The Health Ministry was ticked off by the attorney-general in his 2010 report for neglecting to collect RM5 million in rental for a Sabah hospital building and neglecting to account for all its equipment.

According to the report, Sabah Medical Centre (SMC), which rents a portion of a building owned by the Health Ministry and occupied by the Queen Elizabeth Hospital, did not paid its dues since November 2009.

“After a censure by our office, the federal land commissioner issued a notice demanding the rent and SMCSB (Sabah Medical Centre Sdn Bhd) paid RM805,555 for the months November and December 2009.

“This bring total rental arrears to RM5 million,” it said in the 25 pages dedicated to the QE Hospital.

It noted that the rental agreement with SMCSB did not include a clause to allow the government to charge a fine for late rental payments.

However, in response to the auditor-general, the Health Ministry said all arrears up to March 2011 had been paid.

queen elizabeth hospital kota kinabalu 251008 The building, which initially belonged to SMC, was bought by the government for RM280 million - including equipment - when the Queen Elizabeth Hospital tower block needed to be evacuated due to unsafe structure.

The evacuation was carried out in November 2008, when a report found the structure unsound due to the use of low-quality concrete.

In response, the government also rented the Linzhi Senior Citizen complex, which it had to refurbish at a cost of RM25.75 million.

Waiver of late fine for bumi contractor

The report noted that seven of the nine separate projects awarded for the reconstruction of the tower block were late between 10 and 793 days, or more than two years.

It added that a total RM322,779 of liquidated and ascertained damage (LAD) charge – as a result of the delay - was unpaid.

The reason given was that the contractor, which did the piling and substructure work for the specialist clinic which was late by 30 days, was a bumiputera company.

It is not stated why the RM246,000 LAD was not waived for the company which did the piling and substructure work for the tower block, and was late by 190 days.

Also being given the waiver of LAD charges were contractors who did work on the radiology department and intensive care unit, although the ministry responded that an investigating committee will probe the reason for the non-payment.

The reasons given for late completion were changes in layout and unpredictable weather.

Shoddy work was also carried out by the contractors, with the audit finding 1,030 damages including ceiling leaks, structural cracks on walls and gaps at the joint area of a pedestrian bridge.

This include for sections of the building, completed in February 2010, and the specialist clinic, completed in 2008. The tower block is still under construction although its expected completion date has lapsed.

The ministry was found to have overpaid project consultants by RM727,854 above the approved amount, although the total figure cannot be ascertained as the payment vouchers “were not presented”.

RM48mil worth of equipment 'missing'

The ministry was also criticised for neglecting to keep tabs on the RM48.6 million worth of equipment bought from SMC, with some 468 including beds and sofas missing during the audit.

The ministry, however, claimed that they were moved at the time of audit due to renovations.

In addition, RM3.8 million worth of equipment purchased from SMC were found to be out of order.

The report said that the government should have withheld payment of the 2.5 percent of the building sale price, or RM7 million, as warranty.

“Without withholding (the RM7 million), the government cannot make (SMC) fix the faulty equipment,” according to the report.

It also found that the ministry failed to charge rental for the equipment used by SMC, with the ministry responding that it had a meeting in February to negotiate the rental rate.

As of December 2010, RM363.77 million or 39 percent of the approved budget for the reconstruction of the Queen Elizabeth Hospital has been used, while all RM27.75 million has been used for emergency refurbishments.