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PKFZ report handed to MACC: But after that what happens?

Posted by amkpermatangpauh on May 29, 2009

Malaysia_Biggest_ScandalSBy Wong Choon Mei (Suara Keadilan)

Port Klang Authority chairman Lee Hwa Beng has handed over the audit report on the Port Klang Free Zone to the Malaysian Anti-Corruption Commission for further action.

Lee told reporters he spent about 10 minutes with MACC deputy commissioner Abu Kassim Mohammad.

While he pledged full co-operation with the MACC, Lee said he would leave it to the anti-graft body to investigate before taking further action of its own.

On Thursday, the PKA finally released the audit report compiled by PricewaterhouseCoopers.

The massive PKFZ project, dubbed a white elephant, has been hit by trouble and scandal since its launching in 2002.

Massive cost over-runs and conflict of interest

Initially slated to cost RM1.9 billion, unexplained over-runs have lifted the final figure several fold.

According to PwC, the project outlay of RM4.947 billion has gone up to RM7.453 billion due to interest payments, and PKA must restructure its loan or the final bill could balloon to RM12.453 billion by 2051.

A long string of BN politicians have also been implicated in the long-standing scandal including former MCA president Ling Liong Sik and ex-Transport Minister Chan Kong Choy.

The PwC report itself names Deputy Finance Minister Chor Chee Heung, Backbenchers Club chairman and Bintulu MP Tiong King Sing and Semanta assemblyman Abdul Rahman Palil for possible conflict of interest in the project..

For example, Tiong is the majority shareholder of Kuala Dimensi Sdn Bhd, the turnkey contractor for the project.

PwC also exposed land purchases at a ’special prices’ that were way above market value, saying that Kuala Dimensi may have also overcharged interest between RM51 million to RM309 million.

But will the MACC do its job, or will PKFZ slither away like the Lingam Tape?

Completed on Feb 3, 2009, the report blamed weak governance, project management together with conflict of interest for the problems at PKFZ.

The project was modelled after the Jebel Ali free trade zone in the United Arab Emirates. It is the Malaysian government’s biggest investment ever in the port industry. PKA, a government agency under the Transport Ministry, is the project overseer.

Meanwhile, DAP adviser Lim Kit Siang has called for immediate investigation and action from the MACC.

“Feel utterly violated at manner public funds squandered in PKFZ scandal. Real rip-off. Imagine what RM13billion can do for the country,” Kit Siang said on Friday.

The Pakatan Rakyat leader has been relentless in pushing Prime Minister Najib Razak’s government to account for the fiasco.

Like many Malaysians, he is reserving judgement despite the MACC investigation as the anti-graft body itself has been proven to be subservient to Najib’s Umno-BN coalition.

Said Kit Siang: “I would not say anything until I have the opportunity to study the PwC report, except to say that the first thing I would look for is whether the PwC report furnish answers to five questions on the PKFZ scandal which I posed to Transport Minister, Datuk Seri Ong Tee Keat, on 9th April last year.”

Five golden questions

The quesions raised by Lim were:

1. Was it true that when the Port Klang Authority and the Transport Ministry insisted on buying the 1,000 acres of Pulau Indah land for PKFZ at RM25 psf on a “willing buyer, willing seller” basis, in the face of strong objection by the Attorney-General’s Chambers and the Treasury which had recommended that the land be acquired at RM10 psf, the Cabinet had given its approval subject to two conditions: (i) categorical assurance by the Transport Minister that the PKFZ proposal was feasible and self-financing and would not require any public funding; and (ii) that every RM100 million variation in the development costs of PKFZ would require prior Cabinet approval.

2. In the event, the first condition was breached when the PKFZ project ballooned from RM1.1 billion to RM4.6 billion requiring government intervention and bailout while the second condition was breached with the original PKFZ development costs of RM400 million ballooning to RM2.8 billion without any prior Cabinet approval ever sought for every RM100 million increase in development costs.

3. The Transport Minister had unlawfully issued four Letters of Support to Kuala Dimensi Sdn. Bhd (KDSB), the PKFZ turnkey contractor – to raise RM4 billion bonds, which were regarded as government guarantees by the market. The Transport Minister had no such powers to issue financial guarantees committing the government, as it could only be issued by the Finance Minister and only after Cabinet approval. The first Letter of Support was issued by the former Transport Minister, Tun Dr. Ling Liong Sik on May 28, 2003, which was Liong Sik’s last day as Transport Minister while the other three were issued by Kong Choy.

4. Whether it wasn’t true that in recognition that the four unlawful “Letters of Support” of the Transport Minister had nonetheless given implicit government guarantee to the market that the Cabinet had in middle of last year gave retrospective approval for the unlawful and unauthorized four Letters of Support by the Transport Ministers in the past four years creating RM4.6 billion liability for the government in the bailout of PKFZ.

5. Why no action had been taken against the two previous Transport Ministers, both Liong Sik and Kong Choy, as well as the government officials responsible for the unlawful issue of the four “Letters of Support” – getting the government embroiled in the RM4.6 billion PKFZ scandal?

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