Negligence costs Prasarana RM450m in Mecca’s Metro Line project

The loss was discovered in its 18-month audit and forensic investigation


THE elements of negligence, failure to discharge fiduciary duty and abuse of power by former management on the Al Mashaaer Al Mugaddassah Makkah Metro Southern Line (MMMSL) project in Saudi Arabia cost Prasarana Malaysia Bhd more than 417 million riyal (RM450 million) for the financial year 2019.

Prasarana chairman Datuk Seri Tajuddin Abdul Rahman said the loss was discovered in its 18-month audit and forensic investigation, which was concluded and tabled to the board of directors (BoDs) last September.

The job to operate and maintain MMMSL in Mecca was awarded to Prasarana on April 16, 2015, through its subsidiary Prasarana Integrated Management & Engineering Services Sdn Bhd (PRIME).

It was reported that the value of the project is almost RM930 million.

Through the project, PRIME was tasked to operate and maintain the 18.1km single line spanning between Arafat 1 station and Jamarat station in the north of Mecca to transport haj pilgrims during pilgrimage season.

The take-up rate was said to be encouraging, with former PRIME CEO Masnizam Hisham saying MMMSL transported 1.5 million haj pilgrims in 2017 within the seven days’ period of the pilgrimage season compared to 1.1 million passengers in the year before.

The three-year contract ended in May 2018.

Tajuddin refused to reveal the nature of the issues exposed in the audit as the case was already reported to the Malaysia AntiCorruption Commission (MACC).

The forensic investigation exercises were audited and reviewed by PriceWaterhouseCoopers Advisory Services, he said.

“In a BoD meeting that took place this morning, we are satisfied with the advice by the Audit Risk Committee (ARC) that there are grounds for Prasarana to take this matter up with the authorities for proper investigations and ensuing legal actions to commence.”

“Two main areas of the investigation were the overall execution of Prasarana and PRIME’s contractual obligations in the MMMSL project, including maintenance repairs and overhaul issues pertaining to the spare parts of the project,” said Tajuddin.

The completed findings of the investigation were tabled on Sept 18, 2020, to the ARC. The findings were subsequently handed over to Prasarana’s external legal counsel for their scrutiny and advice on what appropriate course of action that the agency should take regarding the findings.

In 2017, then Pandan MP Rafizi Ramli had said the state-owned rail operator would have a huge financial loss in a deal to operate and maintain a metro train project in Saudi Arabia.

Rafizi criticised the viability of the project, alleging that it was running at loss, and claimed that the country was actually “donating” to Saudi Arabia in running the project.

Tajuddin assured that Prasarana will give its full support and co-operation to the authorities in their investigations.

“As this is a government-linked company, the losses involved the taxpayers’ money, so the company is accountable (for it),” he said.

The decision to report the matter to the MACC and Companies Commission of Malaysia was unanimously supported by the firm’s BoDs, Tajuddin said.

Read our earlier report

Prasarana to lodge MACC report over RM450m loss