Singapore F1 contractor fined over S$570,000 for bid-rigging

SINGAPORE – A contractor for the Formula 1 Singapore Grand Prix was fined more than S$570,000 by the competition watchdog on Tuesday (Nov 28) for rigging the bids of two tenders – providing electrical services for the race and separately, offering asset tagging services for an international school.

The contractor Cyclect Group – which comprises Cyclect Electrical Engineering, Cyclect Holdings and Chemicrete Enterprises – as well as HPH Engineering and Peak Top Engineering were penalised for collusion. HPH and Peak Top were fined S$33,128 and S$21,693 respectively.

A tender was called in Dec 2014 for the provision of lighting and electrical items for the F1 race from 2015 to this year. Four bids were received from Cyclect Electrical, Chemicrete, HPH and Peak Top.

Cyclect Electrical was awarded the tender on Apr 23, 2015. On the same day, an anonymous source sent the Competition Commission of Singapore (CCSC) a tip-off on bid rigging, which turned out to be masterminded by the Cyclect Group.

Investigations revealed that the Cyclect Group had prepared the final bid prices for HPH and Peak Top, and also prepared HPH’s responses to questions to clarify its application for the tender.

Evidence that surfaced over the course of investigation included a Whatsapp exchange between HPH executive director Joshua Tan and Chemicrete general manager Dass Arunasalam, where Mr Tan told Mr Dass: “Bro have u check with your md on the Grand Prix tender. How he want to work together. Or he want me to submit a bogus price only. The tender quite big and a lot of things to do. Please advise”

The fake bids were 25 to 30 per cent higher than Cyclect Group’s bids, said the CCS.

The winning bid was priced 10 to 20 per cent higher than the previous winning bid, which was also awarded to Cyclect Group. However, the CCS noted that the increase could be due to other factors, outside of the collusion.

The anonymous source also told the authorities that the same companies had colluded on another tender: On 31 March 2015, GEMS World Academy had awarded a tender for asset tagging services – including the provision of hardware, software and manpower to generate barcodes and tag individual assets – at its Yishun campus.

Chemicrete prepared a quote for HPH – priced 50 per cent higher than its own quote – for this tender. Eventually, Chemicrete won the bid.

Four days after receiving the tip-off, the CCS inspected the premises of Chemicrete and Cyclect Holdings, and interviewed key employees. Similar inspections were carried out at HPH and Peak Top.

Cyclect Group was fined S$559,297 for the F1 tender and S$12,000 for the GEMS tender, while HPH was fined S$28,128 and S$5,000 for the respective tenders. Cyclect Group was given a reduction in penalty of up to 50 per cent under the CCS’ leniency guidelines, although the commission did not reveal the exact discount.

The CCS said that HPH’s actions “can only be explained by the fact that (it) submitted a cover bid for the Cyclect Group as a form of quid pro quo”, so that it could potentially be awarded more work in the future by Cyclect Group.

The evidence showed that HPH’s submission of a cover bid was to “generate the appearance of competition, allow the Cyclect Group to win the F1 Tender and in the process, secure the goodwill of the Cyclect Group”.

There was also a history of HPH “being eager to maintain good relations with the Cyclect Group by way of submitting quotes for tenders which the Cyclect Group was taking part in, whenever they were asked to do so, even if they do not get the projects most of the time”, the CCS said.

As for Peak Top, the CCS said that its managing director Andy Chong had referred to a “potential partnership” with the Cyclect Group when he was questioned. The commission also found out about a friendship between Mr Chong and Cyclect Electrical employee Lim Poh Beng.

CCS chief executive Toh Han Li said: “Bid-rigging is one of the most harmful types of anti-competition conduct as it distorts the competitive bidding process, thereby preventing businesses from getting the best value for their tenders.”

Tenderers should independently prepare bids and refrain from discussing or coordinating with one another, he reiterated.

The five firms have two months to file an appeal.

When contacted, Cyclect Group managing director Melvin Tan said his company had never “intentionally worked against industry practices”. “We have cooperated to the best of our ability during the investigations. Hence, this decision came as a shock to us. We are currently reviewing the decisions with our legal advisors and will be keeping all our options open, including an appeal,” he added.

HPH did not respond to media queries, while Peak Top declined to comment. A Singapore GP spokesperson noted the findings by the CCS but she would not say whether the race organisers would be taking further action against Cyclect Group.