CEO Morning Brief

Loke: HeiTech Padu's MySikap Contract Value Raised Due to Job Merger; No Link to Anwar’s Former Aide

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Publish date: Thu, 18 Apr 2024, 11:02 AM
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TheEdge CEO Morning Brief

PUTRAJAYA (April 17): Transport Minister Anthony Loke Siew Fook said the value of the MySikap contract awarded to HeiTech Padu Bhd rose to RM190.01 million due to a job merger, and refuted any connections between the contract award and the group's new shareholder Datuk Wira Farhash Wafa Salvador Rizal Mubarak, a former aide to Prime Minister Datuk Seri Anwar Ibrahim.

According to Loke, the maintenance and technical support contract had merged two contracts that were previously awarded separately via direct negotiations — one for MySikap (a driver and vehicle information system) and another for its accompanying mainframe (the server that stores MySikap data) — which resulted in a higher value for the contract.

The Ministry of Transport (MOT) had, in 2014, decided that the MySikap and mainframe contracts should be made separate, Loke said. But last year, it decided to merge them into one, and to award the merged job via an open tender.

The tender took place before Farhash became a shareholder of HeiTech Padu, Loke told a press conference on Wednesday.

Three companies participated in the tender, and all three passed the technical and financial evaluation stage.

Compared to the project’s internal ceiling estimate of RM207.32 million, HeiTech Padu offered to undertake the job for RM185.08 million (excluding service tax), while the other two bidders offered RM186.89 million and RM199.51 million respectively, Loke said.

“On Nov 24, 2023, the MOT procurement board convened and certified HeiTech Padu as the best offer, as it had the most reasonable and lowest price that passed all evaluative stages,” Loke said.

“Treasury approval was obtained on Feb 8, 2024 for a value of RM185 million (excluding service tax),” he added.

Decision made before Farhash's emergence in HeiTech Padu

The tender was concluded prior to Farhash emerging as a substantial shareholder of the company in March this year, Loke stressed.

“In February 2024, the Ministry of Finance (MOF) gave approval for the tender certificate, which means that this approval was not given yesterday. It was already made in February, and Farhash only bought a 15.9% stake in HeiTech Padu on March 16.

“The tender decision was already made before Farhash bought shares in HeiTech Padu. He had nothing to do with it [prior to] his involvement in the company. He got to buy the shares in March. It's your respective right to buy shares,” Loke said.

Anwar and the Cabinet take seriously any claims that the contract was awarded to HeiTech Padu due to Farhash’s connection with Anwar, and welcome any party still not satisfied with the government’s explanation over the matter to lodge a report with the Malaysian Anti-Corruption Commission, so that a detailed investigation can be undertaken, Loke added.

The minister also dismissed allegations of insider trading, saying Farhash does not serve the government in any capacity, and that the letter from the MOF to the MOT regarding the tender certificate’s approval was confidential and protected under the Official Secrets Act 1972.

“To make that allegation is something that is not right,” he added.

The clarification came a day after Loke explained that the higher contract value of RM190.01 million awarded to HeiTech Padu was also due to a longer contract duration of three years instead of one previously.

On Wednesday, Loke further explained that the government decided to award a longer contract duration as shorter contract periods tend to cost more. “Normally, maintenance contracts are something that we give for long periods,” he added.

Loke also noted that pending the merger of the contracts and the open tender, the Road Transport Department (JPJ) had granted HeiTech Padu one-year extensions for both the MySikap and mainframe contracts — from May 1, 2023 to April 30, 2024 — for an aggregate RM54.33 million. HeiTech Padu announced both extensions to Bursa Malaysia in July last year.

The company announced that it had secured the RM190.01 million job, which works out to an average RM63.34 million a year, from the JPJ on Monday. It said the job involves “maintenance and technical support services for the JPJ’s information and communications technology infrastructure and MySikap system”.

HeiTech Padu’s history with MySikap

HeiTech Padu developed MySikap for the JPJ after securing a four-year contract to do so in July 2010 for RM282 million, including two "warranty years". On completion of the system in 2013, the JPJ rolled it out in November that same year to replace the department’s Sikap system used since 1992.

In September 2014, the JPJ contracted the company, on a direct negotiation basis, for a “mainframe capacity upgrade” for RM177 million over five years until September 2019.

HeiTech Padu then received a MySikap maintenance contract in 2016 for RM79.77 million for two years — from November 2016 to December 2018. This was followed by another MySikap maintenance contract in 2021 for RM36.25 million for slightly over 12 months from Sept 6, 2021 to Sept 30, 2022. This contract received a RM10.49 million extension in 2022 for four months to Jan 31, 2023, followed by a one-year extension in May last year.

As for the mainframe maintenance job, HeiTech Padu secured a RM126.02 million contract in 2020 for 29 months from May 1, 2020 to Sept 30, 2022, followed by an extension valued at RM13.23 million for four months to Jan 31, 2022, and a one-year extension in May 2023.

Shares in HeiTech Padu ended two sen or 0.84% lower at RM2.37 on Wednesday, giving the company a market capitalisation of RM239.90 million.

Source: TheEdge - 18 Apr 2024

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