This article first appeared in The Edge Malaysia Weekly on October 10, 2022 - October 16, 2022

THE appointment of Entomo Malaysia Sdn Bhd (formerly KPISoft Malaysia Sdn Bhd) as the developer of the MySejahtera application to assist in managing the Covid-19 outbreak in the country raised eyebrows and many questions, which remain unanswered despite the Public Accounts Committee’s (PAC) investigation into the matter.

Entomo, via a non-disclosure agreement (NDA) signed on April 1, 2020, took the lead and developed MySejahtera, which now has the health data of almost the entire population.

On March 24, 2020, Entomo wrote to Majlis Keselamatan Negara (MKN, or the National Security Council) director-general Datuk Mohd Rabin Basir, offering to develop the Covid-19 Outbreak Management system as a corporate social responsibility (CSR) initiative.

MKN accepted Entomo’s CSR offer three days later on March 27, 2020, but did not know then that it would be for only one year. Negotiations to pay RM196 million for the following two years of using the app — launched on April 16, 2020 — are ongoing.

The PAC report on the MySejahtera debacle, released last week, stated that officials of other relevant ministries were not aware of how the whole deal with Entomo came about, and there were no supporting documents or minutes of meetings available.

According to the report, Health Minister Khairy Jamaluddin told the committee, “We are stuck already with MySejahtera because [it started out as a] CSR [initiative].”

“That is something you have to ask MKN,” Khairy said when pressed by PAC chairman Wong Kah Woh on how the development of the app was masked as a CSR initiative. But once it was agreed on, it was decided that the CSR, or free status of the app, would be for only a year.

As Datuk Wira Dr Rais Hussin Mohamed Ariff of EMIR Research aptly puts it in a commentary: “The government appears to have a gun to its head, with the application and data of MySejahtera held as ransom.”

The PAC report, in its summary findings, notes that the CSR approach proposed by Entomo had caused the government to be unclear on the right direction in the procurement for the use of the MySejahtera app. “The government was confused about the appointment of Entomo, the CSR concept and the ownership of the MySejahtera application,” it says.

In November last year, the cabinet is understood to have approved the procurement of the app and set a price ceiling of RM196 million for two years after the end of the one-year CSR period.

This amount was decided on despite Entomo having planned to transfer the intellectual property (IP) rights and software licence of the MySejahtera app to MySJ Sdn Bhd for RM338.6 million, for a period of five years and three months. The agreement to transfer the IP and licences was dated Oct 6, 2020.

How the price tag of RM338.6 million was derived is not known.

According to the PAC report, MKN had proposed to the cabinet that negotiations on the procurement of MySejahtera be done with MySJ for a two-year contract from April 1, 2021, to March 31, 2023, after the end of the CSR period on March 31, 2021.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz told the PAC that the Ministry of Finance was aware that MySJ and Entomo are two different entities and that it had asked the Ministry of Health to conduct due diligence as to with whom it was entering into a contract. The PAC had raised the question of why due diligence wasn’t done prior to the cabinet’s decision in November.

While the financials of MySJ, which was only registered in September 2020, were not publicly available, Entomo suffered an after-tax loss of RM18.19 million from RM5.94 million in revenue for its financial year ended December 2020. As at end-December 2020, the company had total assets of RM9.81 million and total liabilities of RM35.44 million, with accumulated losses of RM27.4 million.

To put things in perspective, Entomo is wholly-owned by Singapore-based Entomo Pte Ltd, which was founded by Raveenderen Ramamoothie and Anuar Rozhan. Raveenderen and Anuar own 71.47% and 12% respectively of Revolusi Asia Sdn Bhd, which in turn has an 81.43% shareholding in MySJ.

Other shareholders of Revolusi Asia are Naveen Pralhad Deshpande (12%) and Tan Sri Shahril Shamsuddin (4.53%).

Meanwhile, other shareholders of MySJ include Hasrat Budi Sdn Bhd (10.05%), P2 Asset Management Sdn Bhd (7.03%) and Ganesan Shanmugam (1.49%).

Hasrat Budi is a wholly-owned unit of property developer Eco World Development Group Bhd. As for P2 Asset Management, it is controlled by Gregory Jaya-Sudhir (52.78%), Jonathan Jaya-Sudhir (37.78%), Kuhan Arunasalam Poraviappan (9.33%) and Russell Walter Boyd (0.11%).

There has been some wrangling between Hasrat Budi, which is seeking legal redress, and Entomo, Raveenderen and MySJ, which ended with the three parties (the defendants) buying back Hasrat Budi’s 10.05% stake in MySJ for RM24 million, which would value MySJ at about RM240 million. This was announced by Eco World in July.

What is interesting about the dispute between Hasrat Budi and Entomo, Raveenderen and MySJ is that it contradicts earlier statements by government officials that the MySejahtera app and its data are owned by the government.

PAC chairman Wong told The Edge after the report was released that some of the documents describing MySJ to potential buyers clearly state that the company owns the app and data.

The PAC report noted that the government had given assurance that the data within the app was secure and would not be misused, and stressed that it was the owner of ­MySejahtera. It pointed out that the cabinet’s decision for the government to take over the ownership of MySejahtera showed that it still belonged to the developers in principle.

While talks are ongoing for the government to take over MySJ, other questions have been raised.

For starters, the PAC said the price ceiling of RM196 million to procure MySejahtera for two years was high and contradicted the concept of CSR. That price tag was approved by the government on April 14 this year.

Wong said, “If the contract being awarded now is RM196 million for two years, we are talking about a near RM200 million contract for two years and it’s a big contract. Of course, we understand that at this stage, the government does not have much choice or options because this (MySejahtera) has become part of our life. What has been done wrong was, from day one, CSR was used as a tool to obtain a long-term contract, a long-term lucrative contract from the government.”

It is worth noting that Khairy only took up the position of health minister in August 2021, taking over from Datuk Seri Dr Adham Baba. In February 2021, Khairy was appointed coordinating minister for the National Covid-19 Immunisation Programme.

The contract being awarded to Entomo without a tender may be attributed to the pandemic and the need to get things moving as quickly as possible given the magnitude and unprecedented nature of the health crisis. But does this justify the lack of a contract?

The only semblance of a contract is an NDA signed on April 1, 2020, between MKN, representing the government, and Entomo. It is a moot point if this is a valid contract, and will depend on whether it included a letter of intent and terms as well, a lawyer tells The Edge.

One of the key issues the PAC zoomed in on was the CSR initiative being for a period of one year, but there seems to be no indication of how that time frame came about.

Another question that was raised was whether MKN had the authority to award contracts in the first place, especially such an important one that impacts the entire nation.

It is understood that directly negotiated contracts should also involve the Ministry of Finance, the paymaster, but this was not adhered to.

From the PAC report, the Ministry of Finance was not even involved in approving the CSR plan, nor in talks on it.

While some may argue that the quantum of RM196 million to MySJ is relatively small and an asset has indeed been developed, the abuse of the process and the circumstances under which the deal was done leave a bad taste.

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