GEORGE TOWN: Island Golf Properties Bhd (IGP), a subsidiary of the state-owned Penang Development Corporation (PDC) which operated the Bukit Jambul Country Club (BJCC), suffered losses in some years and meagre profits in others, prompting the state government to outsource the management and operations of the club.

Chief Minister Lim Guan Eng revealed the financial performance of the BJCC at a press conference here on Thursday, April 15.

He compared the terms and conditions with the Japanese company, Taiyo Resort (KL) Bhd, which has been awarded the contract, and the RM2 company L & L Golf Management Sdn Bhd (L & L) which had been endorsed by then IGP chairman Datuk Seri Zahrain Hashim.

The total value of the 20-year contract to Taiyo is RM80 million.

Lim's refusal to endorse L & L's bid is said to have upset Zahrain, who had threatened to quit since last year. Zahrain was appointed chairman of IGP in late 2008.

IGP's profits after tax plunged from RM2.559 million in 2005, to a loss (after tax) of RM1.799 million in 2006 and RM868,473 in 2007. It was back in the black in 2008 with RM730,160 and in 2009 RM206,875 in profits after tax.

"In line with the principles of competency, accountability and transparency, the state government is revealing why L & L's proposal was rejected by the PDC board even though it was fully endorsed by Zahrain.

"I fail to understand why when the tender was called by Zahrain, only one company — L & L — which had been set up just months before the tender was called, had applied while the second tender called by the PDC board attracted seven applications," said Lim.

"Though Zahrain had insisted on the PDC board endorsing L & L for the outsourcing, after perusing the terms and conditions, the PDC board decided to retender the contract as L & L had no experience nor financial backing to undertake the contract.

"With Taiyo taking up the contract for 20 years, the returns to PDC will be guaranteed with RM1.3 million annually for the first 10 years, while the L & L deal was for a contract period of 10+5 years with guaranteed rental of RM218,00 for the first year. Over 10 years, this would be RM7.721 million," he said.

"L & L was also proposing to raise RM10 million via membership sales out of which 70% would go to IGP and the rest to L & L, while Taiyo would not be carrying out membership sales," said Lim.

He said that while Taiyo had the experience of running the Kajang Hill Golf Club, L & L had no prior experience whatsoever.