(C4 Center Report)
When it was reported that Pembinaan PFI Sdn Bhd had racked up debts close to RM50 billion in 2018, this issue had the makings of a major scandal. Pembinaan PFI, a government-linked company (GLC), had reportedly been created to implement a policy called Private Finance Initiative (PFI), introduced to allow private enterprises securing public contracts to first shoulder the costs to complete these projects. However, two pension funds, the Employees Provident Fund (EPF) and Kumpulan Wang Persaraan (KWAP), were used to obtain loans totalling RM30 billion to implement PFI projects. The collateral for these loans was a huge number of government land parcels that had been leased by a government agency, the Federal Lands Commissioner, to Pembinaan PFI for a mere RM10, though later increased to RM5.7 billion, which were then sub-leased to the government for a massive RM29 billion!
These PFI projects were implemented through off-budget government loans and awarded without open tenders to companies that did not cover any costs on their own. Pembinaan PFI awarded these contracts to GLCs and well-connected individuals and companies which were later found to be those that were not PFI-type projects. Pembinaan PFI and the Federal Lands Commissioner were tools abused by the government to covertly channel contracts to the well-connected without public disclosure even though they were paid for with funds from two pension-based agencies.
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