24 April 2002 (Business Times) - PLANS to double-track the main railwaylines in Peninsular Malaysia may suffer a setback as one of the foreigncontractors involved in the project is said to be under graftinvestigations.The Government has agreed to parcel out the project to Indian RailwayConstruction Co (Ircon) and a consortium led by China Railway EngineeringCorp.The former is being investigated, according to a report on the IndianExpress’ website dated March 9.Industry sources were divided about the news, with some saying the projectwill be delayed while others insist it will take off as scheduled thisyear.“The investigations have no direct link whatsoever with the project here.They involve the company’s deals elsewhere and its previous managingdirector,” a source told Business Times in Kuala Lumpur yesterday.“In fact, Ircon is appointing a new project director to expedite theMalaysian project,” added the source who confirmed that the investigationsare on-going.But the Indian Express report claimed that Indian Railway Minister NitishKumar had called for files following reports that senior bureaucrats athis ministry were overly keen to hand the Malaysian project’s consultancyservices to a Malaysian company.The firm is said to be charging between 8-9 per cent of the project costcompared to 4.5 per cent quoted by three other bidders.The allegations first surfaced when Kumar’s predecessor Mamata Banerjeeclaimed that Ircon’s former managing director Arun Prasad had pushed forthe contract to be awarded to the Malaysians.Prasad retired on January 31 last year.Banerjee had written a confidential letter to Indian Prime Minister AtalBehari Vajpayee, which was leaked to the press.She said Ircon should not participate in the project in view of the flurryof serious allegations of corruption levelled against Prasad in connectionwith “certain on-going projects in Malaysia”.“It was necessary for me to ensure that before Ircon is permitted tofurther participate in the project in Malaysia, the corruption allegationsare duly verified by the authorities.“I would like to inform you that the preliminary investigations havesubstantiated the very serious allegations of corruption against Prasad.We are taking follow-up action on the vigilance report very soon,”Banerjee wrote.The report further said the unusual interest shown by the MalaysianGovernment in trying to get an extension for Prasad also raised eyebrows.Transport Minister Datuk Seri Dr Ling Liong Sik had suggested in a letterto his Indian counterpart Kumar that Prasad should continue in service andnot be retired, the report added.Dr Ling and Ircon’s current managing director B.S. Kapur and Irconofficials based in Malaysia could not be reached for comment.Sources said that weeks after the memorandum of understanding for theproject was signed in Kuala Lumpur, a board meeting of Ircon attended byPrasad decided that the consultancy services contract be awarded to theMalaysian company.India’s anti-corruption agency, the Central Vigilance Commission (CVC),has since stepped in and its commisioner V.S. Mathur recently recommendedthat action be taken against Prasad.Meanwhile, a Malaysian Government official said the developments will haveno bearing on the counter trade deal as it is entirely an Ircon internalmatter.“It has got nothing to do at the Government level and I’m sure Ircon willstick to the deal and clean up its house accordingly.”Malaysia had in May last year endorsed the participation of India andChina in the railway project under a RM12 billion counter-trade programmeinvolving payment in crude palm oil for work done.The deal will see the delivery of around eight million tonnes of thecommodity over a period of between five and six years to the twocountries.Ircon, which is a state-run engineering and construction firm, willundertake double-tracking and electrification works for the northern gridspanning 338.8km that links Ipoh with Padang Besar. The parcel is worthRM6 billion.China Railway and local partners DRB-HICOM Bhd, Emrail Sdn Bhd and KienHuat Group, on the other hand, will work on the 297km southern gridlinking Seremban and Johor Baru, which is also valued at RM6 billion.The railway forms part of the Trans-Asia Rail Grid stretching fromSingapore to Kunming in south China.The deal was supposed to have been signed end of last year for work tobegin this year, but to date nothing has been inked between thecontractors and the Government.However, Ircon officials based here have said that preliminary civil workshave started and the project is on track.Double-tracking refers to the construction of a new track parallel to theexisting one to enable uninterrupted two-way train traffic.

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