It was the Finance Ministry that picked Perangsang International Sdn Bhd (PISB) to construct the Matrade building after it rejected a Works Ministry recommendation of a company that offered a better deal.

PISB, now a defunct property developer, has been blamed for the nine-year delay in completing the Matrade (Malaysian External Trade Development Corporation) building.

During this time, construction costs went up by 70 percent. The project was completed last month by other contractors.

Works Minister S Samy Vellu said his ministry had in June 1993 recommended Ireka Construction Bhd for the multi-million building project, but that the Finance Ministry had over-ridden this.

He revealed that 14 companies had submitted quotations for the project, including PISB - company owned by the Selangor state government - and Ireka Construction.

Ireka Construction, which valued its bid at RM158 million, was recommended because the price-tag was reasonable, being 15 percent lower than budget estimated by the ministry, Samy Vellu told the Dewan Rakyat today during the question session.

Other factors that favoured the company was its proposal to complete construction within 138 weeks (two years and six months), and the fact that the company did not have a heavy workload as it had only one project in hand at the time.

"The offer by PISB was not recognised as its bid (RM154 million) was too low, as low as 19 percent compared to the estimated budget," the minister said in reply to a question from Salahuddin Ayub (PAS-Kubang Kerian).

Samy Vellu explained that PISB had cited the cost of 'wall cladding' at RM3 million, against the ministry's estimate of RM15 million, without even presenting the design of the wall cladding.

"The Finance Ministry on Sept 8, 1993, decided to recall all the 14 companies and entered into a limited tender (process). On Nov 10, it instructed (us) to negotiate directly with PISB over the project," he said.

After the negotiation was completed, the Finance Ministry approved the project to PISB at a cost of RM167 million in December 1993. The offer letter was issued the following month.

The then finance minister was Anwar Ibrahim, who was also deputy prime minister.

'Buka mata, buka mulut'

Answering a supplementary question from Salahuddin as to why the recommendation was shot down, Samy Vellu said his ministry only acted as an agent between the contractor and the Finance Ministry and that it had no say in the final decision.

"Our responsibility was to evaluate the tender and make recommendation to the Finance Ministry. If the Finance Ministry does not accept (our recommendation), we can't question it," he responded.

On the delay in completion construction and the additional costs incurred, Samy Vellu said he would get to the bottom of the matter. He said he was aware that the government may not be able to obtain compensation claims since the company is now defunct.

"If we let this happen, then in future, all companies will get government projects, take the payments and close the company. Kita buka mata, buka mulut saja-lah (we should keep our eyes open and talk about this)," he said in reply to Mohd Alwi Che Ahmad (BN-Keterah).

"We must fight for this, we can't let them run away. We want to take action against the company's bosses and directors, (check) where the company was set up, and who its directors were then."

Samy Vellu said he had conveyed the same message to attorney-general Abdul Gani Patail to investigate the matter.

Work on the Matrade building began in 1994 with completion scheduled in 1997, but the project suffered several delays and led to the appointment of a new contractor. The original cost of RM167 million shot up to RM287.5 million, with RM64.8 million being spent on repairs.

Samy Vellu reportedly said he had personally investigated PISB and its directors, and that all evidence gathered would be produced in the event of a court hearing. He did not give details but disclosed that, in 2004, PISB shares were sold to Tajuk Modal Sdn Bhd.

PISB was a subsidiary company of Kumpulan Hartanah Selangor Bhd, an investment company under the Selangor government.

Malaysiakini has reported that the new owners of PISB decided to liquidate the company a year after they bought it.