Was Maju's 2012 MEX listing proposal a 1,000% return scam?

More stories from MACC's investigation of Maju Expressway (MEX) over the weekend. Before that, a refresher on the history of the highway from the website of the consulting firm HSS:

The Dedicated Highway initially started as a 42km of expressway that links Kuala Lumpur to the new KL International Airport in Sepang. The Concession Agreement was signed in October 1997 but due to the economic crisis the following year, the project was deferred in December 1998. 

It was later reactivated in July 2002 and only the 26km stretch between Kuala Lumpur and Putrajaya was implemented with the remaining 16km from Putrajaya to KLIA deferred to a later date.

The "later date" was December 2019 but it did not happen. Tan Sri Abu Sahid and Maju Holdings Sdn Bhd (MAJU) subsidiary, Maju Expressway Sdn Bhd (MESB) was said to have ran out of money and unable to complete the 18 km second phase. 

They are now under investigation for alleged false claim of RM360 million. 

Over the weekend, more news report surfaced to give the perception Sukuk bond money meant to finance the planned extension was squandered away for horses, wine cellar, gambling and other luxuries. [Read in MMO here, The Vibes here, and more on Google here] 

Perhaps, that is only part of the story. 

What there any false claim also for the first 26 km stretch between KL-Putrajaya of the KL-KLIA expressway?

The MEX project was developed under a Build-Operate-Transfer (BOT) model, a form of Public-Private Partnership (PPP). The concession agreement was signed in October 1997 but due to the 1998 financial crisis, the project was deferred in December 1998 and only reactivated in July 2002. 

Under this model, MESB was awarded a 33-year concession to design, build, operate, and maintain the expressway. The financing was primarily secured through private means, including bond issuances. 

There is no publicly available information indicating that the Public Works Department (JKR) directly awarded the construction contract to MESB. And, there is no report to suggest that the MEX project was financed through a direct government grant. 

Yet there is this lingering market talk that there was direct government grant and at the same time, a contract award from JKR. 

It led to a long held suspicion, though bizarre to be believable, that MESB was triply paid by the concession agreement, government grant, and JKR payment. Bizarre also for the reason MESB was reported to have defaulted on a RM50 million bond principal payment in April 2021. 

The suspicion remained and cannot be totally ruled out yet in view of the construction cost of the MEX project was initially not publicly disclosed. It was till a 2012 expose by Tony Pua (read in Malaysia Today here) in which he raised issue on the concession agreement: 

The highway was first awarded in 1997 and the concession agreement was amended by supplemental agreements in 1998, 2003 and 2006. The contents in the agreement are still a mystery as of today as the MEX agreements was mysteriously not included when other highways agreements were declassified by the Cabinet in November 2008.

Edge Online reported in June 2012 that MAJU’s proposed sales of MEX to EP Manufacturing Bhd (EPMB) for RM1.7 billion. Abu Sahid claimed the construction cost was RM1.65 billion and financed by RM250 million debt.

The contentious issue then was government grant of RM976.9 million to MAJU and as alleged by Tony Pua, 74% of the construction cost of this project to a crony of Mahathir was borne by tax-payers. The Malaysia Today report revealed:

According to reports by the Malaysian Ratings Corporation, Tan Sri Sahid Mohamed only invested RM60 million and lent RM87 million in funds to the project. The rest of the construction and operational cost of the highway was borne by borrowings which amounted to RM529 million at December 2010.

For RM60 million investment plus advance of RM87 million, Sahid stands to make RM600 million had the backdoor listing went through. That is a 'cool' 1,000% return plus future returns from EPMB. No wonder Dato Najib rejected the proposal in 2012. 

In 2019, DAP controlled Ministry of Finance rejected Maju Holdings proposal to takeover the PLUS highway.          

Could that be the reason Dr Mahathir fixed up Najib with the SRC and 1MDB charges, and willingly succumbed without a fight or usually pre-empted the Sheraton Move by Azmin Ali-Hishamuddin, but pretended to oppose Muhyiddin?

Bet there will be a 3R cover-up that the investigation on Abu Juling is discriminatory policy against Bumiputera entrepreneurs. It will be somewhat of a similar reaction by Mahathir to call MACC plan to freeze RM2 billion of late Daim's overseas assets as cruel.

Related or not?