Mutual termination clause in Bestinet contract puts Putrajaya in ‘challenging position', says PAC report


PETALING JAYA: A mutual termination provision in the agreement for the Foreign Workers Centralised Management System (FWCMS) is hampering government efforts to pursue legal action against the system.

As pointed out by government officials detailed in the Public Accounts Committee (PAC) report, this provision, which mandates consent from both the government and technology company Bestinet Sdn Bhd, has placed the government in a challenging situation.

The report was based on four proceedings held by the PAC interviewing Home Ministry secretary general Datuk Ruji Ubi who agreed with the committee that to terminate the contract with Bestinet could risk cost implications for the government.

The proceeding, which was held on Dec 5 last year, was revealed in the PAC report published on Wednesday (July 3).

When asked whether the government could incur financial burden upon terminating the FWCMS contract despite the Letter of Award (LoA) not being signed at the date of the proceeding, Ruji concurred with PAC member Syahredzan Johan.

“They (Bestinet) can sue the government and during the legal process, it could claim damages from the government for not continuing the contract. From there, it could expose the government to cost implications,” Syahredzan said.

To which Ruji briefly answered the question with, “agreed.”

Detailing more on the contract was the Home Ministry’s legal advisor, Siti Amirah Johari who said the LoA stated that the government reserves the right to delay, discontinue or change the implementation of the project proposal if Bestinet fails to meet conditions set by the government during contract negotiations and agreed by both parties.

“In this situation, the government is not responsible for any cost or expenses incurred by the company if the project is discontinued, postponed or there are changes in the project implementation or any delay from the government’s side in terms of implementing the project proposal and the condition does not in any way allow the company to make any claims for damages or compensation from the government,” she was quoted as saying in the report.

PAC member Sim Tze Tzin asked Ruji if the clause in the LoA allows the government to terminate the FWCMS project, given that audit reports have identified issues with the system's operations.

Ruji responded by saying that the clause must “be read together” as “agreed by both parties".

“This has truly bound the government. It looks okay, but...at the end it must (be) mutual termination,” he added.

The probe by the PAC into the FWCMS has uncovered a series of discrepancies including that the government had used the system for six years without a finalised contract, which is a violation of the rules set by the government itself.

PAC chairman Datuk Mas Ermieyati Samsudin said the FWCMS contract between the vendor, Bestinet and the government was not finalised and signed, even though an LoA was issued on Jan 12, 2018.

The PAC also concluded that during the earlier stages to implement the FWCMS development project, the Home Ministry had failed to adhere to conventional procurement procedures nor (embrace) the public-private partnership (PPP).

Among the factors why the agreement remained unsigned between the two parties was the extension of the six-year application and the increase in the collection fee to RM120 from RM100 by Bestinet.

On June 24, the Home Ministry said the Cabinet agreed to extend the contract to three years with Bestinet.

Mas Ermieyati said the PAC will obtain such information in the follow-up proceeding, which will be conducted within the next three months.

More details on the report can be found at the Parliament’s official website, www.parlimen.gov.my/pac.

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