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Media Statement by Lim Kit Siang in Petaling Jaya on Sunday, 22nd May 2010: 

Najib should not dodge questions but should answer frankly whether the Bakun Dam project has cost overruns of RM1.7 billion and that the government will be asking Parliament for a RM700 million bailout package for Sime Darby

The Prime Minister, Datuk Seri Najib Razak has dodged questions about the Sime Darby costs overruns scandal since the GLC-conglomerate’s May 13 admission of RM964 million losses for the second half of FY2010, comprising:

1. Qatar Petroleum (QP) -RM200 million
2. Maersk Oil Qatar (MOQ) -RM159 million
3. MOQ marine project -RM155 million
4. Bakun Dam -RM450 million
Total -RM964 million

These are however only a part of the losses suffered by Sime Darby from these projects, for instance:

  • the RM974 million QP project which was awarded in April 2006 and scheduled for completion in August 2008 incurs losses exceeding RM500 million;

  • the RM2.2 billion MOQ Project, awarded in January 2007 and due for completion in October 2009 incurs RM526 million losses.

The Bakun Dam is a different kettle of fish altogether. It has been reported that Sime Darby has incurred more than RM1 billion in cost overruns from carrying out a civil works contract for the hydroelectric project, with one estimate putting the total cost overruns at RM1.7 billion, which is almost the same size as Sime Darby’s actual Bakun contract of RM1.8 billion.

It has also been reported that the government has agreed to reimburse around RM700 million to Sime Darby, leaving the group with around RM1 billion to deal with.

Najib said publicly that Sime Darby should determine the cause of its RM964 million losses first before the issue of responsibility.

This is far from correct as RM964 million losses are for the second half of the FY2010 and small porton of the total losses of Sime Darby in its history of some RM3.5 billion write-offs, and with more to come. Star today carries the following table:

History of write-offs in Sime Darby group

Description Period Estimated quantum (RM)
Provision for costs overruns for Energy & Utilities projects 3 QFY2010 964 mil
Provision for cost overruns for the RM2.2 bil Maersk Oil Qatar project 2 QFY2010 210 mil
Provision for costs overruns for the RM1 bil Qatar Oil Project 4 QFY2010 80-100 mil
Futures trading loss due to trading of palm oil FY2008 120 mil
Provision for vehicles sales receivables in China FY2005 164 mil
Provision for cost overruns in Bakun hydroelectric project FY2004-FY2005 132 mil
Losses due to Sime Bank FY1998 1.8 bil

While investigations are ongoing to determine the causes of the losses and the persons responsible, Najib should not shirk responsibility from giving Parliament and Malaysians answers which are available to him now, viz: whether the Bakun Dam project has cost overruns of RM1.7 billion and that the government will be asking Parliament for a RM700 million bailout package for Sime Darby.

Former Prime Minister, Tun Dr. Mahathir Mohamad is gloating over the Sime Darby and Bakun Dam fiascos, and it seems to be “sweet revenge 25 years later” when he called on Tun Musa Hitam and the entire Sime Darby Board to resign over the cost overruns.

The 2M government of Mahathir and Musa (Mahathir had later claimed that 2M really stood for Mahathir Mohamad) lasted less than five years from 1981 before it broke up, with Musa teaming up with Tengku Razaleigh Hamzah to challenge the Mahathir premiership but it is only now we see the return of the “2Ms”, with Mahathir going for Musa’s jugular.

But it must be conceded that Mahathir raised a most legitimate question when he asked:

“Is it only the CEO (Datuk Seri Ahmad Zubir Murshid) who was responsible? Who are the others who were involved with the project and failed to see that the cost overrun was very high and the project has been delayed by almost 3 years.

“I think responsibility should be shared. I was told of this cost overrun and delay three years ago.”

However, Mahathir should not be overhasty in his bombardment of Musa and Sime Darby, as during the Sime Bank Bhd financial crisis when it incurred losses amounting to RM1.8 billion during the 1997/8 Asian financial crisis, only the banking head Datuk Ismail Zakaria resigned while the group president and chief executive Tan Sri Nik Mohamed Nik Yaacob retired only in 2004. Zubir took over the position of chief executive after that.

Who was the Prime Minister during the Sime Bank crisis of 1997/8?

*Lim Kit Siang, DAP Parliamentary Leader & MP for Ipoh Timor



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