What is the impact of a change in Government on companies, especially those with Government contracts or Concession Agreements?
The incoming Government must continue to honor the terms of the Agreements unless both parties agree to renegotiate. What can the Government do if the other party refuses to renegotiate lopsided terms? They can go through in detail and identify areas of non-compliance by the Company, e.g. the case of Syabas with regards to increasing in water tariff when the Selangor Government changed hands.
The other avenue available to the Government is to examine the conduct of the Company during the bidding and award of the Contract / Agreement. Under the Integrity Pact adopted by the Malaysian Government, Companies have to give declarations on non-corrupt practices. If they or their agents are found to have been involved in corrupt practices, one of the consequences is the termination of the Agreement.