The government has been taken to task for bailing out Indah Water Konsortium, the sewage treatment concessionaire, which already had cost taxpayers some RM1 billion.
The bailout has drawn sharp criticism from reform movement Aliran and the Consumers Association of Penang over the weekend.
CAP president S.M. Mohamad Idris said on Saturday that though the IWK case would be the first to be taken back by the government, its failure was a reflection of what was deeply wrong with the government's privatisation programme started in 1984.
"The public has long bemoaned the lack of transparency in the manner in which privatised projects are awarded by the government.
"The purpose of privatisation is to relieve the government of financial and administrative burden, but when the government ends up footing the bill for the companies' failure, then it defeats the whole purpose of privatisation," Idris said in a statement to malaysiakini.
In a report on Friday, "IWK bailout a wastage of public funds", malaysiakini quoted reform movement Aliran's call on the government not to waste any more taxpayers' money to bail out failed privatised projects.
DAP chairman Lim Kit Siang today questioned the takeover by the government, particularly its agreement to pay RM200 million as compensation to IWK's holding company, Prime Utilities, a company listed on the main board of the Kuala Lumpur Stock Exchange.
After re-tabling the 2000 Budget in Parliament last Friday, Finance Minister Daim Zainuddin had confirmed that the government had finalised an agreement with Prime Utilities to resume control over Malaysia's debt-ridden sewerage operator seven years after privatising the operations.
Lim claimed that the concession, first given to business tycoon Vincent Tan Chee Yioun in 1994, had changed hands "four times" in the last seven years, and that in every changeover, the previous concessionaire's interests were fully protected with each of them reaping a profit at taxpayers' expense.
He charged that the Finance Minister had committed a "gross dereliction of duty" in not informing Parliament why the government was using taxpayers' hard-earned money to give a RM200 million "golden handshake" for the failed IWK project after the government had pumped in about RM1 billion since its privatisation.
"The previous Parliament only approved another loan of RM150 million to help meet Indah Water Konsortium's operational costs six months ago," Lim added.
Aliran President P. Ramakrishnan had also called on the government to review all privatised projects and those under consideration and not proceed with any until a comprehensive study had been conducted.
Very often, there had been no open tenders on previous privatisation projects, and these projects were passed on to certain politicians' cronies at taxpayers' expense, he said when commenting on a report in The Sun on Friday that IWK was RM700 million in debt and would be bailed out by the government.