How did UEM and Khazanah bosses rectify the Qatar problem in 2007?

Malaysian ‘warriors’ of the UEM Qatar project carrying the Malaysian flag into foreign land. Will it be another Malaysian story of the sacrifice, and dedication of staff let down by their bosses? Another story of determination and hope of the common people lost to the greedy corporate boys?

There was supposed to be a bonus announcement by UEM Group Chairman and former TNB Chairman, Tan Sri Dr Tajuddin Ali yesterday but it did not turned out such.

Little bird said the whole group of Board of Directors, presumably of UEM Builder, is in Australia on a brainstorming trip. If it so, best betul. Company is in a pressing situation and the Board members can make a trip to Australia. Maybe, the air in Australia is more refreshing for the brains to think than in Malaysia. Some winter golfing could revive tired minds too!

In an e-mail dated April 21st, 2009, Dr Tajuddin promised the same bonus as last year to the staff. Will that mean the promised bonus for the hardworking and dedicated staff of UEM is forfeited and diverted to some Airline and Hotel expenses for Board members and maybe family school holidays?

That’s just a naughty question that does not need answer. In the dated staff circular, Dr Tajuddin came off with a sombre tone and not as confident sounding as the press statement reported by Malaysia Insider, The Star and NST to dispell question by this blog.

It is believed that UEM had engage a management consultant to assess the financial situation of UEM. This blogger confided with some big gun in media and was advised to be vigilent in this exposè. The conclusion of that report will not be disclosed for now. The issue raised in this posting will be focused.

It will be focused on the question why UEM signed a joint and several agreement or arrangement in 2003 that resulted in the current lawsuit which claimed was directed towards the Consultant.

Subsequently, was it rectified when there was such opportunity?

Insufficient Study?

The effort by Superman8818 to established a blog here to explain the difficulty involved in undertaking the Qatar project was commendable.

This blogger consulted Engineers experienced in undertaking work abroad. They dismissed the stories as excuses for easily anticipated problems. Rising cost should be anticipated, added on or translated into Varioation Order. The peculiarity of Arabs business practise should have been understood earlier and not after Contract signed.

They went further to say that if that is the excuse, UEM was bordering on incompetence for not doing sufficient prior study and research of the site situation. A fundamental mistake!

Revelation

This posting is revealing a proposed Supplementary Agreement that was supposedly to be executed in June 2007. Little bird claimed that the Qatar party agreed to sign the proposed agreement.

If it had been executed, it would helped to amend the condition in the earlier agreement. This supplementary agreement would have override whatever condition which is not favourable to UEM in the main contract. It is a condition precedent for any new works to continue and resolve outstanding issues like Variation Order (VO), Extension of Time (EOT) and Liquidated and Ascertained Damages (LAD). It would have relieved UEM of any futire claims.

This agreement was supposed to be signed prior to moving on to the 2nd phase of the Salwa Road project.

Chronology

For recollection, let’s go to commentator Ciku Muda’s revealed information below:

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.

This tallies with the sequence of event in the Initiatory Pleading and proposed Supplementary Agreement, below:

Sequence of Events
28th April, 2001 – Agreement between Delo (later Parsons International) and Qatar PWA
20th July 2003 - Letter of Award to UEM
23rd October 2003 - Contract was executed
1st November 2003 - Commencement of the Contract
4th August 2005 - Extension of time letter to client (EOT1)
30th April 2006 - Completion of Contract (Phase 1)
December 2006 - Discovered signs of distress by Client
29th January 2007 - Client issued stop-work order
12th February 2007 - Extension of time letter 2 to client (EOT2)
March 2007 - Proposal to Client to resolve
21st April 2007 - Contractor submitted an offer to complete work
22nd April 2007 - Client accepted offer of 21st April, 2007
23rd April 2007 - Client issued new instruction and rescinded earlier instruction
June 2007 - Date of proposed Supplementary Agreement

What? Why? How?

The question now is: Was there such Supplementary Agreement? If there are such agreement, was the Qatari willing to sign? Is true to both the above, why did UEM decided not execute the Agreement? Would it not save UEM from the current legal situation?

What was agreed and signed instead?

Should we blame the Arabs or ourselves? Shouldn't we blame ourselves first all the time?

This blogger seek from UEM, and/or comentators Ciku Muda, and Putik Ciku Bergetah to explain this disturbing situation of a Company that used to claim itself as "The Nation Builder" and our nation’s construction flagcarrier.

During that period of time, Khazanah and EPU claimed to take a close control and monitoring of their investee companies, particularly in UEM. In fact, Tan Sri Azman Mokhtar, The Managing Dirtector of Khazanah is a member of the Board of Directors of UEM Group, and former UEM World. It shows he knows of the situation and showed keen interest in the development in UEM.

Why the silence from Khazanah? Is it true the rumours that Khazanah has “lepas tangan” on UEM? Is it true that members of the Boards of Director of UEM Group of Companies have practically "lepas tangan"?

Is it true that the Board is looking towards corporate restructuring their way out instead of telling the truth and getting heads chopped? Would that mean pouring away good profit to hide losses? Will that only serve to enrich the Investment Bankers but does not solve operational and organisational issues through genuine operational turnaround?

Seriously, Dato Seri Najib, Dato Husni Hanazlah and (whether we can continue to rely) Tan Sri Nor Mohamad Yakcop should start to wield their stick to start asking the hard questions on the state of the GLCs or as blogger Syed Akbar called them, Government Losing Concerns.

I put my trust Najib is willing to listen. He should not just listen to his officers but other sources of information to double check his Ministers, Pengarah EPU, and Khazanah and UEM officials.

Fat lady ain't over singing yet here.

* Edited 7:30 PM