Wee: Why is a fashion firm an SPV shareholder?

GEORGE TOWN: Checks showed that a local fashion company is a shareholder of the special purpose vehicle (SPV) for the RM6.3bil Penang undersea tunnel project and not major Chinese construction firms as promised.

However, in a recent statement to Bursa Malaysia, the company had announced that it was diversifying into construction.

MCA deputy president Datuk Seri Dr Wee Ka Siong (pic) questioned why an established and listed fashion company was involved in a tunnel construction project.

“In early 2013, there were allegations that the SPV, which was awarded the mega project, was under-capitalised and lacked experience.

“The DAP-led government, in a move to reassure the public, issued a statement that two giant China construction companies would be share­holders of the SPV and were backed by RM4.6bil in paid-up capital.

“But today, our checks show that the two China construction companies are nowhere to be seen as shareholders,” he said in a statement yesterday.

Dr Wee said 39% of the shares of the SPV were held under nominees.

“Does this change in ownership mean that the project award made under the request for proposal exercise is now null and void?” he said.

He said there should be a public explanation on why the mega project would now be built with the participation of a company known for fashion instead of two experienced and well-funded construction companies.

On Wednesday, the company, Vertice Bhd (formerly Voir Holdings Bhd), announced to Bursa Malaysia that media reports on the Malaysian Anti-Corruption Commission’s probe into the Penang undersea tunnel project would not impact its financial performance.

“As part of the group’s diversification efforts, the main revenue driver for the group moving forward will be from construction projects secured and executed by Vertice Construction Sdn Bhd (formerly Million Twilight Sdn Bhd), a wholly-owned subsidiary, which has been awarded multiple projects worth over RM100mil in recent months,” it said in a statement.

Last month, Vertice bought 13.21% of shares in tunnel contractor Consortium Zenith Construction (CZC).

According to CZC’s website and an announcement to Bursa Malaysia, the chairman and substantial shareholder of Vertice is Datuk Zarul Ahmad Mohd Zulkifli, who is also the former chairman and current senior executive director of CZC.

At a press conference, Penang MCA secretary Tang Heap Seng said the state government was at the losing end of the deal when it agreed to pay RM305mil in land for the project’s feasibility study.

He claimed that besides giving away two pieces of prime seaside land whose value had appreciated rapidly, the state signed away its chance as a landlord to jointly develop the land and earn a tidy profit.

He said on the first piece of land, the state government increased the allowable density from 30 to 156 units per acre after handing this over.

“Multiply the new density with the sizes of the two lots – measuring 3.67 acres (1.485ha) and two acres (0.81ha) – this would allow for 884 units to be built,” said Tang, who is a civil engineer.