Wikileaks resurrects ghosts of PKFZ

 

To the protagonists involved, the Port Klang Free Zone (PKFZ) scandal had been put in the back-burner – unlikely to cause any heat. The billions that had been spent or milked from the project had been overtaken by even a bigger scandal – the 1Malaysia Development Bhd (1MDB).

Over the years, “1MDB” replaced “PKFZ” as the buzzword on government spending, accountability and transparency. When the last of the many legal actions initiated - criminal and civil - ended last week, it was certain to be the end of the PKFZ saga.

After the Federal Court dismissed the government’s application to forfeit RM37 million (a pittance compared to the actual spending) from nine parties, it was thought that PKFZ had been finally declared dead, buried and entombed.

But a resurrection of sorts has come from an unlikely foreign source - Wikileaks - which has been dumping hundreds of documents in the public domain. They expose bad governance, wheeler-dealing, sham transactions and other clandestine activities of governments and organisations around the globe.

Among the documents that surfaced recently was a gem - a cabinet memorandum from the Finance Ministry dated June 22, 2007. It gives a detailed account of the behind-the-scene activities which led to the government pumping in over RM4.6 billion to “save the project.” (With all the interests and penalties, the Port Klang Authority (PKA), the owner of PKFZ will finally pay out over RM12 billion.)

That memorandum outlined some of the misdeeds, non-compliance and other matters - some of which were blatant abuse of power which led to the massive cost in developing the PKFZ.

The memorandum notes that a previous Finance Ministry memorandum submitted to the cabinet meeting on Oct 23, 2002, had already indicated the costly price of the land.

The Attorney-General’s Chambers, the memorandum noted, was of the opinion that the 1,000-acre land in Pulau Indah should be purchased under the Land Acquisition Act 1960 as opposed to buying from then a little-known outfit - Kuala Dimensi Sdn Bhd (KDSB) - which was later appointed the turnkey contractor for the project. The company was and is still helmed by Bintulu MP, Tiong King Sing.

The market price of the land was valued by the Valuation and Property Services Department at RM10.16 per sq ft, whereas the purchase price was a hefty RM25 per sq ft. But that was not the real issue.

The memorandum revealed some startling revelations. Approval was sought to give retrospective approval for the government to guarantee the bonds - issued and created to the total sum of RM4.67 billion, including the coupons of Kuala Dimensi Sdn Bhd.

This approval was needed due to the series of “letters of support” issued by the transport minister (Chan Kong Choy at that time). These letters, the memorandum affirmed, are implicit of “the government’s guarantee in law”.

It can be inferred that the loans had already been taken (without prior approval) and the government was backdating its approval and sort of “reimbursing” such expenditure.

It was previously reported that both the previous transport ministers - Ling Liong Sik and Chan - maintained that their letters were mere "letters of comfort" and could not be construed as guarantee letters.

The transport minister (Chan) had on May 28, 2003, issued a “letter of support” to the Malaysia Rating Corporation Berhad (MARC) stating that “the government shall at all times ensure that PKA will fulfil all its obligations in accordance with the time and amount specified”.

Based on this “letter of support”, a series of bonds were issued by a special purpose vehicle (SPV) to KDSB to finance “the purchase and development of the land”. In short, PKA “provided” the money for KDSB to buy the land and re-sell it to PKA at more than double the price.

Too late

In early December 2006, the Finance Ministry was informed by the lead arranger (of the bonds) that “letters of support” had been issued by the transport minister (Chan) for the issuance of several bonds.

The memorandum noted: “On Dec 14 2006, the Finance Ministry sought clarifications from the Transport Ministry and gave notice that any letter of guarantee can only be issued with prior approval from the cabinet and such letter of guarantee can only be issued by the Finance Ministry.”

But it was too late. Between July 30, 2003, and Sept 30, 2006, four such letters had already been issued by the Transport Ministry which was helmed by Chan. Hence, the government was left with no choice.

The memorandum also noted: “On Feb 25, 2004, the transport minister (Chan) had obtained approval in principle from the prime minister (Abdullah Ahmad Badawi) to complete the entire project in a single phase and appoint a turnkey developer to complete this project.

“In its premise, PKA had negotiated the extra scopes with KDSB, and the project cost has increased to RM4,632,732,000 consisting of land purchase price RM1.7 billion and development cost RM2.9 billion.”

But what was most telling was that these commitments - the increase in the project cost was negotiated and affirmed without any reference to any approving agency.

What is shocking is that the extra expenditure was committed without reference, let alone approval by the Treasury - the ultimate body which manages the country’s coffers.

But what about the members of the board of PKA? Didn’t they raise an alarm at the manner in which all rules were broken and what PKA was committing to? What about the Treasury and Transport Ministry representatives who were sitting on the board? What were their roles?

Didn’t it occur to them that something odd was happening and immediately notify their superiors or were they content with the directors’ allowances?

This whole episode leaves a bad taste in the mouth because the PKA has not recouped a single sen save for its success in suing its former general manager, Phang Oi Choo @ Phang Ai Tu. But she has filed an appeal.

The PKFZ was mooted 20 years ago. Since its inception, it has been anything but smooth sailing. At every turn, discrepancies had been discovered, and an equally efficient system within the establishment covered it up. Now, thanks to Wikileaks, we are getting occasional glimpses.

Today, we the taxpayers are coughing out about RM220 million annually to service that loan. We deserve better. Isn’t it time to hold all the 46 directors during that telling period liable for the losses?

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R NADESWARAN first exposed the shenanigans in PKFZ in 2005 and continues to monitor related happenings. Comments: citizen.nades22@gmail.com. - Mkini

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

✍ Credit given to the original owner of this post : ☕ Malaysians Must Know the TRUTH

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