Two held in graft probe over Penang 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

Duo, believed to be senior execs, detained after raid on firms involved in $2b project

PETALING JAYA • 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 brought before the magistrate's courts in Putrajaya and George Town yesterday. They were remanded for six days, until Jan 15.

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

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

On Tuesday, 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 firms - Ewein Zenith, 555 Capital and Consortium Zenith Construction.

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 included building several highways: A 10.5km North Coastal Paired Road from Tanjung Bungah to Teluk Bahang, a 5.7km Air Itam-Tun Dr Lim Chong Eu Expressway bypass, and a 4.1km 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 promised to deliver the completed studies to the Works Minister to get the necessary approvals. He later said they would be ready by end-2016, but the Works Minister has yet to receive them.

At a press conference yesterday, Mr Lim said MACC investigated the tender process in 2016 and found nothing wrong, adding: "I am surprised over the raid yesterday as it was an open tender overseen by international accounting firm KPMG."

"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," Mr Lim was reported as 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 said the tunnel project would continue unless there is a court order stating otherwise.

THE STAR/ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Straits Times on January 11, 2018, with the headline 'Two held in graft probe over Penang tunnel project'. Print Edition | Subscribe