The construction of the RM482 million Shah Alam hospital is expected to face more delays after an acrimonious fallout between the main contractor, a company owned by members of the Selangor royal family, and its lead sub-contractor.

NONE The tiff between the two parties took a turn for the worse as Sunshine Fleet chief Tengku Putri Arafiah Sultan Abd Aziz Shah, who is the sister to the Selangor sultan, issued a letter stating its intention to terminate sub-contractor GM Healthcare within seven days.

This is likely to put back the completion date for the 300-bed Shah Alam general hospital even further after an earlier seven-month delay. Originally the hospital was to be ready by November this year.

Works Minister Shaziman Mansur had told Parliament last month that the project will now be completed by June 2011. He however insisted that everything was smooth sailing for the troubled and 'overpriced' project.

Show-cause letter

According to the show-cause letter issued by Sunshine Fleet on July 2 - a copy of which has been obtained by Malaysiakini - subcontractor GM Healthcare was behind schedule in the construction of the hospital.

NONE Sunshine Fleet is demanding an explanation for the delays within seven days and make its case as to why it should not terminate the subcontractor's services.

The Selangor royal family-linked contractor also threatened to make GM Healthcare shoulder the costs, losses and expenditure should the main contractor run into trouble with the Public Works Department (PWD) for failing to complete the hospital on time.

However, when contacted by Malaysiakini , GMH Healthcare chief executive officer Elvin Toh said that the delays stem from the failure by Sunshine Fleet and project banker Bank Rakyat to disburse money from PWD to the subcontractors.

"They are holding on to our payments. The subcontractors have not been paid since June 5, how can we proceed with work?" asked the exasperated chief executive.

NONE According to Toh, the non-payments were allegedly the results of instructions from Arafiah to the bankers to cease payments to the subcontractors.

Toh also alleged that the Sunshine Fleet may also be responsible for attempts to harass workers and vandalise the project site, for which he claimed to have video evidence.

According to Toh, these disruptions has caused "progress to come close to stop-work condition, with physical work having "ground to a halt".

He added that the other sub-contractors are all in agreement with GM Healthcare in this and will act collectively in the face of this new twist in the Shah Alam hospital saga.

"We hope that the government can intervene to avoid the project from facing further complications," said Toh.

Bizarre twist

In a bizarre twist, the main contractor had earlier asked the PWD not to pay it and the subcontractors for work already done on the hospital project, though progress payments resumed shortly after GM Healthcare issued a stop-work order to its workers on-site.

Sunshine Fleet is owned by Arafiah (70%), her son Putera Azamuddin Shah Abdul Aziz (10%), and fellow royal Tengku Abdul Samad Shah Sultan Salahuddin Abd Aziz Shah (20%).

NONE The royal trio also make up the board of directors of the company, though Azammuddin is strangely suing the company for allegedly sidelining him in its management.

Sunshine Fleet's actions are bound to lead to more delays in getting the hospital ready in time as GM Healthcare is responsible for the entire construction, fitting and commissioning of the project.

This will leave the main contractor and the hospital project high and dry should the sub-contractor's services be terminated.

The capabilities of Sunshine Fleet to handle the job on its own has long been the bone of contention for its critics who questioned how such a project can be awarded without open tender to a company some claimed unfit to see it through.

Opposition parliamentarians Tony Pua and Shah Alam MP Khalid Samad have labeled the project an 'Ali-Baba' venture .

Troubles surrounding the project was highlighted by Malaysiakini in December last year and has sparked concern over the delays in the project and what appeared to be another waste of public funds in favour of government cronies.