MACC Officer Challenges Penang Tunnel Tender Account, Alleges Land Scam and 10 Percent Kickback

RM6.3 billion project faces scrutiny over its award and land transfers

A Malaysian Anti-Corruption Commission investigating officer has told the Kuala Lumpur Sessions Court that Penang's RM6.3 billion undersea tunnel and three paired roads project was arranged through direct negotiation, challenging former chief minister Lim Guan Eng's position that it went through an open tender.

Senior Superintendent Zulhelmi Ramli testified that a 2011 memorandum of understanding between the Penang government and Beijing Urban Construction Group helped arrange the award to Consortium Zenith BUCG Construction Sdn Bhd before a request for proposal exercise began. He said the process departed from an executive council decision calling for an open tender and bypassed the transparency expected for a project of that scale.

The prosecution alleges that Lim solicited 10 percent of the project's profits, accepted RM3.3 million in cash and caused two parcels of state land valued at RM208.75 million to be disposed of to companies connected to the project. The alleged conduct spans 2011 to 2017.

Lim, who headed the Penang government at the time, has pleaded not guilty to all four charges. He maintains that the project followed an open tender, that he relied on recommendations from state officers and that he did not solicit bribes.

As of October 15, 2025, the case remains before Sessions Court Judge Azura Alwi. The defence has challenged the investigator's conclusions and the credibility of key witnesses, while prosecutors have presented testimony about the procurement process, land transactions and alleged cash deliveries. Lim was charged in August 2020.

Why the 2011 agreement matters

Zulhelmi said the memorandum of understanding, or MOU, made no reference to an open tender and functioned as a direct award. According to his testimony, Lim arranged for the agreement and state officers were asked to assist businessman Zarul Ahmad Mohd Zulkifli with the process.

The investigator said the MOU came before the request for proposal, or RFP, exercise and before broader competition could take place. His account places the order of those decisions at the centre of the prosecution's case: investigators say the state's public position of pursuing an open tender did not match how the project was arranged.

An MOU signals an intention to work together rather than serving as a final contract. An RFP seeks proposals for a defined project. The concern raised by investigators is that selecting a preferred company through an early agreement could make a later competition a formality.

Open tenders invite eligible bidders to submit proposals, normally through public advertisements. Officials then assess those bids against published criteria, with the aim of securing fair competition, suitable technical solutions and value for public money.

Direct negotiation involves a public authority dealing with a preferred contractor without a competitive process. It can be used in narrow circumstances, such as an emergency or where a particular technology or capability is unique. Because fewer checks surround the selection, strong records and approvals are needed to address the greater corruption risks.

Lim's lawyers say the RFP was launched to attract proposals and that officers carried out the evaluations, rather than Lim personally. They maintain that the project complied with state procurement procedures and used an open tender. The court must weigh those arguments against the investigator's account of the earlier agreement.

What prosecutors allege about profits and payments

Prosecutors allege that Lim solicited a 10 percent share of the project profits from Zarul in March 2011, near The Gardens Hotel in Kuala Lumpur, in return for helping him secure the project.

Zulhelmi said his investigation indicated that Lim used his position to assist Zarul and companies under the Consortium Zenith umbrella in obtaining the deal. The investigation drew on testimony and documents gathered from state officials, company personnel and other witnesses.

The allegations cover several kinds of benefit: the requested share of profits, RM3.3 million allegedly received in cash, and the disposal of state land. Prosecutors are asking the court to consider how the award, payments and land transactions fit together.

The investigator described the initiative as being more concerned with valuable land and private benefits than transport improvements. After he outlined his findings, prosecutors asked why the investigation focused on the movement of land and payments rather than engineering work and project timelines.

Zulhelmi, the MACC investigating officer, gave his assessment of what the evidence showed:

It was a land scam,

Lim denies wrongdoing. His defence argues that a witness's view of whether a tender was genuinely open, or whether the evidence shows guilt, is a matter for the judge to decide after hearing the case.

Two land parcels worth RM208.75 million

The land allegations concern two Penang state parcels valued at RM208.75 million. Prosecutors say Lim caused them to be disposed of to companies connected to the tunnel and roads scheme. The transactions took place at the state Land and Mines Office in February 2015 and March 2017 and form the basis of two of the charges.

Earlier testimony linked one parcel to Ewein Zenith Sdn Bhd, which later developed the waterfront condominium known as City of Dreams. Zulhelmi said the pattern of early project arrangements and later land disposals supported his assessment that the exercise prioritised land over transport outcomes. The defence rejects that account.

Malaysia's states sometimes use land to pay for public works. Under such an arrangement, a developer can receive parcels at a government valuation in exchange for building roads or other public assets. The public gives up land and is meant to receive infrastructure in return.

Those arrangements depend on rigorous valuations and clear terms. If land is priced too low, or if the public receives less than it gives up, the state can lose value. Critics of such deals point to the gap that can develop between the initial land valuation and the profits later earned from development.

In this case, investigators say the movement of land belongs alongside the procurement decisions and alleged payments when assessing how the project operated. Lim's lawyers contest the prosecution's account of misuse and maintain that the project followed the proper process.

The defence challenges the investigator's role

Lim's legal team objected to parts of Zulhelmi's testimony on the ground that he had moved beyond facts into opinions and conclusions. Counsel argued that findings about guilt and the nature of the tender process belong to the court.

Judge Azura allowed the testimony to proceed at this stage, with the defence objections recorded. The court will assess the weight of the evidence when considering the case.

Such disputes arise in complex corruption trials because prosecutors seek to show patterns of conduct and intention, while defence lawyers seek to keep witnesses focused on facts they directly observed. Here, the court has allowed testimony about how the decisions were made, with its credibility and relevance to be weighed later.

Lim's position remains that he acted on recommendations from state officers and did not solicit bribes. His lawyers also dispute the accounts of alleged payments and have questioned the reliability of the businessmen whose testimony supports the prosecution.

Zarul describes efforts to protect Lim

Zarul, who led the Consortium Zenith companies involved in the project, is central to the prosecution's account. He told the court that he felt indebted to Lim for the award and acknowledged trying to shield the former chief minister from investigation.

He testified that he instructed staff to prepare dummy invoices to disguise payments. Such invoices create paperwork that presents a payment as something other than its actual purpose. Zarul said his actions were motivated by a desire to protect Lim.

Zarul also said he paid RM19 million to businessman Datuk Seri G. Gnanaraja, believing that Gnanaraja could help stop an investigation linked to the project under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act, known as AMLA.

The law's name covers money laundering, terrorism financing and proceeds from unlawful activities. The investigation discussed in Zarul's testimony concerned an attempt to stop a money laundering probe associated with the project.

Zarul said he began cooperating only after investigators confronted him with documents. He told the court that he had not initially wanted the case to involve Lim and described his hope for the outcome:

I hoped he would be acquitted.

Another MACC officer, Eng Heng Jun, addressed defence suggestions that investigators pressured witnesses to implicate Lim. Eng said Zarul's references to Lim emerged during a separate investigation into Gnanaraja. A formal complaint about Lim in early 2020 then led to a new case file, before charges followed in August that year.

Gnanaraja's account of RM2 million in cash

Gnanaraja testified that Zarul gave him RM2 million in two bags on August 18, 2017, and that he kept the money at home. His account described two later occasions when he allegedly handed cash to Lim.

On August 20, he said, he met Lim and Zarul at a hotel in Kuala Lumpur. They then travelled to a shopping mall in Hartamas, where Gnanaraja said he passed Lim a bag containing RM1 million.

Gnanaraja said the second handover occurred on August 28. After late night messages and a period of waiting, Lim and Zarul came to his home. He testified that, following a brief visit, he retrieved another RM1 million from his car and handed it to Lim.

He also told the court that a company named Bumi Muhibah was intended to channel payments and build the trust needed for a larger RM30 million transfer. Gnanaraja said he understood that 10 percent of the project cost was intended for Lim. The prosecution's solicitation allegation concerns 10 percent of the project's profits.

Lim's defence disputes Gnanaraja's account and has continued to test it through cross-examination. The alleged RM2 million deliveries in August 2017 are part of the evidence being examined alongside the charge alleging that Lim accepted RM3.3 million.

Credibility disputes and the bid to drop charges

Gnanaraja's legal and financial history has featured in the defence challenge to his reliability. He was charged in a separate matter in 2019, later pleaded guilty to a lesser Companies Act offence and paid a fine.

More recently, he was reported to be bankrupt and remained involved in litigation over debts to former lawyers. Defence counsel raised those matters in court while also pointing to what they described as inconsistencies in his chronology, including when a company was formed and when a bank account was opened.

The defence uses those challenges to question his claims about payments and his dealings with Lim. The prosecution relies on his testimony as part of its account of how money allegedly moved between the people involved.

In 2024, Lim's lawyers submitted a representation to the Attorney-General's Chambers asking for the four charges to be discontinued. A representation is a formal request for prosecutors to reconsider whether a case should continue.

The lawyers cited what they described as contradictions in the evidence, including testimony about the RM19 million Zarul said he paid Gnanaraja to stop the money laundering investigation. They argued that those contradictions weakened the case enough to justify withdrawing the charges.

Proceedings continued while prosecutors considered that request. No decision on the representation or date for the next hearing was given in the account of the proceedings available as of October 15, 2025.

How the project and prosecution unfolded

The events examined in court stretch from early project discussions in 2011 to land disposals and alleged cash deliveries in later years. The criminal case began in 2020, with investigators and businessmen giving evidence during 2024 and 2025.

• January 2011: A Penang executive council meeting discussed the project. According to testimony, Lim asked an executive council member to contact Zarul afterward.
• March 2011: Prosecutors allege that Lim solicited 10 percent of the project profits near The Gardens Hotel in Kuala Lumpur.
• 2011: The Penang government signed an MOU with Beijing Urban Construction Group. Zulhelmi said it operated as a direct award before the RFP exercise.
• February 2015 and March 2017: Two state land parcels were disposed of at the state Land and Mines Office. Those transactions are central to the land charges.
• August 18, 2017: Gnanaraja said he received RM2 million in two bags from Zarul.
• August 20 and August 28, 2017: Gnanaraja alleged that he handed Lim RM1 million on each date, first at a mall in Hartamas and later at his home.
• Early 2020: A formal complaint about Lim led MACC to open a new case file, according to Eng Heng Jun.
• August 2020: Lim was charged over the alleged solicitation, RM3.3 million in gratification and two land disposals.
• 2024: Lim's lawyers asked the Attorney-General's Chambers to discontinue the four charges.
• 2024 and 2025: The trial heard evidence from investigators and businessmen, with cross-examination continuing.

The trial continues with testimony from investigators and questioning of key witnesses. Judge Azura will assess the defence objections alongside the credibility and relevance of the evidence. The eventual decision turns on whether prosecutors prove each charge beyond a reasonable doubt, including the allegations about the award process, bribes and state land.

What to Know

• MACC investigator Zulhelmi Ramli said the RM6.3 billion Penang tunnel and roads project was arranged through direct negotiation using a 2011 MOU.
• Lim Guan Eng denies wrongdoing and maintains that the project used an open tender based on recommendations from state officers.
• The four charges concern an alleged request for 10 percent of project profits, RM3.3 million in cash and two land disposals involving parcels valued at RM208.75 million.
• Zarul Ahmad Mohd Zulkifli testified about dummy invoices and a payment of RM19 million to Gnanaraja to try to stop a money laundering investigation.
• Gnanaraja alleged that he delivered RM2 million to Lim in August 2017. The defence disputes his account and challenges his credibility.
• As of October 15, 2025, proceedings remain before Sessions Court Judge Azura Alwi in Kuala Lumpur.