Army under fire for failing to collect RM162mil in penalties
PETALING JAYA : The army has been flagged for failing to collect RM162.75 million in penalties from a defence contractor that delivered armoured vehicles late, according to a new government audit.
The 2025 Auditor-General's Report Series 2 revealed that the vehicles were to be delivered under five contracts signed between 2011 and 2014, but were delivered behind schedule.
In addition, penalties totalling RM1.42 million for delays in repair work and spare part deliveries between 2020 and 2023 were never imposed, according to the report, tabled in the Dewan Rakyat today.
The report also found that maintenance and repair contracts worth RM107.54 million had been split into 86 smaller jobs.
This allowed the contracts to be awarded through direct negotiations and quotations instead of open tenders.
The practice, known as 'pecah kontrak', is often used to bypass stricter procurement regulations and has been flagged by the auditor-general as a serious lapse in oversight.
In response, the army said it had taken note of the audit findings and was working to address the issues.
'We are improving coordination between departments to ensure that procedures are properly followed,' it said in the report.
The auditor-general also urged the defence ministry to recover all outstanding penalties and discontinue the practice of splitting contracts.
A total of five audits involving seven ministries were conducted, covering programmes, activities, and projects worth RM48.873 billion. A total of 22 audit recommendations were submitted to the ministries, departments, and companies involved.
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