Former Finance Ministry deputy secretary-general Dr Uzailee Abdul Latif is pictured at the Kuala Lumpur High Court, February 12, 2020. ― Picture by Ahmad Zamzahuri

KUALA LUMPUR, Feb 12 ― Datasonic Technologies Sdn Bhd (DTSB) won a directly negotiated contract from the Home Ministry (KDN) to supply 12.5 million polycarbonate passport chips for a five-year period worth RM318.75 million despite an unsatisfactory track record as the Finance Ministry (MoF) approved of this, a witness told the High Court today.

Former Finance Ministry deputy secretary-general in charge of government procurement Dr Uzailee Abdul Latif said a letter dated May 26, 2014 from DTSB reached then prime minister Datuk Seri Najib Razak's office to discuss approval for the contract to supply passport chips.

Dr Uzailee then wrote a letter to KDN, asking the ministry for further clarification as DTSB's letter was minuted by Najib; he received a reply from KDN in August 2014.

"In this letter, KDN stated it would like to maintain the existing contract with Percetakan Keselamatan Nasional Sdn Bhd (PKNSB) and chips supplied by IRIS based on exemplary performance.

"In this letter, KDN also stated that DTSB's performance was unsatisfactory as there were frequent delays in the supply of polycarbonates which cost the Immigration Department its service performance when supply was halted.

"From the letter's conclusion, KDN states it did not intend to nominate the company for future procurement," he said in his witness statement here.

Datuk Seri Ahmad Zahid Hamidi was the home minister when the direct negotiations took place.

Dr Uzailee was testifying as the 30th prosecution witness against Zahid in the latter’s corruption trial over 47 charges involving alleged money-laundering, bribery and criminal breach of trust.

During a discussion on the supplying of international Malaysian passport in November 2014, Dr Uzailee, who was in attendance, said DTSB had proposed to supply polycarbonate chips and made cost comparisons whereby the government could save RM103.49 million if DTSB was awarded the project.

"However DTSB was asked to take further action on several issues as information provided by KDN was insufficient.

"On the other hand, MoF also wanted to evaluate themselves DTSB's capability to supply passport chips which adhered to international standards and specifications," he said.

Dr Uzailee said the MoF subsequently granted the approval for DTSB's appointment through direct negotiation process by KDN to supply passport chips for five years until 2021 or 12.5 million chips to be inserted into the polycarbonate biodata page of Malaysian passports.

It said this was because DTSB had succeeded in providing “proof of concept” while also obtaining nods from KDN and the Immigration Department.

During cross-examination by Zahid's lawyer, Datuk Ahmad Zaidi Zainal, on government policies regarding the award of direct negotiation contracts, Dr Uzailee said these were allowed in special circumstance, such as for national security purposes or in times of “desperation”.

Dr Uzailee later agreed to the Ahmad Zaidi's suggestion that passports came under the scope of national security.

When asked if Zahid could hold direct negotiations with any private entity, Dr Uzailee said this was not allowed without approval from MoF as the authority in such matters.

At that time, Datuk Seri Najib Razak was the finance minister.

He also told the court KDN's role in seconding the direct negotiation contract in this case was one of the factors that led to the MoF approval, aside from the company's performance and the nation's needs at the time.

"As I recalled the last report submitted by KDN, the ministry said they supported the process to hold direct talks," Dr Uzailee said.

Datasonic wrote directly to Najib

Earlier today, the prosecution's 29th witness Datasonic Group Berhad (DGB) chairman Tan Sri Mohamed Hashim Mohd Ali affirmed in court he had signed several letters in 2014 addressed to Najib and Zahid to express interest in obtaining the project through direct negotiation.

Hashim said the letter to Najib ― dated May 26, 2014 ― asked the then-prime minister to consider giving DGB the opportunity to supply the passport chips.

Hashim said the letter to Zahid ― dated August 21, 2014 ― informed the latter of a previous letter sent to Najib, which Najib had acknowledged.

In the second letter, Hashim also said DGB's proposal could save the government as much as RM75 million for a period of five years and possessed the capability to do supply high-quality and secured passport chips.

Zahid is accused of receiving RM6 million in the form of two bank cheques from DSG director, Chew Ben Ben, in April 2017, to appoint the company as passport chip supplier.

Home Ministry warned DTSB about contract obligations

Around June 2016, Dr Uzailee said the Immigration Department experienced a passport shortage, which led to a meeting between DTSB and PKNSB convening on August 15, 2016 to seek a solution on the supply inadequacy.

At that time, it was reported that the shortage was attributed to a large number of chips used in the data page of passports being rejected by the National Printing Department (NPD) or Immigration Department as damaged or below quality standards.

In the same month, KDN secretary-general Datuk Seri Alwi Ibrahim wrote to DTSB and warned the company about its contractual obligations, after the MoF through Dr Uzailee sent a similar warning letter inclusive of the August 15 meeting minutes to the ministry.

Hashim testified he then signed a reply letter from DGB to be handed over to Alwi whereby the content stated DTSB's commitment to supply polycarbonate chips through PKNSB.

When asked if he had any direct or indirect knowledge of bribery given by DSB, Hashim replied in the negative.

To a question on the company's statement in denying they were involved in paying kickbacks to Zahid, Hashim said the statement were issued to clarify media reports which linked Datasonic to the former deputy prime minister's current corruption charges.

Zahid’s trial which involves 47 charges resumes tomorrow morning before High Court judge Collin Lawrence Sequerah.