More Curi Duit Stories: AirAsia & Pharmaniaga

1. More CuriDuit Stories: AirAsia & Pharmaniaga

2. The Pharmaniaga Scam There is a company that imports medicines from India and sells it to Government hospitals. India is now a major pharmaceutical power in the world and they manufacture high quality drugs but very cheaply. This particular company buys the drugs in India at a cost of about RM10.00 per pack. They say that if they can sell their imported medicine directly to the Government hospital, they will charge the Government about RM15.00 per pack - which means they slap on a 50% mark up to cover transportation, expenses and of course some profit for them.

3. But the drug is actually sold to the Government hospital for RM45. Here is how it happens. The importing company cannot sell the drugs directly to the Government. They must go through Pharmaniaga Bhd which we all know is an UMNO company. Its Directors include UEM boss Dato’ Ahmad Pardas Senin, failed outsourcing guru Dato’ Azman Yahya and UMNO henchman Dato’ Raja Nong Chik. But even here the company cannot sell the drugs directly to Pharmaniaga at RM15. They first have to sell their drugs to yet another crony company which is "connected" to Pharmaniaga. So the crony intermediary buys the drugs first at RM15.00 and then sells it to Pharmaniaga at a mark up of say RM30.00 (This is how Malays do business...its called “rent-seeking" no need to sweat or take risks, like Chinese do, here they just collect, collect, collect!).

4. The interesting thing is this is just a paper transaction. They may not even take physical possession of the drugs. They may just tell the importing company to deliver the drugs direct to Pharmaniaga. They just bill Pharmaniaga and cream off the difference. Now kawan-kawan, this has been going on for donkey years since Pharmaniaga was set up in the 1990s. Then Pharmaniaga finally sells the drug to the Government hospitals for RM45.00 a pack. And who pays for all this creaming off? Its you and me Encik Taxpayer. We are the suckers.

5. AirAsia Creaming Off More Money Here is a follow up on the AirAsia story that appeared earlier. When AirAsia took over the Sabah and Sarawak routes, they also took over seven airplanes from MAS. But when they returned the routes to MAS about a year later, only one plane was in flying condition. The other six planes had been cannibalised for parts or were under serious repair. AirAsia saved tens of millions of Ringgit (RM50 million or so) from this underhand business tactic and simply passed the cost of repair back to MAS. Everything was approved by Badawi the Finance Minister and his Deputy Nor Mohamed Yakob. But this is not the end of the story.

6. The Finance Ministry official who gave me this news said that when AirAsia first took over the hinterland routes in Sabah and Sarawak they also demanded compensation from the Government. They told the Government that Sabah and Sarawak air routes were not profitable and had to be subsidised. Ok but how much? RM70 million per year! And AirAsia wanted to be paid upfront! And they got it. The Government paid them the RM70 million subsidy up front, signed off by Nor Mohd Yakob. To be fair MAS has also been paid subsidies by the Government to operate the Sabah & Sarawak routes but the Finance Ministry official says that throughout the entire history of MAS, the highest subsidy paid by the Government to MAS was a maximum RM14 million only. And the subsidy was always paid to MAS at the end of the financial year, after MAS had finalised its audited accounts.

7. And during the years when MAS was profitable no subsidies were paid to MAS by the Government. Subsidies were only paid in those years when MAS made slim profits or suffered losses. But here we have AirAsia getting an upfront subsidy of RM70 million. Who paid for that? Err that’s our money lah Encik Taxpayer. And Tony Fernandez gets all the fantastic 'entrepreneur' awards! Pi-dah mabuk! Now after the elections lets have another Royal Commission of Inquiry okay?