Other anomalies revealed in Prasarana audit

Written by Chan Kok Leong, Sharon Tan & Chua Sue-Ann, The Edge  

Besides casting doubt on the ability of public transportation operator Syarikat Prasarana Negara Bhd, the auditor-general has also highlighted other discrepancies.

According to the National Audit Report: Ministries & Government-owned companies (NAR), Prasarana made a loss when it purchased shares of an unprofitable company, KL Infrastructure Group Bhd (KLIG).

“Based on the directors resolution dated Feb 21, 2002, Prasarana bought 52 million shares valued at RM26.52 million. This was equivalent to 10% equity in KLIG.

“Auditors could not find the justification for this purchase as KLIG was a company in financial trouble and had failed to complete the monorail project,” the auditor-general said.

The shares bought at RM26.52 million had plummeted to RM6.76 million in 2007, it added. “It is the view of this audit, that the share acquisition was a loss-making investment for the government.”

It was also pointed out in the report that Prasarana, which is wholly owned by the government, had overpaid between 10%-50% for three pieces of land for bus depots.

“On July 7, 2008 the board of directors approved a RM33.25 million budget based on RM45 per square foot for a piece of land measuring 6.86 hectares in Balakong, Cheras to build a bus depot.”

The land was acquired from the owner of the office building rented by Prasarana, it added.

“The auditors could not determine the justification for the budget which was 10.8%-50% higher than the Land Office and Valuation Department’s estimates and two private valuation companies in February 2008.”

According to the report, IPC Island Property Consultants valued the land at RM30 million while another private valuer put the cost of the land at RM22.17 million.

The Land Office and Valuation Department valued the same piece of land at RM24 million.

The land was subsequently purchased for RM31.03 million, which is 3.4%-40% higher than the three valuations, the report said.

According to the NAR, the land is yet to be developed as at Jan 29, 2009.

“It is the auditor-general’s opinion, that the said land acquisition was not done efficiently and had caused losses to the company. Prasarana’s management and board of directors should have negotiated the price of the land after taking into consideration the valuations given.”

The report also highlighted weaknesses in Prasarana’s purchase of buses and noted that the company did not follow certain finance ministry guidelines when negotiating with vendors, and this had resulted in the purchase of poor quality buses which needed constant maintenance.

Other weaknesses included poor service records on the buses, no proper key performance indicator (KPI) plan and poor handling of subsidiaries.

Of its four subsidiaries — Panorama Langkawi Sdn Bhd, KLRT Consult Sdn Bhd, KL StarRail Sdn Bhd and First Sukuk Al-Ijara Sdn Bhd — the last company has yet to commence operations, although it has accumulated losses of RM12,998.

Panorama operates the cable car service in Langkawi while KL StarRail runs the Kuala Lumpur monorail operations. KLRT is a consultancy service while First Sukuk offers financial instruments services.

The report also found fault with the absence of dividend plans from two of its profit-making companies, Panorama and KLRT.

Panorama, which recorded profits of RM876,690, RM1.4 million and RM2.19 million in 2005, 2006 and 2007 respectively did not submit any dividend proposals to the finance ministry. According to the report, neither did KLRT which made RM449,836 and RM120,309 in 2005 and 2006 respectively.

The report suggested that the Prasarana board of directors adhered to government guidelines on procurement and board approvals.

The NAR also advised the board of directors to relook the role of RapidKL as a bus and light rail transit (LRT) operator as it has to foot a RM10.5 million bus and rail maintenance bill.