The accounts reflect that they have recorded sales revenues of RM51.8 million and an after tax profit of RM54 million on a paid-up share capital of only RM8 million

Last week, the DAP Penang state government had confirmed that it will pay RM305 million to Consortium Zenith-BUCG Sdn Bhd (CZBUCG) to do 3 studies. The DAP Penang Govt also confirms that part-payment of RM135 million was already paid by alienating land of equivalent value to CZBUCG.

After much questioning and scrutiny, the DAP Penang Government continues to maintain that the price of RM305 million for the 3 studies is a “reasonable” cost and “within limits”.

However, checks with the filings of CZBUCG with the Suruhanjaya Syarikat Malaysia (SSM) have revealed surprising information.

As we know, CZBUCG has not yet started construction. Further, as far as available information shows, this special-purpose company’s only business activity to date has been the 3 studies.

The latest filing by the CZBUCG shows that the company had lodged their audited accounts for their financial year ended 31 Aug 2015.

The accounts reflect that they have recorded sales revenues of RM51.8 million and an after tax profit of RM54 million on a paid-up share capital of only RM8 million.

In fact, CZBUCG’s profit for the FY2015 is even higher than the surplus recorded by the Penang Government for fiscal years 2013 and 2014 combined!

This high profitability so early in their project is very unusual for a typical concession company where losses in the early stages are the norm.

Can the Penang Government explain if CZBUCG’s high profitability is due to profits made from the work done on the 3 studies?

Or is this high profit due to capital gains profits from land sales that was given as part payment by the Penang Government which claims the land value is only RM475psf whereas evidence have shown that the market value is much higher – leading to windfall capital gains for the company?

Also interesting to note is that the filings also show that despite the Penang Government’s continued efforts to position this as a joint-venture between China and Malaysia, the China-based company, BUCG, only owns 0.0057% of CZBUCG.

The rest is owned by local interests. Can the Penang Government confirm this?

Liang Teck Meng,
Secretary-General of GERAKAN