Media Conference Statement by Lim Kit Siang in Parliament on Tuesday, 18th November 2008 at 3pm: 

Police report to be lodged over the “looting of people’s money carried by a few officials using tourism as a front” for the guilty in the stable of Tourism Ministry and Pempena financial scandals to face the full brunt of the law

I thank the Tourism Minister, Datuk Azalina Othman for giving me a copy of the Summary Report of the PricewaterhouseCooper review of Tourism Ministry’s subsidiary, Pempena Group of Companies but I will write to her for a copy of the Final Report, as the implicit promise she made in Parliament during her winding-up of the 2009 Budget debate on Nov. 3 was for a full and unqualified disclosure of the PricewaterhouseCooper report.

I must admit that I am somewhat surprised by the PricewaterhouseCooper summary report as the Tourism Minister had led Parliament to believe that it is an audit of the various financial scandals of the Pempena Group of Companies, but clearly this important brief was excluded from PricewaterhouseCooper’s terms of reference, which is a clinical “high level business review” of selected investments by Pempena Sdn. Bhd and “specifically does not include any investigative audit or forensics work”.

In fact, it is mentioned in the PricewaterhouseCooper summary report that the investigation into the various financial scandals in the Pempena Group of Companies are “separately performed internally” in an internal audit of Pempena.

Why did Azalina hide the fact from Parliament that there had been an internal audit by the Tourism Minsitry of the various financial scandals of its stable of Pempena Group of Companies, which includes its affiliates Malaysian Travel Business Travel Sdn. Bhd and SD Corp Communication Sdn. Bhd and that such an internal audit had been completed by 14th August 2008?

Is Azalina prepared to table the Tourism Ministry’s internal audit inquiry into the various financial scandals of the Pempena Group of Companies in Parliament?

I will also write to Azalina for a copy of the internal audit report of the Tourism Ministry on the various financial scandals on its stable of subsidiary companies costing the public taxpayers tens of millions of ringgit of unjustifiable losses.

The Pempena scandals can be divided into two categories:

• first, those which occurred before Azalina became Tourism Minister after the March general election and for which Azalina need not assume personal responsibility; and

• second, those committed after the 2008 general election for which Azalina must bear full responsibility and accountability.

In my speech on the 2009 budget on October 15, I had referred to the Oct. 13, 2008 expose by the Sun in the report “Over the limit…PSD ALLOWS MINISTER ONLY EIGHT STAFF, BUT 20 ON TOURISM MINISTRY’S PAYROLL”, calling in Parliament for a full explanation for the serious allegation that the tourism minister’s office “has excess baggage”, being overstaffed as “the appointment of some 20 staff breaches the Public Services Department (PSD)’s regulations limiting the appointments to only eight” and that “it defies a Treasury circular on cost-cutting and austerity”.

The Tourism Minister had in fact three special officers, five political officers, one research officer, six information technology (IT) officers and given support staff. As only the PSD can approve the new appointments, the guidelines were circumvented by getting Tourism Ministry subsidiary Pempena Sdn. Bhd and its affiliates Malaysian Travel Business Travel Sdn. Bhd and SD Corp Communication Sdn. Bhd to pay their salary.

One such appointment is Datin Paduka Chew Mei Fun, who is the executive director of Pempena and paid RM10,000 and is provided with a car and driver.
These belonged to the second category of the Pempena scandals as they all happened after Azalina became Tourism Minister after the March 8 general election and for which she must give proper accounting.

In my speech on October 15, I also spoke on the financial scandals in the various Tourism Ministry projects including the RM30 million for Malaysia Kitchen, the RM10 million for E-Tourism Portal, and the multi-million ringgit Pempena Teksi Service (Pets) scandal. These belonged to the first category of Pampena scandals as they first happened before Azalina became Tourism Minister although the various financial improprieties continue under Azalina’s term.

When Azalina replied in Parliament on Nov. 3, I returned to the two categories of Pampena scandals. I mentioned for instance that the “padding” of Azalina’s retinue of “excessive staff” in breach of PSD regulations by getting Pempena to employ them has created the ridiculous situation where most of these “excessive” staff were on the 36th floor of PWTC (Azalina’s Ministerial office) and not in the offices of Pempena and its other affiliate companies like SD Corporation.

There was no satisfactory reply from Azalina for padding Tourism Ministry’s Pempena Group of Companies with highly-paid “political operatives” like Datin Paduka Chew Mei Fun, after she was defeated in the Petaling Jaya Utara parliamentary election.

Chew’s most memorable contribution to political discourse in Malaysia must be her warning of another May 13 if Chinese representation in Barisan Nasional is insufficient.
Be that as it may, now that she has been elected uncontested as the MCA Wanita Chairman, is she going to resign and return the monthly RM10,000 salary with driver and car as executive director for Pampena Sdn. Bhd, Deputy Chairman of Malaysia Travel Business Sdn. Bhd and Board Member of Malaysia Convention and Incentive Bureau?

Azalina should public the full list of the 20 appointees she brought into the Tourism Ministry, whether appointed directly by the Ministry or indirectly by the various Tourism Ministry subsidiary or affiliate companies, and to justify such expenditures when the Tourism Ministry and the Pempena Group of Companies are already suffering tens of millions of ringgit of losses from a string of financial improprieties and scandals.

Azalina should also explain whether it is true that although her retinue of “excessive” ministerial staff were inserted and absorbed into the various Pempena Group of Companies in mid-May this year, the appointments were backdated to April 1, 2008.

PricewaterhouseCooper summary report on “High Level Business Review of Pempena Group of Companies”

The Public Accounts Committee (PAC) should schedule an early inquiry into the financial scandals of the Tourism Ministry’s Pempena Group of Companies, making full use of the PricewaterhouseCooper and the Tourism Ministry’s interal audit reports.

The PricewaterhouseCooper summary report is a shocking report of the incompetence, ineptitude, irresponsibility and even criminal breach of trust prevalent in GLCs.
PwhC is recommending that out of the RM54.4 million Pempena investments in 24 investee companies as at June 2008, it should exit its investments from five companies suffering an immediate loss of some RM20 million!

In its “high-level financial performance review” of the 24 Pempena Investee companies, PwhC found that 6 Investee Companies do not any financial information while three Investee Companies have partial financial information.

Heads must roll for such incompetence and ineptitude.

However, it would appear that it is not just incompetence and ineptitude but crimes of criminal breach of trust and even corruption are in play in the can of worms in the stable of financial scandals of the Tourism Ministry’s Pempena Group of Companies, as revealed by the internal audit report.

This has been reported by the country’s investigative journalist par excellence , Citizen Nades, R. Nadeswaran, in his latest expose “Let them rot in jail” in The Sun yesterday:
Lets take three quotations from Nadeswaran’s report:

1. Two audit reports – one done internally and another by PriceWaterhouseCoopers – have revealed the intrigues, the manipulation of funds, fraud, deception and above all, a lack of common sense which a reasonable person is expected to do when he is entrusted with public money.

Instead of acting as people with business acumen, they acted as godfathers and Santa Clauses, dishing out money from a bottomless pit. There were no due diligence tests with supposed partners; there were no checks on current market rates, but what is more damning is their failure to take action to recover monies which is rightfully theirs.

For example, Pempena advanced RM300,000 to one Umi Hafilda (does the name ring a bell?) for a Amir Diab Live in Kuala Lumpur concert. The report says that "Pempena did not even sight the contract between the parties before issuing the cheque" and as expected, the concert did not take place…

When the concert did not materialise, she issued three cheques to Pempena – all of them bounced – there was no money in her account. What did Pempena do? Sat with arms folded because those in the know were aware that she was an undischarged bankrupt, one of the report states.

2. Some of these companies operated as if there were no norms or rules to govern them. Some of the people running them considered the companies to be their own fiefdoms and their private bank, drawing monies through dubious means.

They ventured in businesses and deals that were sure losers from the start. Why in the world would a government-owned company get involved in businesses in which it neither has the expertise nor the experience?

Were feasibility studies done before millions of taxpayers’ money was pumped in? Did those who made the decisions ask themselves: Why do we want to get into such businesses when our core business is promoting tourism?

3. The report states that Pempena bought one million shares at RM1 each in a company called SD Corp Sdn Bhd, which had forecast a turnover of RM8 million and a profit of RM100,000 for the first year. But the company ran up a loss of RM2 million. To add insult to injury, Pempena paid RM2.1 million for the shares but the share certificates had yet to be delivered as of July 31.

But more shocking are the claims that minutes of meetings of the board of directors of Pempena had been changed by hidden hands. The internal audit confirms this by saying: "The amendments of the minutes are a serious offence as it involves the appointment of contractors without going through the proper process. No action was taken against those responsible for changing the minutes although it was brought to the attention of the management."

Tomorrow, I will lodge a police report for the full brunt of the law to be applied to what Nadeswarn has described as “the looting the people’s money carried by a few officials using tourism as a front” for the guilty in the stable of Tourism Ministry and Pempena financial scandals to be brought to justice.

* Lim Kit Siang,  DAP Parliamentary leader & MP for Ipoh Timor