Media statement by Dr. Hiew King Cheu in Kota Kinabalu on Saturday, 29^th October 2011:

Audit General found faults in SMC Purchase

The SMC complex in Damai was bought over by the Ministry of Health for a price of RM280 Million. This was a measure to solve the shortage in the wards, hospital beds, operation theatres, and ICU faced by the Queen Elizabeth Hospital in Kota Kinabalu. This is now the HQE 2, and the purchase included a land area of 2.42hectres, the building, the treatment plant, the transportation and equipments. This was disclosed in the Audit General report for 2010.

The report gave further details on the terms and condition of the Sale and Purchase agreement made between the government and the SMCSB (Syarikat SMC Property Sdn Bhd). It has highlighted the particular clause on the "Guarantee money on Equipments" by stating that according to the agreement, the government will detent a sum equivalent to 2.5% of the purchase price, and RM7 million as the guarantee amount of money on the equipment that was sold by the SMCSB in good condition, fully operational and function able. The retention money shall be withheld for a period of 6 months from the date of the purchase to 2nd May, 2010, unless SMCSB can produce a guarantee bond for the said amount. However, the clause can not be enforced because the government 0n the 21st of October 2009 had paid the full amount of the purchase price of the SMC although the bond was not produced by the SMCSB.

Without the retention money as required, the Ministry of Health can not tie down the SMCSB to make good, repair and maintain the broken down equipments, because of that some RM3.81 million worth of equipments can not be operational and broken down completely. After the government had taken procession of the complex, these were still not repaired by the SMCSB until the visit by the Audit department came on the 6th November 2010.

The list on these equipments was given by the Audit department which on top of the list is 4 units of Radiotherapy and Otology costing RM2.80 million, the 5 laboratories equipments - RM672,000, 3 units of Radiology fittings - RM104,000, 2 units of reverse Osmosis Water Treatment sets, water tank for Dialyser Reproseser - RM108,960 and many others items which have no details.

The report continues to say that there are many items which were included in the sale were not found, and these were under the clause of sale "as is where is" condition when handing over. After the Audit's physical check there were 468 units of tools and equipments were missing. The HQE 2 management can not explain and provide detail to the Audit.

On the part of the delayed rental payment to Ministry, according to the agreement a rental of RM416,667 per month is payable starting from 3rd of November 2009 and to be paid before the 7th of every month. Audit found that SMCSB never make payment since November 2009 until the date of auditing on October 2010 amounting to RM5 million. After the Audit, on 2nd November 2010, the SMCSB was given notice on the delayed rental and on 15th of November 2010 then they paid two months rental of RM805,555 for November and December 2009 that brought the total due to as at 31st December 2010 to a big figure of RM5 million.

The amount was finally paid up by the SMCSB on March 2011, and this was the reply from the Ministry of Health on the Audit report. There are many other matters were not brought up here regarding the SMC issue.

How these can happen when there is a Sale and Purchase Agreement signed and executed on the Purchase of the SMC to turn into a QE hospital. There are so many faults and discrepancies, and why the terms and conditions were not followed. This is unacceptable even though the Ministry of Health had made explanations in 2011 to the Audit on various matters and chased the full payment on the rental due. We see this as a total negligence and deliberate fault on the part of government. Many people said if the Audit department did not do their job properly and found the faults, many of these defaults could have been swept underneath the thick carpets and covered up for ever.

This is a serious offence on the part that the government is not doing their duties, and we need some action to be taken to dig down to the bottom of the wrong doing here, especially it is involving such a huge sum of money and the degree of involvement. We demand the MACC to take action to investigate the whole event, and on the details as stipulated in the Audit General Report 2009. This is believed to be not some "mistakes" but it can be taken as a very serious case of "abuse of power" and "negligence" on those who are involved, and including the Minister of Health himself who had failed his job.

* Dr Hiew King Cheu, MP for Kota Kinabalu