Explained: Selangor DRT deal, Asia Mobiliti and Hannah Yeoh — is there conflict of interest?

Malay Mail
Malay Mail

KUALA LUMPUR, May 30 — Over the past few days, Malaysians were introduced to the Selangor government’s Demand-Responsive Transit (DRT) and along with it came some alleged controversies.

But before anyone could grasp what the DRT entails, and its connection to Asia Mobiliti Technologies Sdn Bhd, a chorus of calls surfaced for Hannah Yeoh to step down as youth and sports minister.

This was over an alleged conflict of interest involving Yeoh and one of the recipients of the DRT project, Ramachandran Muniandy, who is the CEO of Asia Mobiliti and her husband.

The Malaysian Anti-Corruption Commission (MACC) has, however, said its preliminary investigations had found no conflict of interest.

Malay Mail takes a deep dive into the alleged controversy that received so much attention over the weekend and the question of conflict of interest.

What is the DRT?

The DRT project is a public transportation service that facilitates on-demand shared ride services with intelligent, machine-learning algorithms to automate fleet dispatch and optimise vehicle routing to accomplish efficient pick-up and drop-off of passengers headed to various destinations.

According to a statement shared on its co-founder Premesh Chandran’s social media page, bookings are made via a passenger application while drivers are guided by a driver application.

Operating within a geofenced zone, this provides for more efficient and cost-effective first- and last-mile passenger services, freed from a fixed schedule and fixed route of conventional public transport services.

Who is behind Asia Mobiliti?

Ramachandran and Premesh — who is also news portal Malaysiakini’s director and its former CEO — had in 2018 set up the mobility tech company, known as Asia Mobiliti, with the goal of improving public transport.

The appointment of Asia Mobiliti as one of the two DRT service providers for the Selangor Mobility programme was first announced at a public forum organised by the Selangor government with the Shah Alam Municipal Council (MBSA) and the Mentri Besar Selangor Incorporated (MBI) in June 2023.

This was followed by the official unveiling of the Selangor Mobility brand logo and zone announcement at the Selangor Smart City and Digital Economy Convention (SDEC) on October 20, 2023.

Approved by APAD

Asia Mobiliti, along with Trek Rides (the other mobility tech company), conducted a private pilot of the service in September 2021 in Petaling Jaya for relevant stakeholders and clients.

Following the pilot and validation of use, Asia Mobiliti said it was the first to be licensed by the Land Public Transport Agency (APAD) to operate a “bus-on-demand” service in December 2022 and remains the only company with a “Made in Malaysia” system, designed and developed by its engineering and technology team as part of its Mobility-as-a-Service (MaaS) platform, Trek.

The appointment process

In the context of the Selangor Mobility appointment process, Asia Mobiliti in a statement said it understood the reasons given for awarding two companies instead of one.

It said that an open tender in this situation of a highly specialised new service and with only two qualified companies in Malaysia would have created a monopoly situation in the state, the statement read.

It added that this would have stifled competitiveness and deprived the opportunity for the state to pilot the service in a real-world setting and assess the performance of the service providers over a reasonable period.

Asia Mobiliti said it must be noted that the appointment is only for a period of nine months and requires extensive investment from both service providers in terms of procuring vehicles, hiring drivers and continuous optimisation and development of the technology that powered the service.

But is there a conflict of interest?

Lawyer Tisya Yunus explained that a conflict of interest basically occurs when an individual’s personal interests or loyalties interfere with their professional duties or responsibilities.

“It is a situation in which a person who is in a position of power can potentially derive benefit either for themselves or their family and friends based on actions or decisions made by the said person in power in their official capacity.

“Based on investigations by the MACC that have already taken place, it can be concluded that there is no conflict in interest as far as this case is concerned as it was not Yeoh’s ministry that had awarded the contract to her husband’s company.

“Yeoh was not in a position of power or had the capacity to grant the contract where it was in purview and capacity of the Selangor government to grant the same. As such, the allegations in respect to the issue of conflict or interest in this matter is without any merit or basis,” Tisya said when contacted by Malay Mail.

She added that there is no issue of “conflict of interest” in this situation because the project for which Ramachandran’s company was awarded the contract has no correlation or connection with Yeoh’s ministry.

“Other issues, however, may be at play including but not limited to biasness on preferences.

“Although conflict of interest can create biasness, biasness itself does not amount to a conflict of interest.

“Ultimately, it was a decision made by the Selangor state government in accordance with its own preferences and at its own discretion,” she said.

Constitutional lawyer Nizam Bashir Abdul Kariem Bashir also explained that a simple definition of conflict of interest is one which arises when a person or an entity has multiple interests, one of which could potentially influence the motivation or decision-making related to another interest; and an individual or organisation has competing professional or personal obligations or personal or financial interests that would make it difficult to fulfil their duties fairly.

“To my mind, that question whether Asia Mobiliti’s situation is a conflict-of-interest transaction calls for more than just a simple ‘yes’ or ‘no’ response.

“This administration was voted in on a platform of reforms and transparency. Where are we on that? Is this deal reflective of the administration’s promise of reforms? If not, then let’s not wait any longer, reform (the way we award projects) now!” Nizam said when contacted.

Lawyer Ganaesh Rau said, at this juncture, even though Yeoh may not be directly involved in the awarding of the contract to her husband’s company, the Pakatan Harapan (PH) prior to the general election had been heavily campaigning in favour of public tenders and against cronyism and favouritism.

“Legally, yes, she might not be in direct conflict of interest, but ethically, she is perceived to be in conflict of interest now.

“In my opinion, either the minister or the husband has to resign from their respective posts, or the company should refuse the project,” Ganaesh said when contacted.

Next course of action

Nizam said as far as what can be done to regulate conflict of interest cases or allegations of conflict of interest, there are common law rules that can be relied upon, but if those are codified or drawn up in a statute, it may be easier to appreciate what can or can’t be done.

“For a start, all public decision-making must be procedurally fair i.e. a decision must be free from the taint of bias and predetermination. That aside, another common law rule is that a person who has a fiduciary obligation is not allowed to put themselves in a position where their official role conflicts with their personal interests,” he said.

Ganaesh added that the government should stop direct negotiations (if any) and make public tenders.

“Any ministers or person in power, or authority should strongly advise their family and friends to disclose to the decision maker about the possible conflict of interest; for example, ‘this minister is my father/wife/nephew/grandchild’,” he said.

Urgent need for reforms

Despite the MACC saying there is no element of conflict of interest, Centre to Combat Corruption (C4) has called on the government to urgently enact procurement reforms to overcome conflict of interest and lack of transparency.

“Regardless of whether the Youth and Sports Ministry is involved, the fact remains that Yeoh holds a position as a prominent figure within DAP — and by extension PH.

“The simple fact that the same coalition forms the Selangor state government is enough to raise valid suspicions around the propriety of the appointment.

“Therefore, while Azam Baki (MACC chief Tan Sri Azam Baki) argues that formal bureaucratic channels may not be directly linked in this matter, other political connections exist. These connections are enough to raise serious questions of conflict of interest, which remain unaddressed despite its grave implications for good governance,” C4 said in a statement.

It added that the matter is compounded by the fact that there was no open tender — the state government, and any individuals involved within this process should have acknowledged the possibility of a conflict of this magnitude occurring, with necessary measures taken to reduce the likelihood and perception of abuse.

Importance of open tenders

C4, in disagreeing with Asia Mobiliti saying there was no need for an open tender process, claiming it would cause “a monopoly in the state”, said by its very nature, an open tender process encourages competition and transparency in the procurement process, and forms part of the United Nations Commission on International Trade Law (UNCITRAL) Model Law for public procurement.

“Despite mentioning approval from APAD in appointing Asia Mobiliti for the project, Selangor state Investment, Trade and Mobility Committee chairman Ng Sze Han has, thus far, failed to furnish any details pertaining to the list of criteria relevant to this approval,” it said.

C4 has questioned why no criteria was disclosed publicly, especially in a situation as contentious as this.

“The opaqueness of the appointment procedure has only allowed aspersions to be cast regarding this matter. This runs counter to Pakatan Harapan’s explicit commitment to a more transparent public procurement system — pledged in both their 2022 Kita Boleh manifesto and by Prime Minister Anwar Ibrahim,” it said.

Yesterday, Ng said Asia Mobiliti was one of the two companies selected for the DRT pilot project and both companies had been approved by APAD.

A new law for ‘conflict of interest’

C4 said this episode with Asia Mobiliti has exposed the need for Malaysia to consider a legal framework to regulate conflicts of interest.

“In doing so, a clearly defined scope must be established to clarify what exactly constitutes a conflict of interest, with stipulations that restrict or outright prohibit actors with contentious relations to the dealings.

“There must then be full disclosure provided to the public for any proceedings flagged as having conflicts, allowing for better transparency, and easing future investigations.

“Ultimately, the persistence of questions surrounding the awarding of government contracts — especially due to a lack of transparency from the government — will further dampen the credibility of the Madani government,” the anti-corruption non-governmental organisation said.