Tan Sri Vincent Tan Sues Government & Spanco - Not Honouring Fleet Management Deal

Tan Sri Vincent Tan, the founder of Berjaya Group, has sued the Malaysian government and Spanco Sdn Bhd over a lucrative vehicle fleet concession. Tan claims that the previous administration chose his business, together with Naza business, to handle the fleet concession through a Letter of Intent (LoI) published in 2018.

Berjaya and Naza formed a consortium with a 49:51 ownership structure in 2018 to bid for the contract jointly. Starting after the fifth year, the contract is expected to include around 12,500 vehicles worth an estimated RM300 million per year. Tan alleges that the consortium acquired a letter of intent from the Finance Ministry to replace Spanco Sdn Bhd, the current fleet management contractor.

Tan claims that the LoI was unfairly terminated before the real award was honoured. He claimed that a case has been filed against the Ministry, and that a court hearing is scheduled for later this year. Tan made these remarks during a news conference when he highlighted the RM700 million sale of Berjaya Group's waste management division to Naza Group.

The government issued a request for proposals in February 2018 for a contract to supply, maintain, and manage its fleet of official cars for the next 15 years. The Naza-Berjaya consortium, Sime Darby Bhd, DRB-HICOM Bhd, Samling Group, Comos, Go Auto, and Spanco, who have managed the concession since 1994, reportedly filed applications.

Tan claims that the Naza-Berjaya won the bid with the lowest bid. However, when the government changed and Tan Sri Muhyiddin Yassin became Prime Minister, the consortium's LoI was terminated. Tan claimed that their bid was RM700 million less than Spanco's and questioned why the government chose to select Spanco which is a lot more expensive.

Tan speculated that the new administration could be assuming that the Berjaya and Naza combo are inexperienced in car maintenance or the car business. He stated furthermore that the consortium's shareholder agreement had been also changed to increase Bumiputera ownership to 60% which decreased Berjaya's stake by 40%. Tan expressed optimism that their ongoing legal battle will result in a favourable court verdict.

Source: New Straits Times