Tuesday, 27 November 2012

AES is revenue grab to fill an empty treasury

AES is revenue grab to fill an empty treasury
By Chua Jui Meng

WE ESTIMATE that at the end of the five-year Automatic Enforcement System (AES) concession to collect about 40 million compound fines for speeding at RM300 per offence, the two crony companies would have pocketed RM2.18 billion + RM756,960,000 (the nett staggering mark-up cost of cameras). That’s an easy RM2.88 billion grab of taxpayers’ money.
Clearly, the AES is more of an exercise to fleece the people for revenue and to enrich Barisan Nasional (BN) cronies.
The BN government led by Najib Abdul Razak is trying to bulldoze the AES to:
Ø SHORE up its grossly depleted national coffer as reflected by a fast ballooning federal debt of RM502.4 billion; and
Ø BENEFIT and enrich cronies and benefactors.
There has been a lack of transparency in the AES fiasco but what we hear is that the two companies are claiming RM800 million (assuming RM400 million each company) as capital investment for their concession.
The two companies are A.T.E.S Sdn Bhd (ATES) and Beta Tegap Sdn Bhd (Beta Tegap).
This works out to a massive mark-up of RM962,000 for each camera. A total of 830 cameras are to be installed nationwide.
The lack of transparency, details, information on brand, manufacturer and price sold to others, has made it difficult for us to assess the gravy train.
Let’s assume that the actual cost of the AES camera is RM50,000 each, that’s a nett staggering mark-up of RM912,000 per camera . Total mark up cost is RM912,000 X 830 = RM756,960,000.
This modus operandi to loot the national coffer is seen in many government procurements for goods and services.
The latest being MP Mahfuz Omar (PAS-Pokok Sena)’s revelation of the bloated price of police Laser Digicam and Laser Trucam speed trap detectors.
The actual price of the Laser Trucam is actually RM15,000 but the cost was marked up by 1,500% (details see story reproduced below).
Yet another recent scam was exposed by Johor’s Sultan Ibrahim Ismail who took to task the Defence Ministry’s purchase of Rapid Intervention Vehicles (RIVs) at RM540,000 above market price each (details see story reproduced below).
Phase 1 of the AES gravy train is the target to collect 20 million summonses in five years.
For the first five million summonses, ATES and Beta Tegap will each get RM16 from each traffic booking.
This will work to about RM80 million or RM40 million for each company. The government pockets RM1.42 billion!
In Phase 2, the next five million summonses will see a 50-50 share of the compound fine collections between the two companies and the government – total fines amounting to RM1.5 billion or RM750 million for the government and RM750 million for the two companies.
In Phase 3, the subsequent collections until the targeted 20 million summonses in five years, the two companies will each get 7.5% or 15% of RM3 billion i.e. RM450 million.
However, we estimate some 40 million bookings would have been made in five years, instead of 20 million.
That is another RM6 billion to be shared. This would give a grand total of RM2.18 billion for the two companies and RM19.82 billion for the government in revenue collection in five years.
In addition, ATES and Beta Tegap can recoup their capital cost, including the AES cameras from the common fund set up for collection of fines.
Reproduced below are two reports for a wider read:

Speed cameras on price radar
Posted on 22 November 2012 - 10:34pm
Last updated on 23 November 2012 - 10:18am
Hemananthani Sivanandam
KUALA LUMPUR (Nov 22, 2012): The cost of speed detection cameras, more than 10 times its original price, as pointed out by an opposition MP, is due to other costs such as, training for the police, a two-year warranty period and maintenance costs.
Deputy Home Minister Datuk Abu Seman Yusop, during the ministry's winding-up debate of Budget 2013, explained to Datuk Mahfuz Omar (PAS-Pokok Sena) that he should not compare the cost of the laser cameras supplied to governments of three states in the United States of America to the cost quoted to the Malaysian government.
Mahfuz, however, responded by saying that the cost quoted by suppliers in the US also included warranty and maintenance of the per unit price offered.
"We can't possibly say that it costs about RM170,000 and RM233,000 per unit because it includes training. Surely, training is not worth more than RM100,000 per unit?
"It just does not make sense that training to use a camera costing RM15,000 to RM18,000 per unit is RM100,000.
"How were the procurements made? Was it through open tender?" he asked.
Abu Seman replied: "The cost there and here is different," without elaborating much further. He did, however, add that the procurement of the cameras were through open tender.
Mahfuz then urged the Malaysian Anti-Corruption Commission and the Public Accounts Committee to investigate the matter. To this, Abu Seman said he will inform Mahfuz of the identity of the contractor who won the bid.
Earlier in the House, Mahfuz questioned why the government purchased 85 units of Laser Digicam for RM173,925 a unit and 39 units of Laser Trucam for RM223,500.
He pointed this out based on a written reply to Mohd Firdaus Jaafar (PAS-Jerai) on Monday.
The written reply stated the police have acquired speed detection cameras in stages since 1995. The total number of cameras procured to date is 124 units.
Mahfuz then cited quotations made to the state of Delaware, Idaho and Montana between Oct 2011 and Jan 2012.
"In Idaho, the price is around US$5,000 (RM15,302) for the Laser Trucam unit, which includes accessories, warranty and service.
"If we convert it to Malaysian Ringgit, it should only be around RM15,000 but we paid RM223,500 for the Laser Trucam," he said.
"In 2011 in Delaware, the Laser Trucam was offered at US$6,378 (RM19,519) and in Montana, it was offered at US$4,995 (RM15,287), so how is it that there is such a vast price difference," he questioned.

Saturday, 22 September 2012 09:50
YES, Johor Sultan is smarter: Zahid now blames suppliers for RIV overpricing
Instead of probing the widely suspected internal corruption, the Defence ministry today shifted the blame on its controversial purchase of Rapid Intervention Vehicle (RIV) at above market price to the suppliers.

Its minister Ahmad Zahid Hamidi said investigation was now underway and stressed that legal action would be taken against those involved.

Saying his ministry was in the process of gathering evidences following a public rebuke by the Sultan of Johor on the bloated price for RIVs paid by the government, Zahid said suppliers would be taken to court.

"The ministry will not compromise with anyone. If misappropriation is involved in the purchase of the RIVs, we will take action," he was quoted by Bernama as saying.
Even the Sultan is disgusted?

On September 8, Sultan Ibrahim Ismail, who presented a unit of RIV to the Special Forces Regiment expressed his disappointment that military equipment was lacking in quality yet purchased at exorbitant prices. He pointed out that the RIV he bought was RM540,000 cheaper than the price paid by the ministry.

"Do not supply low quality equipment which are priced multiple times higher," he reportedly said.

Zahid said his ministry would probe into the difference in prices and whether it was due to specification differences.

Unusually high prices paid for military equipment had led Pakatan Rakyat to call for the setting up of a Parliament Oversight Committee to review and monitor defence expenditure.

Last year, PR questioned the purchase of six littoral combatant ships (LCS) after the cost ballooned from by 50 percent from RM6 billion to RM9 billion. The Defence ministry was also told to explain the acquisition of 257 armoured personnel vehicles (APVs) costing RM7.55 billion last year.