the proposed Penang undersea tunnel scandal, MCA deputy president Datuk Seri Dr Wee Ka Siong said.

“His (Ramasamy’s) opinion piece today (yesterday) that defended the project is a joke. It is nothing more than a drowning man clutching at straws,” Wee said yesterday.

He said Ramasamy had claimed that there was a campaign against the Penang government’s tunnel project, using half-truths, lies and distortion of facts.

“However, he (Ramasamy) has been caught red-handed using half-truths, lies and distortion of facts to mislead and confuse the people.”

He added that Ramasamy had said: “I do not think that the Penang state secretary said that CRCC (China Railway Construction Corporation Ltd ) holds equity in the SPV (special purpose vehicle).”

“This is a ridiculous statement. “The state secretary did say this in his statement dated March 4, 2013, to defend allegations that the SPV did not meet the financial requirement to have a combined paid-up capital of at least RM381 million.

“He had claimed that the SPV was backed by RM4.5492 billion in paid-up capital.

“He (the state secretary) had said that Consortium Zenith Construction Sdn Bhd, together with CRCC Ltd, held 70 per cent equity with paid-up capital of RM3.5 million and RM4 billion respectively, while Beijing Urban Construction Group (BUCG) held 10 per cent equity with paid-up capital of RM541 million.

“Does the word equity mean nothing to Ramasamy?” Wee asked.

He said even Chief Minister Lim Guan Eng had repeated the RM4.5 billion paid-up capital backing in his interview with a news portal published on April 11, 2013.

In the interview, Lim had said: “The project was not awarded to some RM2 crony company with no expertise or experience at an overly-inflated price, but to companies with a combined paid-up capital of RM4.5 billion.”

Wee, however, said CRCC and BUCG were no longer shareholders in the SPV, with CRCC confirming that it was just a contractor to the SPV and not a shareholder.

“Would Ramasamy agree that a ‘bait-and-switch’ has taken place, where what was promised is now something entirely different?

“CRCC is a contractor of the SPV and did not enter into a construction contract with the Penang government.

“Ramasamy can prove me wrong by publishing the contract between the state government and CRCC. But, he will not succeed as such a contract does not exist.”

Last week, CRCC confirmed that it was never a shareholder or a developer of the SPV and was just a contractor, and that the project had not yet started.

This raises doubts whether the SPV has the financial strength to pay CRCC.

Wee said the effect of this meant that the RM6.3 billion project had been awarded to a local company with only RM300,000 paid-up capital that was registered on Aug 22, 2011, less than three months before the tender opened.

“With this revelation, Ramasamy should explain why the state government did not penalise or cancel the contract as the SPV has never met the minimum RM381 million paid-up capital backing required for the project.

“He went on to say that how Consortium Zenith made a pretax profit of RM60 million for in 2015 was of no concern to the state government, as the company may have other businesses.

“He did not acknowledge the fact that Consortium Zenith, as the SPV, was only registered in July 2012 for the sole purpose of delivering the tunnel project.

“Its only source of revenue in 2015 would be from doing the reports for the RM305 million feasibility studies, or selling or developing the state land given as payment for doing the reports.

“Thus, questions that the reports are grossly over-priced are valid, given the super profits that the then two-year-old SPV is already raking in.”

Wee added that while the SPV was making a huge amount of money, the people of Penang were not benefiting from the feasibility studies.