Generally, public procurement refers to the purchase of goods, services and works by governments and publicly owned enterprises. Every year, the government allocates enormous budgets for public procurement.

 

In the 2020 budget, a total of RM241 billion is allocated for operating expenditure and RM56 billion for development expenditure. Therefore, the procurement sector is categorized as most at risk of corruption, malpractice and abuse of power.

The proof is that in the period 2013 to 2018, the MACC received the highest number of complaints related to the procurement sector at 42.8 percent followed by complaints related to the enforcement sector (23.9%), administration sector (13.4%), licensing/permit sector (8.6%) and financing/revenue sector. (8.1%).

 

The Chief Commissioner of the Malaysian Anti -Corruption Commission (MACC), Datuk Seri Azam Baki said that corruption cases involving leakage of government revenue involving government servants are seen as increasingly critical.

Based on these facts, government officers involved in managing procurement need to be more careful in performing their duties. Not only corruption, they also need allert common mistakes that often occur in public procurement.

These issues and offenses stem either due to mismanagement of procurement, negligence of officials, errors in supply, corruption, malpractice and abuse of position.

 

There are seven major offenses in public procurement offenses.

 

First offense: Acquisition at an unreasonable price

Some prices of goods or services are increased to cover other costs not specified in government tenders or orders. Some also include the purchase of other additional goods or services. There is also the possibility that the price of goods or services will be increased to cover the cost of paying bribes to certain parties.

 

Example of a real case: The Auditor General's Report 2012 revealed that RTM bought an A4 size scanner at a price of RM14,670 per unit. While the estimated market price is only RM200 per unit. Three units were purchased for a total of RM44,010.

 

Second mistake: Supply that does not follow specifications

The possibility of this happening is that the contractor is trying to make more profit by supplying low quality goods or services; there were confidential negotiations between procurement officers and contractors. Profits will be shared with the procurement officer concerned; negligence of the receiving officer who fails to make a check during the supply of goods or services.

 

An example of a real case: The Auditor -General's Report 2010 revealed that the Malaysian Marine Parks Department, Ministry of Natural Resources and Environment had procured a four -stroke aluminium boat engine worth RM11,553. However, the contractor supplied a two -stroke engine priced at RM6,549.

 

Third mistake: Improper payment

Payment is made to a contractor or supplier without following proper financial procedures. Occurs when payment is made to a contractor even if the procurement of goods, services or work is imperfect. Imperfect means that the acquisition is not made directly or is only partially implemented. This offense often occurs during the end of the financial year, when the agency tries to avoid payment using the following year’s provisions as per ‘Arahan Perbendaharaan 58’ (AP58).

 

Examples of real cases: Auditor General's Report 2013 Series 1 reported non -procedural payments for the procurement of equipment and bread machines in the Malaysian Prisons Department. Based on the contract, the supplier has to supply, ship, install, test and commission the equipment and bread machines. An audit review found that suppliers had shipped all equipment and bread machines to five designated prison institutions. As the bakery has not yet been built or renovated, the supplier is unable to install, test and commission the equipment and bread machines delivered. However, full payment has been made to the supplier.

 

Fourth offense: The use of ‘middlemen’ in procurement matters

‘Intermediaries’ may consist of individuals, companies or organizations whether registered or unregistered in accordance with applicable law. The ‘middlemen’ who often cause problems are individuals who use close relationships with those in a position for self-interest. This ‘middleman’ can be a special officer, confidential secretary, political secretary, or an acquaintance to any minister, head of department, officer involved in procurement and so on.

 

Example of a real case: On April 9, 2012, a senior officer of the Malaysian Communications and Multimedia Commission (MCMC) and his wife were charged with soliciting and accepting RM250,000 in bribes in connection with a tender for a project to design, implement, test and commission MCMC's digital forensic laboratory. The MACC investigation found that the wife of the senior MCMC officer acted as a 'middleman' between the contractor and her husband. They acted fraudulently and asked for a bribe of RM250,000 in return for helping the contractor obtain the award letter for the tender for the project. On April 5, 2013, they were sentenced to five and four years in prison and fined RM1.25 million respectively after being found guilty of corruption charges.

 

Fifth offense: Turnover in small fractions

This practice means breaking down the turnover for the same item into several other turnover. The small breakout tactic is used so that a procurement can be made through direct purchase, thus avoiding using the method of quotation or tender. The practice of small breaks causes procurement to be made non -transparent; supplies or work are provided to specific contractors only; and can cause the acquisition price to be manipulated.

 

Examples of real cases: Around March 2015, the MACC launched ‘Ops Sealord’ related to corruption and irregularities at the Fleet Supply Depot (DBA), Royal Malaysian Navy (RMN). In the operation, 16 individuals were arrested, 240 bank accounts worth RM23 million were frozen, 13 luxury vehicles were seized. Subsequently, several TLDM officers were charged with corruption in connection with the approval of the supply of ship spare parts to certain companies. The MACC investigation found that the procurement of ship spare parts was done in small batches so that the appointment of certain companies could be made through direct purchase.

 

Sixth offense: Acceptance of gifts by goverment servants

Goverment servants are prohibited from accepting any gifts or valuables from those with whom they have an official relationship. This is an offense under Section 165 of the Penal Code. Goverment servants should always remember not to use their position to get any gifts or entertainment. Government servants must also be vigilant when certain parties try to buy their ‘souls’ with gifts and entertainment. Even in small amounts.

 

Example of a real case: On 24 May 2018, a Public Works Department Director was fined RM3,000 by a court after being found guilty of receiving a 'gift' of accommodation package and golf package at Sutera Harbor Resort, Kota Kinabalu worth RM2,880.90 from Borneo Era Sdn. Bhd. The Director of PWD and the Project Manager have an official relationship in the Kampung Gersik Bypass Construction Project, Federal Territory of Labuan by Design and Build. The offense is committed under Section 165 of the Penal Code.

 

The seventh mistake: Legislative intervention or ‘revelation’

The integrity of the officers involved in procurement is often tested when certain individuals with position and authority issue clear instructions contrary to financial procedures. An example of an instruction is choosing a particular company; giving flexibility to certain companies; and expedite payments to certain companies. This raises the misconception of the officers involved, to choose between the interests of the department and comply with the directive. Most instructions are made orally. When any problems arise, the procurement officer will be in charge.

 

Example of a real case: On October 14, 2020, the former political secretary of the Malaysian Minister of Defense was charged with five counts of accepting and soliciting bribes amounting to RM6.35 million from a company. Bribes as wages for helping the company be selected as a strategic partner and maintenance contractor for MINDEF’s intelligence equipment. This case is one example of influential individual intervention in the government procurement process.

 

The issue of leakages in public procurement has never been resolved. There is only one reason, there are officers who are dishonest in carrying out their responsibilities. Advice or warnings alone may not be effective for such officers. Therefore, punitive action must be taken against those involved.

One of the initiatives of the National Anti-Corruption Plan is to create legal provisions related to misconduct of government servants that intentionally cause leakages and losses to the government. If this new provision exists, government servants who have caused losses to the government can be prosecuted in court for criminal offenses.

 

Finally, any party who becomes aware of any misconduct by a government servant must report it to the authorities. In a media report dated 12 December 2020, the Director General of Public Service, Tan Sri Mohd Khairul Adib Abd Rahman called on government servants to report any misconduct in their ministries, departments or agencies in an effort to curb leakages.

 

Source:-

Mohamad Tarmize Abdul Manaf

Timbalan Pengarah Bahagian Pendidikan Masyarakat

Suruhanjaya Pencegahan Rasuah Malaysia

https://www.sprm.gov.my/index.php?id=21&page_id=103&contentid=1539&cat=BKH

 

Article prepared by : Mrs. Nurul Ezani Abdul Malek

Date of Input: 21/06/2021 | Updated: 21/06/2021 | nurmiera