'Big bird' vs 'little bird', UEM answered

This blog made a startling revelation of a potential loss in the tune of billion in Qatar for Khazanah-controlled, UEM on June 8th, few days back.

Today UEM have issued a statement via Malaysia Insider here.

Another Brick in the Wall wish to thank UEM for replying and taking seriously an issue raised by a pesky "housewife, and unemployed goblog and penembak curi" which they could shoo away as irrelevent.

This is truly commendable on the part of UEM in promoting corporate transparency. Minding the fact that the swift answer was made despite faced with a commotion on Tuesday, which this blog's wrongfully claimed as "tremor" at UEM office.

This blog was informed that a fire broke out on the 8th floor of their office during a meeting. Hopefully no life was affected.

The statement was issued this today, thus only the online news websites like Malaysia Insider could have reported. At this material time, none of the mainstream media have yet to report the statement from UEM.

UEM denied a coverup and gave assurance they will manage the case and believe they have a strong defense. They said, it is the consultant that is being sued and they are only a contractor and positioned as second defendent in the suit.

They went to the extend of denying allegation that Dato Izzaddin Idris is withdrawing from taking up the CEO job. That was not necessary for it was merely a naughty poke but understandbly in the corporate world, it was necessary.

However, UEM did not commented on the claimed sued amount. And, they refused to comment on information of frozen accounts situation and police arrest warrant, which they cited as speculation.

In the meanwhile, a commentator by the nic of Ciku Muda left a comment in this blog's comment box at around 3:20 AM here. The commentator gave the "story from the other side of the world" from their 'big bird.' If Ciku Muda is UEM's 'unofficial official side' of the story, they must be awake all night to prepare a response. Salutation to UEM.

There are still troubling issues but before commenting on their response, and perhaps 'little bird' would have one too, the MI report and Ciku Muda's comments is reproduced for the readers.

Another correction on this blog's part, it is little birds and not little bird. And, MI, don't simply bloody stereotype people, meaning this blog, as right wing socio-political website! *#(&^+$ ...

The MI report below:

UEM, Khazanah mum on Qatar troubles

By Lee Wei Lian, Malaysia Insider

KUALA LUMPUR, June 11 — A lawsuit to the tune of hundreds of millions of ringgit has been filed against UEM Group Bhd by the government of Qatar over a dispute regarding a highway project in the Middle Eastern country.

However, UEM and its parent company, the government-owned investment agency Khazanah Nasional Bhd, have decided not to comment publicly for the moment.

One Internet website alleges that there was an attempt to cover up UEM's legal problems in the Gulf state. The website also states that UEM's operations and bank accounts in Qatar have been frozen and that the Qatar government is going to issue a warrant of arrest for former UEM managing director Datuk Ridza Abdoh.

When contacted, a Khazanah spokesperson said that the company does not respond to "speculation".

UEM also declined to comment.

"UEM Group is not in the position to comment on the matter as we respect the Qatari legal system. We will not make any statements that may jeopardise our legal position," said UEM's director of group corporate relations and communications Basariah Abdul Latiff.

Group chairman Tan Sri Ahmad Tajuddin Ali however was reported yesterday as saying: "We are just the contractor. It is the consultant that has been sued but we are named as second defendant.

"We will manage the case. We have strong case to defend ourselves," when asked about the lawsuit after the company's annual general meeting.

According to the blog, which some consider a right-wing socio-political website, UEM and two other companies involved in the project in question, Parsons International Ltd and Qatar Insurance Company, are being sued for Qatari riyal (QR) 876,318,972 (about RM840,981,000) for failing to fulfil contractual obligations related to the construction of Salwa road in the Qatari capital of Doha.

The blog further claims that a further QR400 million is expected to be levied on UEM for the cost to complete the road the project which was started in 2001 and that the UEM Group and UEM World were delisted in order to cover up the potential financial losses.

Citing sources, the blog author also claims that Datuk Izzaddin Idris, the newly appointed CEO of UEM Group, may reconsider the job due to the "revelation" of the lawsuit.

Sources in Khazanah however contend that Izzaddin was aware of the issues in Qatar when he accepted the job and that UEM Group has not been listed in the first place.

According to news reports last year, UEM World was delisted and its property arm UEM Land was listed instead to give investors direct participation in the latter which has become the main driver of the share price of UEM World due to its projects in Iskandar Malaysia.

The Salwa road is one of the main shopping thoroughfares in Doha. The design was done by Parsons while construction was by UEM.

Ciku Muda's reply is as per below:

1. UEM was being victimized and bullied by the arabs! They failed to understand the culture of the arabs before venture into Middle East. Or it’s the Malaysian culture that always being nice to anybody. Arabs are well known for not keeping their words. ‘Insyaallah’ is being use as escape clause for anything. That’s why ME can never be in peace. Don’t blame the Zionist coz Fatah and Hamas themselves cannot live in peace. Kuwait was attacked by Iraq, Iran & Iraq war, blah..blah..blah.. Single currency agenda for the GCC country is also at threat as Oman & UAE walked out from the agreement when Saudi hijacked UAE’s earlier proposal to have the Monetary Agency headquarters in Abu Dhabi. And many others..

2. No any other contractor will survive when the country’s inflation rate skyrocketing to between 7% to 15% for the past 3 to 4 years. The situation in Qatar is not like Malaysia where most of the major construction materials are controlled items. More than 90% of construction materials are imported from all over the world. Steel, cement, bitumen, timber, plywood, paint, and many more. They cannot even produce the aggregate/stone which is essential for producing concrete and asphalt mix! Worst deal, supplies are being monopolized by only few family cartels. Price of raw materials can be doubled if not tripled, within few years if not months. And UEM are being forced to absorb all the additional cost!

3. UEM started the project with many problems, be it internally or externally. The biggest problem was difficulty to get a consistent supply of good quality aggregates/stone for asphalt mix production. The dedicated quarry for the project and even in the whole Qatar, the land are generally formed with young limestone which is very soft and brittle. The project was further hit with decision by the Qatar Government to close all the quarries due to the environmental reasons! UEM got a highway project and now the government is closing all the quarries? What a nonsense! Starting from then, the project was highly depending on the importation of the stones from UAE. The project was further hampered with logistic problems when the tiny seaport congested with so many ships and long queues waiting to berth. Trucks and trailer queuing at the yard and charges was increased due to low productivity in doing business. Can you imagine how much time and cost had badly impacted the project?


4. The design of the project was being carried out by a ‘well reputable’ consultant in the world. The American consultant who was earlier screwed up in Iraq’s development projects was being praised as the best designer in the region. And yet, providing a flawed design for international contractors to tender. And when the project had delayed and failure occurred, ‘twice’, and headed the front page of prime newspapers, Public Works Authority was under tremendous pressure. Even with their internal expert’s Investigation Committee had clearly pointed out that it was due to the design flaws which was not complying to Qatar Standards and Specification, UEM was being dragged into the proceedings. Charging them at fault for not ‘discovering’ the design fault by the consultant and not complying to requirements which were not in the specification? PWA is really trying their luck..

5. The WSN study is a detail survey, testing and analysis of existing road condition using specific testing equipment which will be factored in for designing the structural of a highway. An ordinary contractor will not be able to carry out the study if not by appointing a design consultant. (Any Professor, please correct me if I’m wrong). What more if the contract itself does not ‘allow’ contractors to carry out the study when no instruction, information, data, assumptions, design criteria and factors were being issued to contractors for tendering.

6. The failure took place exactly during the prestigious event of Asian Games 2006 (which Malaysia had lost the bid to be the host). Some portion of the highway starts to crack and damage severely. Unusual heavy rain since the past 10 years had deteriorated the damage further. However, it was surprisingly that the failure took place at only one particular type of design which is the pavement ‘Type 5’ out of 7 or 8 different types of road design in the project.

7. Subsequent to the first failure, at half way through the project, UEM was invited by PWA to re-negotiate the contract which ended up UEM being given a new price, new completion date, new design drawings, new requirement & specifications (which was until to date not approved by Qatar General Organization For Standards and Metrology) and less scope (as PWA wish to involve local company participation in the project). Both parties mutually agreed with a further terms in which PWA promised to assess fairly UEM’s earlier submission of financial claim, compensated losses incurred by UEM, no back charging of cost incurred by local companies participation, and many sweet promises more.

8. The ‘2nd phase’ of the project then begin, however with many signs of trouble starts to appear. Asphalt mix design was not being able to attain approval from QGOSM as the new specification again, does not complying to Qatar Standards and Specification and it ended with PWA giving their sole approval. The concern of a high risk for another failure was strongly raised by UEM to the consultant & PWA but UEM’s advice was neglected. Ended up with the 2nd round of disaster.

9. During the ‘2nd phase’ of the project, 10 other local contractors were involved. All other road/asphalt paving contractors facing the same mode of failure which resulted from the introduction of the new unproven specification. And yet, all the contractors including UEM were being blamed for the failure due to incompetency and lack of quality control in the construction! A massive scale of redo and rectification works which involved millions of money were carried out and at the end, all the contractors were not being paid for it. What a world..

10. Even with so many contractors involved in the project, the completion date cannot be achieved. Towards the end of the project, UEM was given few additional works and instructions to take over some of the other contractors’ scope significantly in order to expedite the completion of the project.

11. During the project life, PWA’s Project Manager has been removed for a minimum of 4 times! Subsequent to the 1st failure and at the beginning of ‘2nd phase’, PWA’s project management team was being removed and replaced with a ‘reputable’ management team which had earlier successfully completed Qatar National Sports Complex for Asian Games 2006. However, the inexperience team (in roads construction) was misled by their internal inexperience consultant from Australia which lead to another disaster and triggered public attention nationwide. Further to the 2nd failure and delays, PWA top guy was removed! The new MD was appointed somewhere in early 2009, after the project was at last being completed. Then, this was the time when the summon was issued to all parties involved in the project (contractor, consultant & insurance company). So, you can see the political agenda and the ‘true colors’ of the arabs! This is the way they are doing bussiness!!

12. What a pity to the arabs who is actually being con by the American and Australian consultants. They were also being mislead by the so called ‘expert’ from UK regarding the investigation of the failure. They had never learn their lessons. Making silly mistake twice and wasted millions of government’s money. In their case, not the tax payer’s money as they are a free tax country. It is the oil money/gas money. That’s why they don’t have to answer to the public, except for some inconvenient to the road user and edgy eye catching.

13. Projects being delayed, contractors at lost, public is suffering and PWA are definitely can’t sleep well. All the well reputable giant contractors from all over the world are suffering in all mega infrastructure projects handled by PWA. The Croatian, Germans, Turkish, Malaysians are all suffering. All their projects had been badly delayed. The whole country is in a mess and being screwed up by PWA. And they are really stupid enough to solve all the problems and just passed it to the court to decide.. (Maybe the rich is getting poorer due to the global economic crisis) Hope that this phenomenon won’t chase investors out of the country. As for the new investors, you better think minimum, twice..

Thanks Z ... Ciku Muda.