Sunday, April 04, 2010

RM482 Million 'royal' Shah Alam Hospital facing crisis- completion delayed due to 2 disgruntled contractors on failure of payment

The construction of the troubled RM482 million Shah Alam Hospital has taken a new twist with two disgruntled contractors at each other throats, which may result in the project being delayed.

The hospital turnkey contract holder Sunshine Fleet, owned by Selangor princess Tengku Putri Arafiah Sultan Abd Aziz Shah, may soon find itself being declared bankrupt for allegedly failing to re-pay a RM10 million loan to project sub-contractor GMH Healthcare (GMH).

GMH has issued a March 31 notice of demand to Sunshine Fleet under section 218 of the 1965 Companies Act.

NONEAccording to the section, "The court may order the winding up if ... the company is unable to pay its debts." Winding-up is a process where a company's assets are seized and used to pay its debts.

In the letter, hand delivered to Sunshine Fleet last Thursday, GMH is demanding that the Tengku Arafiah's company - the main contractor of the massive hospital project - repay the amount owed.

"We have been instructed to demand from you, which we hereby do, that you are to pay to us as solicitors, the sum of RM10 million, only being the sum you owe our client as a result of our client paying on your behalf the advance payment bond or bank guarantee placed with Jabatan Kerja Raya (JKR)."

Owned by sultan's sister

Sunshine Fleet is owned by the Selangor sultan's sister Tengku Arafiah (70%), her son Putera Azamuddin Shah Abdul Aziz (10%), and her uncle Tengku Abdul Samad Shah Sultan Salahuddin Abd Aziz
On winning the contract in 2007, Sunshine Fleet has first sub-contracted the project to ailing construction firm Isyoda. Isyoda was unable to complete the project after it was delisted from Bursa Malaysia, and is in the process of being declared bankrupt.
The project was later sub-contracted to GMH.
NONEGMH claimed that when it took over last year from Isyoda, it had to fork out RM10 million to repay the ailing construction company for the bond the latter placed with the Public Works Department (PWD) on Sunshine Fleet's behalf.

According to standard procedure, the bond should have been paid by the turnkey contractor Sunshine Fleet as the main contract holder.

Sources informed Malaysiakini that the inability to agree over 'money matters' has also caused a fallout between Sunshine Fleet and Isyoda.
This problem has again soured ties between Sunshine Fleet and its new sub-contractor GMH.

NONESunshine Fleet will have 21 days from the receipt of the letter to repay the RM10 million or face further actions.

"If you neglect to repay the sum as herein above demanded or to secure or compound the same to the reasonable satisfaction of our client, you will be deemed to be unable to repay your debts and appropriate actions be taken for your winding-up," said the letter of demand.

Acting on the sub-contractor's behalf is legal firm Gunaseelan & Associates.

Calls for probe

This altercation is the latest in a series of tussles between the two disgruntled partners in the 300-bed Shah Alam Hospital project being built in Section 7.

Malaysiakini has reported last year that Sunshine Fleet was accused of siphoning off funds from the project to the detriment of GMH, which had to bear the costs.

The matter was deemed serious enough to draw the attention of DAP parliamentarian Tony Pua, who demanded that the scandal be investigated by the Public Accounts Committee (PAC).

The troubled hospital drew the concern of transparency advocates over the directly-negotiated government contract, despite being earlier announced as an open tender.

NONEThe allegedly overpriced Shah Alam Hospital is yet another government project which has been called into question over gross irregularities in its award and implementation.

Although initially announced as costing "about RM300 million", the eventual contract has come to worth a whopping RM482 million - a mark-up of RM182 million.

The PWD has however issued a statement claiming that the project was'clean' and proper.

With the latest tussle between the two companies, it is unclear whether the Shah Alam General Hospital will be able to open by its target date of November this year.

courtesy of Malaysiakini

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