By Khairul Khalid
The controversy over the Selangor water MoU (Memorandum of Understanding) continues to simmer as questions linger over why the Selangor Menteri Besar acted unilaterally on Selangor’s water issue that has been deadlocked for over five years.
After intense public pressure, the Selangor state and the federal government has finally agreed to disclose the water MoU next week.
In another surprising turn of events, it would seem that there is another agreement to be signed by the state and federal government after the water MoU (Memorandum of Understanding). This was never mentioned before by any of the parties involved.
According to Selangor Menteri Besar (MB) Khalid Ibrahim, this new agreement would contain more detailed and comprehensive information on water restructuring in Selangor.
Why wasn’t the existence of another agreement simply announced together with the MoU? Or has it been forced into being by the clamour for more transparency about the whole deal?
Regardless, the lack of information only reinforces the notion that Khalid has struck this deal unilaterally without any consultation with key state personnel.
Was Khalid’s arms twisted?
PKR (Parti Keadilan Rakyat) chief strategist Rafizi Ramli lambasted the hush-hush, last minute nature of Selangor’s water MoU and slammed Khalid’s unilateral decision making. He has even cast doubts on the legality of the MoU because it wasn’t presented to the state executive council for approval.
The MoU facilitates the consolidation of the Selangor water concessionaires with a RM9.65 billion takeover and also allows the construction of the controversial Langat 2 water treatment plant after a long delay.
Khalid decided on a critical issue unilaterally that could possibly jeopardise the state’s long-term control of water matters and potentially backfire on him politically as well. Why did he act alone?
Fuelling speculation
Conspiracy theorists are having a field day. Was it the much publicised Kajang move that forced Khalid’s hand? Some political observers claim that Khalid had rushed the water MoU to negate its potential impact in Anwar’s Kajang by-election campaign.
Anwar Ibrahim (left) & Khalid Ibrahim
Or did someone twist Khalid’s arms? Some have suggested that it is no coincidence that the MoU coincides with Khalid’s out of court settlement with Bank Islam over a RM67 million loan dispute that dates back to 2007. The terms of the settlement have not been made public.
Or did the federal government rush Khalid into an agreement to avoid the complications of dealing with a new MB in Selangor?
Was there a deal within a deal? Are there other agreements besides the MoU that we don’t know about? Khalid’s initial stance on this matter, deferring to the veil of confidentiality, only serves to fan the rumours and suspicions.
“I won’t comment anymore on this matter. I will not fuel speculation and I’m not interested in the political insinuations. I only want the facts of the MoU to be out. My duty is to highlight it to the public so that people are aware of the issues,” Rafizi told KiniBiz earlier.
A big mistake
Charles Santiago, Member of Parliament (MP for Klang) is more blunt in his assessment of the water MoU saga.
Charles Santiago
“That’s just Khalid’s style of doing things. It’s how he operates. He doesn’t really consult people but that also creates a lot of doubts. The state has been fighting this case a long time. Suddenly you broker an agreement that appears to be unfair. It is obvious that the federal government got what it wanted but the state government didn’t,” said Santiago to KiniBiz.
Nevertheless, he is not convinced that Khalid’s unilateral decision on the MoU is somehow connected to his settlement with Bank Islam.
“I believe Khalid is a man with a lot of integrity. He is not a guy who can easily be bought. But I think he has slipped big time with the MoU and made a mistake. But then again, he comes from a banking and corporate background. For somebody of his stature and experience, it raises a lot of questions,” said Santiago.
The Klang MP firmly believes that Khalid should have gone to the exco for a mandate on the MoU to make things clear to everyone. The MB should have also have called Pakatan Rakyat leaders and people familiar with the water issue.
Caught in a mess
Another thing that Santiago is sceptical about is Khalid’s team. He feels that Khalid doesn’t surround himself with the right people.
“I think his advisers are not up to the mark. They should have picked up on some of the things that are lopsided in the MoU. It (the MoU) should have been put through a “legal scrubbing” to allow the legal experts to go through every detail. I don’t think he did that. Now he is caught in a mess,” said Santiago.
The Klang MP adds that the Selangor state seems to be the big loser in the MoU.
“Khalid hasn’t really won anything outright for the state. The SPV (Special Purpose Vehicle) was supposed to be 100% controlled by the state but now it’s not. Why has Khalid given a 30% stake to PAAB (Pengurusan Asset Air Bhd – the federal government body that takes over the water assets)?” Santiago queried.
Concessionaires could flex muscles
In exchange for the RM2 billion injection by the federal government to facilitate Selangor’s takeover of the concessionaires, the state government is to sell water assets or equity in the state’s Kumpulan Darul Ehsan Berhad (KDEB) water special purpose vehicle (SPV) to PAAB of up to 30%.
Santiago also spells out the potential pitfalls of the MoU for the state government.
“Firstly, the MoU allows for arbitration to take place. It gives rise to the notion that the government is not allowing restructuring to go on. Secondly, it allows the water concessionaires to flex their muscles and make things difficult,” said Santiago.
Langat 2 conundrum
Subramaniam Pillay, an adviser in the water panel during Khalid’s first term as MB feels that questions should instead be posed to the federal government.
“We should turn the tables on them instead. Why are they (the federal government) suddenly agreeing with Khalid? Why didn’t they agree much earlier and allow this to drag on for years? Khalid has never changed his stance. If the federal government signs off on the deal to take over the concessionaires, he would give approval for Langat 2,” said Pillay.
The Langat 2 water treatment project has been sidelined the past five years pending the Selangor water negotiations.
Pillay explains that although Selangor’s water panel had decided that Langat 2 was unnecessary for Selangor and there were other options such as exploring groundwater extraction and lowering NRW (non-revenue water – effectively wastage and theft), there wasn’t much that Khalid could do to stop the Langat 2.
“We already knew that the Langat 2 project was going ahead regardless. The agreement was signed a long time ago by the previous Selangor government under BN. We cannot revoke the agreement outright. Khalid’s only trump card when he took over was approval for the water treatment plant in Selangor,” said Pillay.
Politically motivated
Nevertheless, Pillay is concerned that Langat 2 could be a breeding ground for corruption if not managed properly and could lead to higher water tariffs.
“How sure are we that the contracts for Langat 2 will be given to the lowest tender offers? Will there be transparency? If it is run efficiently, consumer prices could be lower. But if Khalid is no longer there, they may start to appoint cronies to the related companies and inflate the costs,” said Pillay.
He says that although he can’t be certain why Khalid had acted unilaterally, on the surface it would seem like it is a politically motivated move.
“My suspicion is that maybe it (the MoU) is to embarrass Anwar. Or maybe they (the federal government) had no choice but to strike a deal now rather than negotiating with Anwar if he becomes MB. My only concern is that the federal government might be taking Khalid for a ride. Najib has never delivered on his promises,” said Pillay.
KiniBiz could not get in touch with Khalid despite repeated attempts. However, Khalid has said in interviews with other media that there was a need to keep the deal quiet because companies involved were listed.
However, on the opposite end at the federal government level, it is quite clear that many people knew. The prime minister himself was present at the signing of the MoU.
Many people continue to question why Khalid did not take advice from his bosses at PKR and even those who advised him earlier on the water deal. It is surprising that the MoU has still not been officially released although most details appear to be already in the public domain.
At worst, Khalid was compromised and at best Khalid was pushing through the water deal hoping that it will not be hijacked by political considerations after he leaves the MB’s position.
But the would mean that for the latter Khalid thinks that he knows best – that’s dangerous.
Yesterday: The MoU that wasn’t
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