Two detained in graft probe on RM6.3 bil Penang undersea tunnel project

The project to build a 7.2km tunnel linking Gurney Drive on Penang island to Bagan Ajam in Seberang Prai on the mainland was awarded by the state government to Consortium Zenith in 2013.
The project to build a 7.2km tunnel linking Gurney Drive on Penang island to Bagan Ajam in Seberang Prai on the mainland was awarded by the state government to Consortium Zenith in 2013. PHOTO: THE STAR / ASIA NEWS NETWORK

PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Two men have been detained after Malaysia's anti-graft agency raided several companies involved in a controversial RM6.3 billion (S$2.1 billion) undersea tunnel project in Penang.

The suspects, believed to be senior executives in property development and construction companies, were on Wednesday (Jan 10)brought before the magistrate's courts in Putrajaya, Selangor and George Town, Penang. They were remanded for six days until Jan 15.

Investigators from the Malaysian Anti-Corruption Commission are believed to be focusing on RM305 million worth of feasibility and detailed design studies for the project that have yet to be completed, even though RM220 million had been paid to a special purpose vehicle for that purpose.

The RM305 million bill is also believed to be 400 per cent above the cost guidelines set by the Board of Engineers.

On Tuesday the MACC raided the offices of four state government agencies - the Penang Public Works Department, Penang State Secretary, Penang Office of Lands and Mines and Penang Valuation and Property Services Department.

It also raided three property development and construction companies - Ewein Zenith Sdn Bhd, 555 Capital Sdn Bhd and Consortium Zenith Construction Sdn Bhd.

The project to build a 7.2km tunnel linking Gurney Drive on Penang island to Bagan Ajam in Seberang Prai on the mainland was awarded by the state government to Consortium Zenith in 2013.

The contract also includes constructing several highways - a 10.53km North Coastal Paired Road (NCPR) from Tanjung Bungah to Teluk Bahang, the 5.7km Air Itam-Tun Dr Lim Chong Eu Expressway bypass and the 4.075km Gurney Drive-Tun Dr Lim Chong Eu Expressway bypass.

Consortium Zenith had said that the feasibility studies would be completed in April 2014.

In early 2016, Penang Chief Minister Lim Guan Eng had promised to deliver the completed studies to the Works Minister in order to get the necessary approvals for the project. Mr Lim later said that the studies would only be ready by the end of 2016. To date, the Works Minister has yet to receive the studies.

In a press conference on Wednesday, Mr Lim said he was surprised at the raid as the MACC had investigated the tender process for the project in 2016 and found nothing wrong.

"I am surprised over the raid yesterday as it was an open tender overseen by international accounting firm KPMG," said Mr Lim.

"We hope this is not because of the elections cycle and this is not because of an attack by pro-BN forces against the state government," he was reported saying, referring to Malaysia's upcoming general election and ruling coalition Barisan Nasional.

The Penang state government has been led by the federal opposition Democratic Action Party since 2008.

Mr Lim added that the tunnel project would continue unless there was a court order stating otherwise.