Sarawak DAP chairperson Wong Ho Leng has alleged that the main contractor for a RM300 million state government project will be able to 'pocket' RM70 million without having to do anything.

The Sarawak State Legislative Assembly building project has been awarded to PPES-Naim JV which will carry out the work for RM230 million, he said in a statement.

"This (also) does not include any additional profit arising from any variation order," he added, which further raised questions about the manner in which the contract was awarded.

The build-and-design contract was awarded directly to a joint venture company comprising PPES - a subsidiary of CMS Bhd which is controlled by the family of Sarawak Chief Minister Abdul Taib Mahmud - and Naim Cendera.

Construction is being undertaken by Bina Puri Sdn Bhd, a wholly-owned subsidiary of listed civil works and infrastructure company Bina Puri Holdings Bhd.

Responding to a Bursa Malaysia Securities Bhd query about a report in The Edge Daily recently, Bina Puri announced on Aug 5 its undertaking to construct the new complex at Petra Jaya, Kuching, at a contract worth RM228,909,249.51.

Sarawak DAP has already taken the state government to task for being "wasteful and extravagant" in putting up the new building, saying the existing legislative assembly building is still useful and can last for 100 years.

Everything wrong

Wong, a former state assemblyperson, said the fact that an open tender was not called was suggestive of a lack of accountability and transparency.

"How closely related is CMS with the powers-that-be? I would not at this stage (say there was) anything wrong in the manner in which CMS got the award, but there is certainly everything wrong with the government for not calling an open tender," he said.

He also criticised leaders of state BN component parties for not speaking out against the project.

"Why have they been keeping quiet? It is very mind boggling. Or, if one considers the manner in which many huge projects have been awarded in this country, it is not surprising. Direct contract awards are given to cronies," he claimed.

"But, uppermost in my mind about the construction of the new complex ( left ) is this - if the government had thought that CMS and Naim could do it, the buck should stop there. Naim and CMS should do it. Period. Why should Bina Puri come in?"

He said RM300 million is "a humongous sum, more so when it doesn't look like the Sarawak government has the money to pay for it", backing his claim by saying it has been borrowing from other countries.

"Amazingly, Naim and CMS got the direct award for RM300 million. Yet, Bina Puri got it for RM230 million. For having to do nothing, Naim and CMS earned RM70 million."

Wong felt that no one should be so privileged as to be given an award, and then pass it on to the sub-contractor.

Profits guaranteed

"Naturally, the complex will not be built at the original price of RM300 million. Bina Puri will build it for only RM230 million, meaning that this is the actual price tag."

He claimed that Sarawakians have been short-changed by their government.

"Taxpayers pay RM300 million, but will get a building that costs RM230 million. There is nothing to stop the main sub-contractors from engaging other sub-contractors, thus further diluting the original price," he added.

PPES Works Sdn Bhd, the wholly-owned subdisiary of CMS Bhd, has over the years undertaken more than RM2 billion worth of road works for the government and contracted out to various sub-contractors for a clean profit of about three per cent. PPES Works is also undertaking water supply projects which are also sub-contracted out to guarantee them the same level of profits.

"A lot of local companies are in fact benefitting from contracts awarded to the CMS Group which guarantees itself a reasonable profit while ensuring that its many sub contractors are appropriately rewarded for carrying out sub contract works and delivering them on time," a local consultant said.

"Where the profit margin is higher is when CMS is awarded a turnkey or a project like the state assembly complex on a design-and-build basis.

"The guaranteed profit from the complex project is significant and is one of the most profitable considering the contract sum and contract period," he added.

TONY THIEN is malaysiakini 's Sarawak-based stringer.