AUDIT REPORT The government-linked Solid Waste and Public Cleansing Management Corporation (SWCorp) has made RM116.72 million in improper payments to its concessionaires, according to the third series of the Auditor-General's Report 2014.

The payments were made between September 2012 and December 2014. In 2014 alone, the payments amounted to RM56.36 million.

In total, RM34.69 million was paid for work that fell outside the scope of the concession agreement, and another RM28.88 million in payments were endorsed under questionable circumstances.

In addition, for road cleaning works in Kuala Lumpur, there is inconsistency between the payment recommended by SWCorp and the actual length of roads inventoried.

This had led to an overpayment of RM32.48 million, the audit report shows.

Meanwhile, the endorsements for RM8.77 million in payments were found to be unreasonable, and RM11.9 million was overpaid because the claims by the concessionaires fell short of the actual work done.

SWCorp is in charge of handling solid waste management and public cleaning works in Peninsular Malaysia. The three concessionaires working under it are Environment Idaman Sdn Bhd in the northern region, Alam Flora Sdn Bhd in the central region and SWM Environment Sdn Bhd in the southern region.

On another matter, the auditors also found SWCorp wanting when it comes to collecting payments from local governments, resulting in RM316.11 million in arrears as of December 2014.

In response to the claims that it paid for work that is out of scope of the contract, SWCorp told the auditors that there had been requests from local councils to also clean the sidewalks.

“SWCorp has agreed to conduct works beyond the scope of the concession agreement after being told that all payments would not be made through federal government allocations but are instead borne by the relevant local governments. The total cost of work beyond the scope for Putrajaya is RM17.52 million.

“Nevertheless, the local government only paid RM6.57 million while SWCorp paid RM10.95 million, which would be adjusted after the Putrajaya Out-of-Scope Data Refinement Workshop from September to date,” the company is quoted as saying in the audit report.

As for the payments endorsed under questionable circumstances, the auditors highlighted that the size of an area in Putrajaya that the concessionaire is supposed to upkeep is the same as the size of the area inventoried for grass-cutting services there.

Inventory data

However, the size of the area for grass-cutting services is supposed to be smaller, as parts of the landscape would have been taken up by structures such as drains, sidewalks and motorcycle paths.

“This can result in overpayment,” the report says.

SWCorp replied that its inventory data has yet to be finalised and it has taken several steps to resolve its inventory issues, including through a data verification task force formed on Nov 8, 2013.

As for the unreasonable payments, the auditor found that SWCorp had been billed for 277.27km of drain cleaning works in Jalan Hujan Abu 2, Taman OUG, Kuala Lumpur, although only 528 metres of drainage exist there.

In addition, for drain cleaning works along the Sultanah Bahiyah Highway in Alor Setar, SWCorp had been billed the higher rates, as though the concessionaire had fully met its key performance index (KPI).

However, an inspection of the drains found that it fell well off the mark and parts of the drain were not working.

In response, SWCorp said it had made payments based on a full KPI fulfilment on orders from the National Solid Waste Management Department, because geographical data of the drains had yet to be finalised until July 2 this year.

It said it would make an adjustment totalling RM616,254.12 to the concessionaire, which is backdated to September 2012.

No proper priority

As for the drains at Jalan Hujan Abu 2, SWCorp said there had been an error in data entry and the 277.27km actually accounts for drains in 63 housing areas, including Taman OUG, hence no overpayment was made.

However, upon review, the auditors replied that the roads in the amended data still referred to roads in Taman OUG, and the total also exceeds 277.27km.

Separately, the Auditor-General's Report also chastised the Natural Resources and Environment Ministry for not giving proper priority for flood mitigation efforts in the East Coast of the peninsula.

It said Terangganu suffers an average loss of RM101.58 million from floodwaters annually, while Kelantan loses an average of RM93.32 million. This places them in the third and fifth rank in terms of flood damages in the country.

However, Terengganu only got nine out of 187 flood mitigation projects under the 10th Malaysia Plan, while Kelantan had five.

In terms of allocations approved between 2011 and June 2015, Terengganu was provided RM56.85 million, while Kelantan was provided RM5.24 million, out of RM3.35 billion.

In response, the Drainage and Irrigation Department (DID) said it had in fact placed Kelantan and Terengganu on the top five priority list based on the annual flood damage data and the flood conditions at the time, during its proposal for the 10th Malaysia Plan in 2008 and 2009.

“Nevertheless, the final approval is subject to consideration and approval by the Economic Planning Unit in the Prime Minister's Department.

“The department has also proposed to execute the flood mitigation plan for Sungai Kelantan, Sungai Kuantan and Sungai Kemaman under the 11th Malaysia Plan,” the DID said.