CRCC and the Penang tunnel-highways deal

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While much attention has focused on BUCG’s removal from Consortium Zenith BUCG Sdn Bhd, perhaps it is time to take another look at how another state-owned firm from China, China Railway Construction Corporation Ltd (CRCC), ended up as the main contractor for Zenith in the tunnel, highways and property development project.

I spotted a Malay Mail report from 5 March 2013 (reproduced below). Some points and questions below:

  • Consortium Zenith BUCG’s Sdn Bhd’s shareholding structure has since changed. But back in 2013, BUCG was reportedly described by the Penang state secretary and the Penang state financial officer as “the main bidder which formed the SPV with Consortium Zenith”. BUCG is now being removed. What are the implications?
  • The Malay Mail report cited documents saying that China Railway Construction Ltd had tied up with IJM during the tender. They didn’t win. (Zenith-BUCG did.)
  • But then China Railway Construction Corporation (CRCC) became the engineering, procurement, construction and design consultant for Zenith-BUCG.
  • CRCC, BUCG and Consortium Zenith BUCG signed a preliminary agreement with the Penang government in October 2013 to carry out a feasibility study and detailed design work.
  • Are CRCL, CRCC and China Railway Construction Corp International different companies, related or one and the same?
  • If this CRCC is the same China Railway that had tied up with IJM… isn’t it odd that one of the losing bidders is now so heavily involved with the winning bidding team?

I am asking because this is what a World Bank report that discussed tenders for infrastructure projects like highways has to say:

Subcontracting as a facilitator of capacity-building and collusion

Allowing less experienced local companies to subcontract with experienced international firms gives them the chance to learn new techniques and build domestic capacity. However, when losing bidders are permitted to become subcontractors to the winning firm, subcontracting can be a way colluders pay one another off for sticking together. As suggested above, where the risks of collusion are high, consideration should be given to prohibiting subcontracting with losing bidders or at least monitoring subcontracting patterns to identify collusion risks.

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The World Bank also lists 10 indicators that the US government uses to reveal collusive bidding. Item no. 3 (see page 12 of this link) is “Firms that submitted a bid later became a subcontractor on that project.”

So the practice of a winning bidder selecting a losing bidder as its subcontractor is not encouraged, even frowned upon.

In November 2015, I had also blogged:

Reuters reported in October 2013 that China’s anti-graft authorities punished eight people at a state-owned rail construction firm, China Railway Construction Corp. Ltd, for spending more than $100m on ‘hospitality’ in 2012. They had spent $135m on receptions for guests. One of the officials received a suspended death sentence, meaning life imprisonment.

[The company sounds familiar. In March 2013, a company bearing the name China Railway Construction Corporation International signed an agrement with the Penang state government on behalf of the consortium that won the bid for the Penang tunnel and highways project. Is this the same company? (Firms from China were also linked to the other bidders.)

And this is the Malay Mail report mentioned earlier:

Consortium Zenith is made up largely of CRCC

By A. Sangeetha, Zalinah Noordin | Malay Mail – Tue, Mar 5, 2013

GEORGE TOWN: Despite the tie-up with Beijing Urban Construction Group (BUCG), the special purpose vehicle company led by Consortium Zenith is made up of RM4.5 billion paid up capital, largely contributed by China Railway Construction Ltd (CRCL).

According to the documents, CRCL had tied up with IJM Corporation Bhd to bid for the tender but only proposed to build the 4.2km between Gurney Drive and Lebuhraya Tun Dr Lim Chong Eu coastal bypass.

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In a joint statement issued by State Secretary Datuk Farizan Darus and State Financial Officer Datuk Mokhtar Mohd Jait stated that Consortium Zenith was specially set up to bid for the RM6.3 billion integrated road projects.

“Consortium Zenith and CRCL possess 70 percent equity with paid-up capitals of RM3.5 million and RM4 billion shares.

“The main bidder BUCG which formed the SPV with Consortium Zenith has a ten percent equity with a paid-up capital of RM541 million.

“Sri Tinggi Sdn Bhd and Juteras Sdn Bhd have a ten percent equity each with paid-up capitals of RM3.7 million and RM1 million, respectively,” they said.

Both Farizan and Mokhtar were debunking Barisan Nasional (BN)’s claim that Consortium Zenith was a RM2 with a paid-up capital of RM200,000.

Evidently, from the bids submitted by four companies during the request for proposal, three companies had tied up with China construction companies including VST Cemerlang with China State Corporation (VST).

Despite CRCL’s failed attempt to secure the deal with the assistance of IJM, it is apparent that they had managed to grab a chunk of the projects with its highest equity possession.

When asked, Chief Minister Lim Guan Eng not only conceded that the CRCL had the largest equity but also pointed out that CRCL is China’s biggest construction firm.

VST, on the other hand, submitted its proposal to build all four projects but due to its higher asking price of RM6.6 billion and a land swap deal of 171.3 acres, they were rejected.

The other company WCT Berhad, a Shah Alam based construction firm, tied up with Korean builder Daewoo Engineering and Construction to build the Teluk Bahang and Tanjung Bungah paired roads, and the Gurney Drive coastal bypass.

Their asking price was RM1.4 billion and 100 acres of land as part of the land swap deal but BUCG managed to win the bid after agreeing to RM6.3 billion and settled for 110 acres of land from Tanjung Pinang.

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According to a company search, the RM2 special vehicle company Consortium Zenith and BUCG was set up on July 5 last year with two directors, aged 57 and 37, based in Kuala Lumpur and a 34-year-old secretary from Petaling Jaya.

It had a paid-up capital of RM200,000 but the joint venture company is believed to have increased its paid-up capital following the coming on board of CRCL and the two local companies, and the inclusion of BUCG’s investment.

The announcement of the road projects’ winning bid by Lim on Thursday had re-ignited criticism by environmental groups and Penangites.

The projects comprise a 4.2km bypass from Gurney Drive to Lebuhraya Tun Dr Lim Chong Eu, a 4.6km bypass between Lebuhraya Tun Dr Lim Chong Eu and Bandar Baru Air Itam, a 12km paired-road from Jalan Tanjung Bungah to Teluk Bahang, and the 6.5km Penang-Butterworth sea tunnel.

Lim had said the projects would be scrapped if the Detailed Environmental Impact Assessment (EIA) study revealed negative effects.

He also said the contract will only be signed after the general elections as the terms and conditions to the projects would be amended if Pakatan Rakyat took over Putrajaya.

“Due to the importance placed on public transportation in the PR manifesto, we would need to re-study the terms. If we win Putrajaya, we will be able to implement public transportation.

“Therefore, there will be a change to the projects. However, we still see the need to make road improvements and that is where the agreement with BUCG would be amended. Perhaps the projects will be on a smaller scale,” he said.

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60 Comments on "CRCC and the Penang tunnel-highways deal"

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Vivica 118
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Vivica 118

Teng CY got hood to hit back at Zahid, then he should take OngEuSoon’s hypothesis to court to bury LGE next GE14, and promte OngEuSoon as his deputy?

http://www.malaysia-today.net/umno-to-be-blamed-for-penang-election-defeats-says-bn-state-chairman/

Sora Zhen
Guest
Sora Zhen
I believe Zahid Komidi has already given up on Gerakan/MCA. He would not be stupid to demand these 2 parties to embrace Umno culture with open heart without a motive. Knowing that BN could not win back Chinese votes in Penang, he is hoping that the malay votes would not be lost to 3M’s Bersatu, thus trying to exert Umno influence and malayness to appease the malay voters, and retain the Umno seats. Anyway, the non-Malays in Penang knew that Gerakan/MCA would not have guts to venture into the dark side of the corrupted realm of Umno. It would be… Read more »
Samad AH
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Samad AH

Now Nazri of Umno is finding faults with MIC and MCA. What a drama in BN.

Vivica 118
Guest
Vivica 118
Only NGOs and individuals complaint (some call it make noises) about Penang Transport Masterplan, whereas UMNO or Gerakan or MCA is busy on somethjng else. Want to know why? Thry are too busy dreaming of how to recapture Penang. Today Zaid in Penang basically asks Gerakan and Penang to follow UMNO formula to be successful in GE14 (give up chairing be end of pulo pinang?) Then Teng Chang Yeow out of sudden borrow his Selangor brother guts to hit back at Zahid, claiming UMNO is the main cause why his team got zero seat last election. Teng after long self… Read more »
tunglang
Guest
tunglang

So ‘chun’ ah, your predictions?
Why not peddle your trade instead of ‘kong-kong, shiok-shiok’ as Lau Ee Khua-Mia at the 5-foot way of Eu Yan Sang, Chulia Street?
Good money you know, as many CAT minions will line up for rounds of ‘kong-kong, shiok-shiok’ so in the near future you can afford super condo @ Gurney Wharf!
Pls try harder!!!

zoro
Guest
zoro

they take back pg gomen next election afterall whdn manhy think ph is even worst.mca and gilakan will supporr rich towkays and the other psrty will get more donation and get more cheap or free land

Lim Kah Cheng
Guest

Fishy

LSS
Guest
LSS

Also look at when the feasibility studies was supposed to be completed then: http://www.thesundaily.my/news/938998

And did you know that even the 3 roads construction has been announced to be delayed until next year due to further studies needed for “storm water dispersal”?

LSS
Guest
LSS

Anil, u can do a SSM search on CZBUCG. Have a look at what is the paid up and also the profitably from them from just doing “reports”? Also have a look at what the shareholding that BUCG and CRCC has.

http://www.malaysia-today.net/explain-super-profitability-of-company-doing-rm305-million-feasibility-and-design-studies-for-penang-tunnel-project/

Then look at who is witnessing the signing of this and how much land it is: http://www.theborneopost.com/2016/01/16/ewein-subsidiary-acquires-land-worth-rm2-83-billion-in-penang/

zoro
Guest
zoro

anil, lss. , tun lang and calvin has been instructing you to do this and that. they are new bosses?j

zoro
Guest
zoro

i do not make false statements. they have been asking you to carry night soil when they are supposed to do it themselves unlike ah soon khor.

Gerry
Guest
Gerry

Not sure if Zoro ever donate to Anil’s fund.

zoro
Guest
zoro

not sure gerry donates too. but the trinity has been giving instructions ( worse scenerio) or telling ( least scenerio) anil to do this or that as if they are tokongs. like warlords in amno.

tunglang
Guest
tunglang

Gerry, that kiamsiap kia knows how to “hee- haw” and “eeyore.”
I believe Anil doesn’t need a drop of his donation.
Suppose if he ever donated, Anil might be at his mercy for a few cents day in, day out!!!

tunglang
Guest
tunglang

Be very careful of what you said.

Andy
Guest
Andy
The current share distribution is as it is (17.5 Million shares). The ratio is as such because BUCG opted no to increase their shares, and the state is aware of that and allow it. As for the profitability – one of the main lies by LSS and BN Cyber-troopers that meant to confuse readers. According to LSS, 2015 account states revenue to be RM51 Million, but profit is RM61 Million – thus they say this is super profitability – this is a lie. Because Revenue – Operating Cost = Profit ; How could Profit be more than Revenue ? This… Read more »
tunglang
Guest
tunglang
As a Penangite, I have very little hope for the future of Penang property development, so no need for comparison! Read: Not okay for developers to be moneylenders http://www.malaysiakini.com/news/355321 COMMENT The proposal by the Urban Well-being, Housing and Local Government Minister, Noh Omar, to permit developers to be moneylenders is fraught with risks. We all know that the property market is slowing down and developers are doing all they can to resuscitate the languishing market – ranging from giving free trips, cars, paying for settlement expenses; and now a proposal to give loans to buyers who don’t qualify for housing… Read more »
Sadhu
Guest
Sadhu

You are forever unsatisfied and use CAT as your punching bag. Feel very sad for you.

tunglang
Guest
tunglang

You should feel sad for the displaced Penangites who are economically displaced.
Feel sad for the right reason, not for shiok-shiok politicians.

gk ong
Guest
gk ong

Singling out Gerakan and MCA, Umno vice-president Datuk Seri Dr Ahmad Zahid Hamidi said the component parties should adopt Umno’s culture, tune and machinery to ensure Penang’s return to BN.

“Umno is willing to help all component parties to recapture Penang. Umno is not stingy in sharing the party’s knowledge.

“All the component parties have to do is to open their doors to accept Umno’s help. They cannot continue to be arrogant,” he said when officiating Umno Balik Pulau division delegates’ meeting here today.

zoro
Guest
zoro

Concur with you, amno machinery is hard at work here?? Donation is make to very good use??

Swat
Guest
Swat

“All the component parties have to do is to open their doors to accept Umno’s help. They cannot continue to be arrogant,” ???

Umno’s helps by trampling on and tearing of bohoot CM Koh’s picture and barring Koh’s entering Bishop street by Umno youth in their gathering ? By scolding on Gerakan’s Dr.Teng and asked for a fight ? Siapa mudah lupa lagi ?

zoro
Guest
zoro

there are rats only and you want cm to be like one and not stand in parallel with those trying to push?

Mustafar
Guest
Mustafar

Dongeng Zahid buat hiburan rakyat.

David Loman
Guest
David Loman

Heavy rain Astro transmission disrupted, now KL LRT also disrupted. What’s next?

gk ong
Guest
gk ong

The biggest threat to Astro is the smart TV box that allows watching free TV shows and sports programs similar to its offering via internet on any TV, with only one-time payment for the box top. My neighbor is enjoying his TVB drama this way, but need to pay for Unifi.

黃國新
Guest

should provide a workable/economical practical solution instead of condemning the state development projects which bring economical grow to the state

zoro
Guest
zoro

he loves to see unemployment jobness and people begging in street and people resort to stealing and daylight robberies.

peter pang
Guest
peter pang
As a Penangite, I have very little hope for the future of Penang when I compare KL and Penang, The Federal Gov sits pretty while Penang is going into a major congestion crisis, and to compound the problem, Penang Gov has to deal with all these NGOs and their inept and non comprehensive BCF plan. As a Penangnite, I directly appeal to the NGOs, Please Please Please stop being so selfish, Please try to come up with a Realistic Alternative Plan that can cover ALL areas of the Island and the Mainland with FAST public transport. We do not want… Read more »
zoro
Guest
zoro

More congest more co2 and more inhale smoker smoke. Never mind not important, cutting hills and building condons are bread and butter issues to pg lang

Damien
Guest
Damien

Many emphatize with you, Peter.
Don’t lose hope.
Mainland Penang still a nicer place to live, the island however have been war turf for NGOs, opposition and local gomen far too long that we prefer to enjoy leisure kopi at mainland now.

gk ong
Guest
gk ong

Peter is the voice of Prai, a reminder to Penang Forum that Penang is not just an island.

I urge Peter to highlight to us the concerns of Prai folks for the attention of Anil.

zoro
Guest
zoro

anik thinks pg is only the island like malaysis is malaya. whst sabsh and sarawak? never hesrd before.

Damien
Guest
Damien

Looks like we need a leader like present Philippine president should LGE has to be replaced. A tough no nonsense guy can get things done fast effectively without distractions from others. Of course, those with differing views should not bite the bullets but need to be on the toe not to jeopardise matter at large but contribute in more positive ways.

tunglang
Guest
tunglang

Wasn’t it fated that the Penang purple shirt volunteer corp was dismantle?
If not, some politicians may have excess compulsion to behave like President Rodrigo Détente to round up all who disagree or agree to disagree!
But no all are easily bullied. Be careful!

zoro
Guest
zoro

Like barring federal mp and ngo from travellingeven they have passport. Maybe they look handsome or pretty than first couple. Also red shirts can go around KL chinatown. Next Penang be the next destination? There are non bumis joining. Good chance for those barking here to join?

Grandmarquis
Guest

The problem is that you lose hope for the future of Penang, but refuse to acknowledge the source of the problem. It is probably because he is the revered which you have lots of hope on and refuse to admit that he screw up lot of things.

tunglang
Guest
tunglang
Precisely, but the emo-problem of die-hard worshippers is perpetual self-denial even in the face of current issues done deal by the we know who. It is this politico-emo helplessness of no-other-alternative & knee jerking (at the slightest contentions) that is dragging down DAP to their graves together with the hopes of the hopeful emos. These Arrogants @ Komtar will never ever learn since they reaped the emo-hopeful-delirium souls of 308 but ‘short changed’ these souls in the name of Cosmopolitan Penang development. From botak hills, degradation of coastal seas, untouchable housing to selling our George Town to SingLanders. What comes… Read more »
zoro
Guest
zoro

why not you take over with bn federal gomen in control? east malaysia are not states and they have better resources and 50 years are they better? what suggestions or solution to brighten the hope. every one easy to put blame but cannot suggest solutions. show us how you will do? cant?

tunglang
Guest
tunglang
Who cares if BUCG is out of the game? The Pg Transport Plan is still going full steam. My observation: 1) CAT latest antic of removing BUCG is more of a PR exercise of swaying perceptions to salvage it’s damaged public perceptions due to many contentious issues (land development, swap deals, environment mess, botak hills, etc) CAT: “Penangites are easy to sway comes timely hero actions. What better choice than to take hero action against a developer/contractor to shiok them” 2) With a change of the consortium partnership (BUCG is out), the game plan of Pg Transport Plan may be… Read more »
zoro
Guest
zoro

You support BUCG to drop the crane hook any time and any where??

tunglang
Guest
tunglang

Your Niao Kong dropped BUCG from the consortium, paham kah???
If don’t understand the obvious, go ask your Niao Kong why?
Pls lah don’t ask me this stupid question so you can spin another time for Komtar Dedak!

zoro
Guest
zoro

lu tun lang and allow bucg like ship drop the hook anywhere as if bucg is your ah kong ang tokong. you worship bucg now

Snowball
Guest
Snowball

Tunglang’s consistent Cat bashing is a way to get invited as a member in PTC? Should first approach Parti Cinta Malaysia boss who can find him useful for ceramah as GE14 may happen by Match 2017?

tunglang
Guest
tunglang

To you, Niao Kong is so venerable, no one can or should criticise for the good of Penang.
So you mean all the contentious development issues with botak hills, environmental degradation + dangers & above 250 ft threshold are AOK?
Pls justify your stuffs of AOK with Venerable Niao Kong.
Otherwise, don’t simply comment like a useless troll just b’cos we disagree with your Deity.

zoro
Guest
zoro

They bark because ph is easy meat to chew. Never when unmno back in power in pg. See how much noise they can bark. Kumuning resort is ready to reserve a place for them with kopi o kau kau

zoro
Guest
zoro

More people are affected by traffic jams and smog than isolated botak hills. Good luck to their health. Some botak hills are carried out by farmers and people on part time trying to earn extra income due to gst. Our money are like banana notes and better to invest in properties that putting them in local institutions. Even in shares, you want a better share earnings.

Ong Eu Soon
Guest
CCRC in the early stage (allegedly) gave a quotation of RM4.08 billion to the state govenment. That is how lim Guan Eng end up using it in his speech at Rasa Sayang Hotel in 2011. Lim Then (allegedly) decided to jack up the price to RM6.3 billion and awarded the project to ZB. ZB end up gave the whole project to CRCC at the price of US$1.19 billion which is equivalent to RM4.08 billion at the exchange rate of 3.4 per dollar. The prevailing rate was 3.18 per dollar in 2011. Lim Guan Eng (allegedly) allowed an inexperienced RM2 company… Read more »
zoro
Guest
zoro

Of course you have a lot of complains at PR and tin kosong on opposing side. Welcome opposing side in the next Gomen. Guess we have to call you YB soon.

Snowball
Guest
Snowball

To stay neutral politically, EuSoon should also lodge report on MO1 matter?

LSS
Guest
LSS

And Tony Pua must lodge report on Penang Tunnel and PO1

zoro
Guest
zoro

be a man like ah soon khor and make report otherwise kg jaguhn

tunglang
Guest
tunglang

If he does, Tony Pua will be summoned to HQ, Rangoon Rd & be screamed at:
“Don’t you understand the meaning of Toe-ing The Line?”
I admire Tony Pua’s courage in many issues affecting the nation & Selangor, but I don’t breathe any confidence of him if he ever does dare to touch anything of Penang!
Tony Pua, you read this?

zoro
Guest
zoro

he find it is easy to grind ph meat otherwise he will land in kamunting resort eating curry rice or like maria chin unable to travel to LOS.

tunglang
Guest
tunglang

Why not ask yourself this question in the first place b4 commenting here???

zoro
Guest
zoro

why not ask yourself nothing was done to billions and trying to cover low. of course another kg jaguh scare of kamunting resort.

Andy
Guest
Andy
Debunking Ong Eu Soon: 1) Lim Guan Eng has withdrawn that figure (RM4.08 Billion), citing it as a typo. That was 2011. 2) CZBUCG was awarded the tender at RM6.34 Billion in 2012. 3) CRCC signed a JV agreement with CZBUCG to undertake 70% of the construction work for RM3.85 Billion; & to do part of the detailed design work for RM70 Million. Some medium quoted USD1.19 Billion or USD1.21 Billion depending on the then current rate exchange at that time (1:3.2) 4) Originally, Ong Eu Soon alleged that CRCC’s contract was USD1.19 Billion = RM4.8 Billion (he applied at… Read more »
zoro
Guest
zoro

anyway ah soon is a he man unlike others she man telling anil to carry …. but see if ah sooon is a political opportunist.so far very uiet from unesco about sia boey. pg forum quietly buried it? now top secret??

tunglang
Guest
tunglang

Where is your other half of 2-in-1?
I am waiting a sure response!