Can Ong Ka Ting explain the price difference of RM300 million for the Broga incinerator, following the latest Ebara's financial scandal?

Media Statement
by Ronnie Liu Tian Khiew

(Petaling Jaya, Thursday): In early July, the Housing and Local Government Minister Datuk Seri Ong Ka Ting said the government was probing a series of allegations involving Ebara's business dealings in Japan's multi-billion dollar waste management sector.

This followed media reports in Japan alleging that Ebara, a major player in that country's incinerator industry was in dire financial straits and had a bad track record due to negligent design and operations.

However, Ong has yet to inform Malaysians on the probe to date.

Meanwhile, Ebara Corp. is hit by yet another financial scandal.

On 2003-09-24, the Daily Yomiuri of Japan reported that Ebara was fined over 300 million yen payoffs to rivals.

Ebara concealed about 300 million yen in earnings in the two years prior to April 2002 and used the money as administrative expenses" to urge local subcontractors to withdraw from bidding for several public works projects, sources said Monday.

Ebara, based in Ota Ward, Tokyo, reportedly referred to the money paid to the subcontractors as "expenses for regional measures" and money paid to operators that dropped their tenders as "co-operation expenses for orders received."

A tax inspection conducted by the Tokyo Regional Taxation Bureau revealed Ebara failed to declare an additional 1.2 billion yen in corporate earnings through accounting errors.

However, because Ebara posted a deficit of about 16 billion yen in its settlement of accounts for the period, it was ordered to pay only about 5 million yen in additional tax penalties.

According to the sources, in September 2000, Ebara won the bid to construct part of a sludge-processing facility in Osaka commissioned by the Japan Sewage Works Agency for 2.14 billion yen.

Ebara reportedly paid about 75 million yen in "expenses for regional measures" to local subcontractors for the project, but reported the expenses under administrative costs as "sales commissions."

During fiscal 1999 and 2000, Ebara reportedly paid "co-operation expenses" to other contractors to urge them to drop out of the bidding for nine sewage treatment and other facilities constructed in six prefectures, including Kanagawa, Aichi and Gunma.

Some of the firms paid to withdraw their bid were then taken on as subcontractors by Ebara, with the company adding the "co-operation money" to the construction costs, the sources said.

The bureau determined the company's attempts to include the regional measures and co-operation expenses, which should have been reported as taxable entertainment and social expenses, as administrative expenses constituted a concealment of earnings.

It recently came to light that Ebara had a subcontractor, Toyama-based Sato Kogyo Co., pad its bills for construction of a rubbish incinerator for which the Nagareyama municipal government in Chiba Prefecture placed an order in September 2001, so that it could accumulate about 300 million yen in off-the-book funds. The municipal government and other authorities are investigating the matter.

It's Ong's duty and responsibility now to inform Malaysians on his investigation on Ebara. It's also his duty and responsibility not to hire a company with such a bad track record to build the world's largest incinerator for Malaysians.

Following the latest financial scandal of Ebara, one of the questions Ong must answer to all Malaysians now, is the actual cost of the incinerator.

It was reported earlier that the incinerator was priced at RM1.2 billion when it was supposed to be built in Kg Bohol. Now, the price for the same incinerator has said to be shot up to RM1.5 billion in Broga.

Can the minister now explain to all Malaysian taxpayers about the price difference of RM300 million, which is not a small amount by any standard?


* Ronnie Liu Tian Khiew, DAP national publicity secretary and DAP Selangor chairman