Penang government hit by graft probe into tunnel project

Penang's Gurney Drive waterfront, where Malaysia's first undersea tunnel has been planned as part of a mega project. There are allegations that a feasibility-study fee linked to the plan has been grossly inflated.
Penang's Gurney Drive waterfront, where Malaysia's first undersea tunnel has been planned as part of a mega project. There are allegations that a feasibility-study fee linked to the plan has been grossly inflated.PHOTO: THE STAR/ASIA NEWS NETWORK

Chief Minister calls it a 'political witch-hunt' ahead of expected national elections

A mega transport project by the Penang state government has yet to take off, but it has already attracted an investigation by Malaysia's anti-graft agency, putting Penang Chief Minister Lim Guan Eng on the defensive.

To ease perennial traffic congestion, the state government is touting a 7.2km road tunnel linking the island to mainland Malaysia to quickly disperse vehicles, making it the country's first undersea tunnel.

The RM6.3 billion (S$2.1 billion) project, first proposed in 2011, also involves constructing three new highways on the island.

The Penang government paid RM208 million as the feasibility-study fee for the highways. The state was quoted a RM305 million fee, but its independent valuer priced it lower.

But the plan by Mr Lim, secretary-general of the Democratic Action Party (DAP), a federal opposition party, could now be in deep trouble.

The Malaysian Anti-Corruption Commission (MACC) last week raided several offices in Penang and Kuala Lumpur, arrested two persons linked to the project and recorded statements from at least 30 people, amid reports by DAP's political foes alleging that the fee was grossly inflated.

The scrutiny, just months before nationwide elections are expected to be held, has been criticised by Mr Lim.

He has led Penang since 2008, when opposition parties led by the DAP defeated the ruling Barisan Nasional (BN) coalition.

"This is an evil scheme, a political witch-hunt," Mr Lim told reporters last Thursday, speaking about the MACC probe. "We have done everything above board... We hope the MACC will not allow itself to be used as a political tool by BN or give the impression that it targets only the Penang government," he added.

  • 7.2km

    Length of the proposed tunnel. The tunnel and three highways were proposed by the state government in 2011 to ease traffic congestion. The project is fully funded by Penang state, with payment not in cash but via a land-reclamation swop.


    Or S$2.1 billion, which is the cost of the project that has been awarded to a Malaysia-China consortium, now called Consortium Zenith Construction.

    30 years

    The consortium's toll concession to operate and maintain the tunnel.


    Expected completion of the tunnel. The highways are to be built first.


    Current transport links between Penang and mainland Malaysia - two bridges and a ferry service.

    Trinna Leong

Several BN leaders have over the years questioned Penang over the alleged inflated fee, claiming that the state paid more than double the projected fee cited previously by one of the companies involved.

Mr Lim said the state was forced to allow for a land-reclamation swop because the Penang government does not have much ready cash.

The crux of the issue for the opposition is why the anti-graft agency moved in only now, with elections round the corner, after years of the issue being aired in the media.

"This appears to be political," said Dr James Chin, director of the University of Tasmania's Asia Institute. "There seems to be an idea to implicate Guan Eng on multiple charges, and hoping one would stick."

Mr Lim is facing graft charges linked to his purchase of a bungalow at a discounted price. That trial is expected to start in March.

Still, political analysts doubt that the tunnel-project controversy or the bungalow deal would cause Penang voters to suddenly come to a conclusion that Penang is poorly governed and corrupt - allegations the DAP has long pointed at the BN government. "Penang voters appear to view these as nothing more than political persecution," said Dr Oh Ei Sun, principal adviser to the Pacific Research Centre.

Added Dr Chin: "This is a Penang sideshow. Come elections, Pakatan Harapan would surely win Penang again," he said, referring to the federal opposition pact that includes the DAP.

A version of this article appeared in the print edition of The Sunday Times on January 14, 2018, with the headline 'Penang govt hit by graft probe into tunnel project'. Print Edition | Subscribe