A-G's Report: Lack of coordination between ministries, govt agencies led to hundreds of millions of ringgit wasted


  • Nation
  • Monday, 24 Aug 2020

PUTRAJAYA: Ministries need to be more alert as there is a lack of coordination which allowed for hundreds of millions of ringgit to go to waste, says Auditor-General (A-G) Datuk Nik Azman Nik Abdul Majid.

He said the lack of coordination was to the extent that some recipients of goods or services did not even have the contract which stipulated the terms of payments.

He also said that there must be sterner action be made against mismanagement and misappropriation of funds with internal audits within departments of ministries and government-owned companies.

He said this at the launch of the 2019 A-G Report on Adherence of Ministries and Federal Departments and the 2019 A-G Report on the Management of Federal Government-owned companies.

The A-G said, among its findings, was that the Defence Ministry had sent defective armoured personnel carriers (APC) to the United Nations peacekeeping troops in Lebanon.

“Let us hope our peacekeeping troops are safe. The nine armoured personnel carriers, which were sent to Lebanon despite the defects, were supposed to allow the soldiers to shoot the enemy from the inside, but the defect forced them to have to put their heads out of the APCs before they can shoot the enemy.

“Sometimes the ministry does not realise that there is delivery of damaged goods or services or the need to apply late delivery penalties as the only connection (between purchaser and seller) might be between the recipients (department which made the purchase) and the one who made the payments. There is no coordination (between ministries and its departments).

“At times, the person who undertakes the payment did not have the agreement with him or her at that point of time. There must be better coordination between the departments in ministries, ” said Nik Azman.

Other issues he revealed were the failure by the Defence Ministry to charge liquidated damages of RM116.54mil on the manufacturer of the second generation littoral combat ship which was delivered late by 245 days. Nik Azman declined to reveal the name of the shipbuilder.

He also pointed out the ministry did not charge a late penalty of RM15.04mil for late delivery of launchers as well as supplying defective APCs to the Malaysian United Nation peacekeeping troops in Lebanon.

“The reason given was that there is a clause for a grace period in the contract.

“As for the RM15.04mil late penalty not charged on the late delivery of the Lightweight Multiple Launcher - New Generation (LML-NG), the ministry has agreed to penalise the supplier, ” he added.

He also stated that the Inland Revenue Board (LHDN) had not refunded RM3.8bil to taxpayers who submitted payments in 2017 and later on the excuse that the board will only refund after auditing was carried out.

“We suggested that LHDN refund first, audit later.

“As for the overpaid Goods and Services Tax of RM4.38mil, we suggest that there be an investigation on the companies making the claims and Customs Department officers who are in charge of the refunds, ” said Nik Azman.

He also suggested that the Customs Department collect the RM50.46mil of exemption of import duty for alcohol with 99.5% purity level which was disturbing as the exemptions did not get permission from the police.

On the Federal Government-owned companies, he said that there was much mismanagement, abuse of administrative powers as well as a complete disregard for key performance indicators (KPIs).

Among the nine companies audited were TH Hotel and Residence Sdn Bhd, Amanah Raya Berhad, Talent Corporation, UDA Holdings and CIDB E-Construct Services.

According to Nik Azman, the management of TH Hotel and Residence with three hotels in Kelana Jaya, Penang and Kota Kinabalu were done poorly and much needed to be done to overcome it, including a management overhaul.

He said that the facilities were damaged with no repair work done while no promotion campaign of the hotels were carried out.

The full report is available on the A-G Department’s website.

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