KUALA LUMPUR – A “mutual termination” clause in the letter of acceptance (LoA) issued to IT solutions firm Bestinet Sdn Bhd for the management of the Foreign Workers Centralised Management System (FWCMS) has placed Putrajaya in a difficult position, revealed government representatives.
The stipulation, believed to require approval from both the government and Bestinet to terminate the FWCMS contract, has “heavily restricted” the government from taking action related to the migrant worker recruitment system.
This was conveyed to Parliament’s Public Accounts Committee (PAC) by Home Ministry chief secretary Datuk Ruji Ubi during proceedings on December 5 last year, during which he also agreed that a termination of ties with Bestinet could expose the government to “cost implications.”
PAC’s release of its report on Bestinet and the transcript of inquiry proceedings on Wednesday follows the cabinet’s decision to extend the controversial company’s contract with the Home Ministry to run the FWCMS.
According to the ministry’s legal advisor, Siti Amirah Johari, the LoA dated January 12, 2018 states that the government reserves the right to delay, discontinue or amend the implementation of the project proposal if Bestinet fails to meet conditions set by the government during contract negotiations and agreed by both parties.
Ruji was then questioned by PAC member Sim Tze Tzin on whether the above clause outlined under paragraph 5(ii) of the LoA means that the government is free to terminate the FWCMS project after audit reports had highlighted “problems” in the systems’ operations.
“According to this (clause), yes. But, it has to be read together – ‘agreed by both parties’. This has really bound the government. It looks okay, but… (it means that) there must (be) mutual terminations,” Ruji said in response to the PKR MP.
Ruji also agreed with another PAC member’s suggestion that there is a possibility of the government incurring a financial burden if the FWCMS contract is terminated, even if the LoA was not yet signed as of the date of the proceeding.
“Do you agree that in a situation where the government terminates the contract, the company can take action against the government, although there’s no decision or agreement between both sides?” DAP lawmaker Syahredzan Johan posited.
“(Bestinet) can sue the government and during the legal process, it could claim damages from the government for not continuing the contract. This could expose the government to cost implications,” he added, to which Ruji briefly answered in the affirmative.
During the same proceeding, Ruji had also raised concerns on Bestinet’s patenting of FWCMS, asserting that the Home Ministry and Human Resources Ministry were not aware of the company claiming exclusive rights over the system until the matter was addressed in the 2022 Auditor-General’s Report.
In its findings published Wednesday, the parliamentary bi-partisan committee found that as of March 13, Putrajaya had been using the FWCMS for six years without a finalised contract, in clear breach of government regulations.
Scoop previously reported that Bestinet was still being investigated by the Malaysian Anti-Corruption Commission (MACC) as of January this year.
The PAC proceedings raise questions on the cabinet’s decision to extend Putrajaya’s relationship with Bestinet following the expiration of its six-year contract with the Home Ministry to develop, supply, provide and maintain the FWCMS on May 31.
Home Minister Datuk Seri Saifuddin Nasution Ismail had on June 24 reportedly confirmed the three-year contract extension following reports by several media outlets on the matter, with the minister stating then that the cabinet had finalised the decision “a few weeks ago.”
While the exact date of the cabinet’s decision and the terms of the extended contract remain unknown, PAC will be scrutinising the matter in follow-up proceedings scheduled to be held within the next three months. – July 5, 2024