AG's Report 2013 Lost millions

by **Cals** Fri 11 Apr 2014, 14:27

AG's Report 2013 Lost millions

Business & Markets 2014

Written by fz.com (contributor to theedgemalaysia.com)

Friday, 11 April 2014 12:25

Last Updated: 12:24pm, Apr 11, 2014

THE first series of the Auditor General Report 2013 was tabled on April 7, showing more serious failure in the government administration system.

Every year, the same pattern emerges and millions of Ringgits of taxpayers money are lost. Transparency International Malaysia (TI-M) was spot on when they said the government should emulate the private sector where productivity and compliance are important to safeguard one’s job.

TI-M even described the current civil service in Malaysia as a ‘fattened calf’ that needs to be trimmed down, especially when the economic times are tough.

It said the onus is now on Public Service Department to step up efforts and remove civil servants who are found to be inefficient in managing public funds or else it will continue to cause a strain to the public coffers.

The Auditor General made a total of 109 recommendations to assist the ministries, departments and government companies to improve the inadequacies identified.

Auditor General Tan Sri Ambrin Buang said the weaknesses, among others included 'improper payment', works/supplies/services which did not follow specifications/low quality/unsuitable; delays and unsuitable prices; wastage; weaknesses in revenue management, government asset management and maintenance; non-compliance of environmental regulations as well as weaknesses in the management of government companies.

Below are some of the articles carried by our portal on the report;

April 7

Inexperienced contractors for dam causes flood, delay

by Meena Lakshana

The inexperience and lack of expertise of the contractors hired to helm the construction of the Paya Peda Dam in Terengganu had not only culminated in a flood two years ago but will also affect targeted increase of paddy yields in the district of Besut this year.

The Auditor General's (AG's) Report 2013 stated today that the Finance Ministry had hired water and steel pipes manufacturer JAKS Resources Bhd and Pembinaan Sujaman Sdn Bhd through a RM342.55 million contract via direct negotiation.

However, the AG found that not only did the contractors lack the experience needed in the construction of a dam with a hydro mechanical gate system, they had also flouted international guidelines, failed to submit preliminary drawings resulting in an incomplete submission for the project and made wrong calculations on components of the project.

They also had insufficient assets for construction, causing a delay in the completion of the project which was initially targeted to be completed within a timeframe beginning June 1, 2010 to November 30, 2013.

"For example for the month of July 2013, the total number of machines should be used in the construction of the Peda Dam is 215 units of machinery but the contractor only uses a total of 151 units of machinery alone," the report stated.

"In the Audit's opinion, this delay can be avoided if the contractor had been working to implement the project as specified in the contract.

"It could have also been avoided by the selection of competent contractors in terms of experience, knowledge, and sufficient resources in construction management, especially for large-scale projects requiring high technical expertise."

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Retailers under Tukar forced to sell or rent

by Meena Lakshana

The lack of increase in sales and profits had spurred some business owners involved in the Retail Stores Transformation Programme (Tukar) to sell or rent their premises to other parties.

According to the Auditor General's Report 2013, 18 (26%) out of 70 retail stores of sundry shops involved in the programme has sported a decline in sales partly due to competition from other nearby supermarkets.

Furthermore, 10 stores had closed down their businesses, partly due to capital shortage.

"Besides that, the participants had difficulties in getting their supply because they did not maximise the returns on stock sales as a working capital for the next stock purchase," the report stated.

"In addition, the participants also experienced difficulty in returning expired items due to absence of agreement between the participants and suppliers," it added.

As a result, some of the business owners had to relinquish their stores by selling or renting out the premises.

According to interviews between some participants and officers from the Auditor General's office, this was done as there was no clause in the contracts that specified against selling or renting our premises involved in the programme.

"Among the causes of the poor sales causing participants to close or sell their businesses are due to competition with a nearby supermarket, difficulties in obtaining goods as well as the reluctance of suppliers to accept faulty or expired goods, the unsuitable locations of the stores and the priority of the Tukar programme on store upgrades rather than capital assistance to restock merchandise," the report stated.

Read the recommendations here: [You must be registered and logged in to see this link.]

Selangor government falls short of promise

by Jaqueline P'ng

The Selangor state government has fallen short of its promise to spend according to its much promoted "value for money" principle, said the 2013 Auditor General's report.

In 2000, the Selangor state government approved a proposal to build official residences for all state executive councillors (Exco) at Shah Alam to make it more convenient for them to meet with officers and the public for discussions.

The AG found that these houses have not been fully occupied, ill-managed and are depleting state coffers unnecessarily with high maintenance costs, utility bills as well as loss of rental.

In January 2005, the official Exco residences were built on 6.51 acres in Section 7, Shah Alam which belongs to the Selangor State Development Corporation (PKNS), the report stated.

The houses were built by PKNS's subsidiaries and took 21 months starting from 29 April 2003 to complete, costing RM27.91million on RM4.29million worth of land.

The project was fully funded by PKNS and was handed over to the state government as a form of contribution.

The report found that when the houses had changed status from being "official exco residences" to "government housing" shortly after the 12th General Election, the occupancy rate fell sharply.

More on the shortcomings here: [You must be registered and logged in to see this link.]

Kuantan new court complex overshot budget by RM19m

by Syuhada Roskhamdi

The delay in the construction of the Kuantan new court complex for 560 days has resulted in the escalation of cost by RM19.56 million, according to Auditor General Report 2013.

The reasons given were poor planning in the design and scope of work of the building's construction.

The construction of the new court complex, which covered an area of 11.01 acres, started on July 8, 2009 with a contract period of 78 weeks. It has been executed under the Second Economic Stimulus Package with a contract bearing the cost of RM157.34 million.

Unfortunately, the project was not completed on time and accomplished only on July 17, 2012 - 158 weeks behind schedule. The Public Works Department (PWD) later handed over the project to the Office of the Chief Registrar of the Federal Court on July 20, 2012.

The report said that despite findings that the construction of the complex was at a reasonable level, certain defects were not rectified, which included the Defect Liability Period (DLP), maintenance works during DLP, impractical design and disobeying the contract conditions.

Other defects included unsatisfactory construction works with differences between the As-Built Drawings and the actual construction. In addendum, the equipment were also not placed in the suitable location.

More defects here: [You must be registered and logged in to see this link.]

Management, maintenance of Batu Kawan Stadium poor

by Sangeetha Amarthalingam

The management and maintenance of the Batu Kawan Stadium has been found to be less than satisfactory due to disorganised bookings, damages to facilities and equipment, and lack of safety in the premises.

The 2013 Auditor-General's Report revealed that despite the increase of the stadium's usage by 207 times or 287.5% in 2013 and 122 times (169.4%) in 2012 compared to 2011, the weaknesses were glaring.

The report wrote up the stadium's performance of the rental management and maintenance as "less than satisfactory".

Unveiled today, the report prepared after an audit conducted between March and June 2013 listed six setbacks.

They comprise:

- disorganised management of stadium bookings

- regulations on cub prix racing rental was not set, rental rates were not standardised, and stadium stalls rental not satisfactory

- poor management of receivables

- unsatisfactory performance of cleaning contracts

- damages to facilities, equipmet and in the stadium surroundings

- less than satisfactory stadium's safety

The stadium located on a 90-acre site in Batu Kawan, on what used to be a rural site surrounded by oil palm plantations, was built in 2000 to replace the City Stadium on Penang island to host the Malaysian Games (Sukma) 2000.

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Penang's Islamic college performance unsatisfactory

by Sangeetha Amarthalingam

Lecturers teaching without permits and unaccredited diploma programmes were among some of the unsavoury findings on the seven-year-old Kolej Islam Teknologi Antarabangsa (Kitab) featured in the Auditor-General's Report.

The college, set up by Usaha Tarbiah (Pulau Pinang) Sdn Bhd (UTSB), a wholly-owned subsidiary of the Penang Islamic Religious Council (Maipp), received the approval for establishment by the Higher Education Ministry in 2004.

However, an audit carried out last year revealed that "as a whole, the financial and corporate governance performance of UTSB was less than satisfactory".

When it was set up Kitab offered five diploma programmes comprising Diploma in Syariah, Tahfiz Al-Quran, Qiraat Al-Quran, Banking, and Finance, respectively and three degree programmes.

The report revealed that three out of five diploma programmes possessed only 'provisional' accreditation from the Malaysian Qualifications Agency, and that no application was made to obtain accreditation for the three degree programmes.

For more, read here: [You must be registered and logged in to see this link.]

Mismanaged Rural Internet Centres in Sabah

by Jaqueline P'ng

Piles of unused and damaged computer devices were found chucked aside in Sabah's Pusat e-Desa or Rural Internet Centres set up by the Ministry of Resource Development and IT as revealed in the 2013 Auditor General's Report.

Since 2004, RM10.45 million was allocated to build and furbish 32 Rual Internet Centres in Sabah following the 8th to 10th Malaysia Plan. In that period the ministry spent RM1.07 million or 64.5% from the RM1.66 million funds set for paying administrative expenses, while a total of RM4.87 million or 89% from RM5.47 million development allocation was used, said the report.

The centres, intended to bridge the digital divide in rural areas of the state, are equipped with internet connection and all necessary computer devices such as printers, scanners, PC workstations to aid people with their studies and research.

However, the AG's visit to several of such centres discovered that not only mismatched equipments were under utilised, some of the centre's infrastructure were at a shabby state where damaged furnitures were hidden in toilets and pantry, and the roofs were leaking.

Newly bought printers, scanners and WiFi routers were also found idle in the centres, said the report, and an air-conditioning unit was found dumped in the Pusat e-Desa Management Committee chairman's home.

More here: [You must be registered and logged in to see this link.]

MPPP solid waste management gets 'satisfactory' mark

by Sangeetha Amarthalingam

Penang Island Municipal Council (MPPP)'s solid waste management by seven contractors monitored through Global Positioning System (GPS) was given an 'overall satisfactory' evaluation.

However, several setbacks were identified in the 2013 Auditor-General's Report such as the uncleared contamination from leachate that spilled on roads in the MPPP operations area.

It also revealed that the weight of solid waste disposed by the contractor failed to achieve the minimum weightage specified in the agreement.

The report also pointed out the inefficient collection service by MPPP due to the shortage of truck compactors, and that waste bins provided by MPPP failed to accommodate the amount of solid waste discarded by the public.

It was also learnt that the total suspended solids in all locations around the landfill exceeded the standard limit, and action taken on solid waste management complaints were acted on slowly.

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'Contracts for Johor's low-cost flats had expired for up to 18 years'

by Chee Yuen Gho

The Johor government had failed to renew tenancy agreements with 29 occupants of low-cost flats (PPR) for up to 18 years.

Highlighting this lapse, the Auditor General's Report 2013 stated that the absence of a valid rental agreement with occupants had jeopardised the state's interest.

"The state would not be able to take legal action against these occupants even if they are in breach of the terms of occupancy," the report read.

"The occupants record system used by the state was also not up to standard as many of the files have been lost," it said.

The state's agreement with private companies which have obtained concessions to manage PPR projects in Johor Bahru district, Johor since 2007 were also lapsed for up to three years.

The report noted that although notices had been issued to the respective companies to extend their services, no new agreement was signed up to the point of audit.

"We also could not verify whether the agreement of the concessionaires had been extended as there are no official records kept by the state," the report added.

Recommendations for improving PPR management here: [You must be registered and logged in to see this link.]

April 8

Kelantan's Yakin missed out on RM4.5m

by Nurul Iman Dimyati

The Yayasan Kelantan Darul Naim (Yakin) had missed out on earning RM4.5 million in tributes in 2012 due to a delay in appointing a manganese mining company.

Manganese is a mineral used to bend or soften steel and manganese mining is one of the development and investment activities undertaken by Yakin.

According to the Auditor General Report 2013, Yakin's delay had caused mining activities to be halted for 10 months which resulted in the foundation skipping out on its tribute earnings.

"The delay in the decision by Yakin to appoint miners caused Syarikat Centamin's mining operations in the area to be stalled for 10 months, from August 2011 to May 2012.

"As a result of that, Yakin was not able to generate tribute revenue of about RM4.5 million. This is based on the production of manganese from the area before which is estimated at 30,000 metric tonnages (mt) valued at RM450,000 per month," according to the report.

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