(Note: this letter has been edited to protect third parties)
RE: PECD UNIT SEEKS AMICABLE SOLUTION WITH KELE CONTRATING
I refer to the recent news statement from PECD on BERNAMA dated Sept 24,2007 with the above title and would appreciate if you could consider my response, although limited only to what I have in memory, to find an amicable solution to this matter.
The negotiation and subsequently, the agreement with KELE Contracting was entered into Mr.OJ, the former General Manager Middle East.
According to the agreement:
1. 2 security PDC cheques of 1 mil each will be issued to KELE to enable them to start work immediately at O Project, Palm Jumeirah.
2. The 2 security cheques will be returned once Letter of Credit arrangement is in place within normal time of 2-3 days upon Application < In our case, since the issuing bank is AFFIN in Malaysia, Group CEO Signatory is required; and in turn, he requested Mr.TT, the Director of Construction to vet through the documents and to endorse prior to him signing it>
The signed agreement by Mr.OJ was given to me together with the 2 security cheques which have been signed by him. Prior to signing as second signatory, I have included my notes on the payment vouchers accompanying the cheques < Please note : this is not a payment ; merely securities to be replaced by LCs > In my notes, If I can recall correctly, I have requested further supportings such as all necessary approvals prior to releasing the cheques to KELE. The GM assured me that there have been an extensive communication between him & Mr.TT and the latter has given him an approval via phone.
The cheques were released to KELE by the project team without addressing my request to include the approvals < email from Mr.TT to OJ > as part of the supporting. The project accountant, Mr.MR is willing to testify on this matter.
Subsequently, the LC application was sent from my office to HQ for further submission to Affinbank, once approved by the Group CEO. Ms.S , the finance executive at Dubai Regional Office may be able to provide the documents (copies). Please also note that, issuance of LC is merely an assurance from the company that we have the ability to pay. At that point of time, we still have the full banking facilities from Affinbank. Issuance of LC, by itself, does not constitute payment. All claims of the LC must be accompanied with a payment certificates, issued, measured and approved by relevant authorities.
On the reason(s) for the non issuance of the LC or my rejection from Mr.TT on the matter is unclear to me as I am not included in the email communication. However, during the hand-over meeting by Mr.OJ on his last day at the company, attended also by ZH from Internal Audit, Mr.TSK, the Head Of Operations did concur that there has been no decision made by the Director Of Construction on the appointment/issuance of LC. By that time, the 1 st security cheque/Post Dated 30/6/07 has already gone into current status cheque.
After the departure of Mr.OJ, the negotiation with KELE Contracting was resumed by Mr.TT, Mr.NS & Mr.TSK and most recently before I left, with my successor, Mr.MZ. The issue, as I understand it has always been the ” Short Notice Pay” demanded by KELE. And as it is, the issue has always been company to company. In other parts of the world, the matter will be pursued through civil proceedings. That is not the case unfortunately here in UAE.
Throughout my tenure as the Head Of Finance, extensive communication was issued via my office to Mr.F, Head Of Legal, Mr.NS, Mr.TT, Mr. HI, Mr.TSK attaching all relevant documents pertaining to the matter. Internal Audit Dept may verify that all the documents have relevant department’s endorsements on it eg. Cost, Commercial, P.M etc. As far as I am concerned, I am not aware of any hidden reason(s) for this contractor to be appointed. The appointment MUST be made at that time as we were facing imminent possible termination from the project and also due to the lack of interest from other contracting to work with us due to our payment track record in DIFC project.
I do not have any authority to appoint nor approve payments which is not in line with the Company procedures and financial limits of authority.
However, we are not talking about payment here, at least NEVER intended to, as the cheques were supposed to be security only. The Board may find that these were not the first nor the last cheques issued as security. The practice has been accepted by the previous MD, former management as well as the present management due to the practical issue in UAE. A list of all the PDCs and security cheques can be obtained from Finance, Regional Office.
To me I bear no ill feelings to the company which I have served for 10 years. Despite my predicament, I truly believe that this matter should have been solved between companies. On why KELE Contracting chose to target individual signatories(employees) rather then pursuing a civil case like everybody else even in Malaysia, only they will be able to answer.
(signed by Zainal Adnan Khairuddin in original hand-written letter)
AMBER NO.1, MURAQABAT POLICE STATION, DUBAI, UAE.