KUALA LUMPUR: Wijaya Baru Holdings Sdn Bhd chief executive officer Datuk Seri Tiong King Sing said he will be suing Port Klang Authority (PKA) board chairman Datuk Lee Hwa Beng and several others within a few weeks over the Port Klang Free Zone (PKFZ) audit report.

Nanyang Siang Pau reported on the front page of its evening edition last night that Tiong would also be suing auditing firm PricewaterhouseCoopers (PWC) Advisory Services Sdn Bhd and several media companies.

Tiong told the daily that Kuala Dimensi Sdn Bhd had appointed a team of lawyers to study the audit report to draft the suit. Tiong is a 70% shareholder of Wijaya Baru Holdings, which is the sole proprietor of Kuala Dimensi Sdn Bhd, the turnkey developer of PKFZ.

Speaking after launching a Buddhist project in Petaling Jaya yesterday, Tiong said that he decided to sue Lee and not PKA.

Tiong also challenged Lee to use his money and not PKA funds to defend himself.

Tiong, who is also Bintulu MP and Backbenchers Council chairman, warned Lim Kit Siang (DAP – Ipoh Timur) that he may be sued too.

Kuala Dimensi also took up full page advertorials in Sin Chew Daily, Nanyang, China Press and Guang Ming Daily to explain its position.

It said the PWC’s report, which was incomplete, had tarnished the company’s reputation.

When contacted, Lee said: “I have to wait for the suit and will inform my lawyers to file a defence. Whatever I did is on behalf of PKA and for the good of taxpayers.”

Among the issues which were revealed by the points were weak project management, cost overruns and conflicts of interests.

Among the issues were:

> PKA’s failure to alert the Cabinet in a timely manner of its inability to finance the project from its internal funds following an audit report by the Auditor-General in 2004 that noted that PKA did not have sufficient funds to finance the project;

> PKA’s failure to seek the advice of the Attorney-General while not complying with certain Finance Ministry regulations;

> Potential conflicts of interests arising from the involvement of parties who had prior association with either the land used to develop PKFZ or the turnkey developer, Kuala Dimensi Sdn Bhd (KDSB);

> Awarding of the PKFZ development contract to KDSB before a project masterplan was finalised;

> PKA’s projections that it would be in a cumulative cash deficit position in 2012 and would not be able to repay the Finance Ministry soft loan instalments on time;

> PKFZ having a low occupancy rate of 14% which is not generating sufficient revenue to cover its operating expenses.

> PKFZ Sdn Bhd incurring losses since its incorporation and having negative shareholder’s funds as at Sept 30 last year.

> The possible breach of Treasury regulations when the Transport Ministry issued letters of support which could be construed as a guarantee that PKA would meet its obligations on a full and timely basis. Such letters should have been approved by the Finance Ministry.

The report was made public at a press conference by PKA chairman Datuk Lee Hwa Beng at his office in Port Klang yesterday.

Lee however refused to field any questions on the details of the report and repeatedly asked reporters to view Transport Minister Datuk Seri Ong Tee Keat’s blog for further information.

He said the report would be available online at www.pka-report.com for a period of two weeks while the appendices to the report would be available for public viewing during office hours at PKA at Jalan Pelabuhan, Port Klang until June 10.

“The appendices could not be released like the report due to its voluminous nature,” he said.

Transport Minister Datuk Seri Ong Tee Keat also directed authority chairman Datuk Lee Hwa Beng to submit a copy of the report to the Malaysian Anti-Corruption Commission and the Public Accounts Committee.

The report, which was drawn up by accounting firm Pricewater­houseCoopers, was made public during a press conference by Lee in Port Klang yesterday.

In his blog posting yesterday, Ong said he had directed the authority to carry out the following:

> SEEK professional advice on the restructuring of financial obligations of the authority;

> IMPROVE and tighten governance issues at management and board levels of the authority; and

> FURTHER beef up the day-to-day management of the zone to strengthen operations and improve its financial returns.

Ong said the release of the report was only a small part of the job that needed to be accomplished.

“We need to seriously act on the findings of the report to make sure that the interest of the people are fully protected and that this Government walks the talk,” he said.

He added that his ministry was not only committed to have the report released but it was also determined to ensure that all possible remedies that were within its jurisdiction were explored.

In his blog posting on Wednesday, Ong had said he was a strong advocate for the report to be made public.

“I have advocated since April last year that the public should know the truth. It has been a long journey for me personally. It is one that is fraught with challenges and hurdles from both within and without,” he said.

Meanwhile, the Transport Ministry said in a statement yesterday that Government was confident that the facts and issues presented in the report would finally put to an end to speculations.

It said the Government also shared the deep concern of Malaysians about the costs of the project as well as its weak governance and project management as revealed in the report.

The ministry said the action to commission a position review into zone and the subsequent release of the results demonstrated the Government’s commitment to be transparent and to act on the findings in a firm manner to lessen the public’s burden.

“The Government has, through today’s action, shown that it really means to change from the old ways of governing. It demonstrates the openness and transparency espoused by Prime Minister Datuk Seri Najib Tun Razak’s People First, Performance Now administration,” it added.

The ministry would ensure that the zone became a viable project in the long term in line with the original intent of turning Port Klang into a regional transhipment hub.

It is understood that the authority is working with legal advisers and financial consultants to define the scope and parameters of the necessary actions based on the directives given by Ong.

The report is available on www.pka-report.com

The release of the report was a clear instruction from Transport Minister Datuk Seri Ong Tee Keat, said PKA chairman Datuk Lee Hwa Beng at a press conference in the PKA office here Thursday.

“I was also instructed to hand the report over to the Malaysian Anti-Corruption Commission. I’ll be there tomorrow at 8am,” he said, adding that this was because PKA does not have any investigative authority.

He cautioned that the release of the report was on certain conditions, including the media not having the authority to rely on the report to arrive at any conclusions and that PwC is not obliged to respond to any queries from other parties, as its duty of care is solely to PKA.

Lee however refused to field any questions on the details of the report and repeatedly asked reporters to view Ong’s blog for further information.

He said the report would be available online at www.pka-report.com for a period of two weeks while the appendices to the report would be available for public viewing during office hours at PKA at Jalan Pelabuhan, Port Klang until June 10.

“The appendices could not be released like the report due to its voluminous nature,” he said.

The report highlighted 20 issues concerning the project’s management and governance by the PKA.

Among them were weak project management, cost overruns and conflicts of interests:

* PKA’s failure to alert the Cabinet in a timely manner of its inability to finance the project from its internal funds following an audit report by the Auditor-General in 2004 that noted that PKA did not have sufficient funds to finance the project;

* PKA’s failure to seek the advice of the Attorney-General while not complying with certain Finance Ministry regulations;

* Potential conflicts of interests arising from the involvement of parties who had prior association with either the land used to develop PKFZ or the turnkey developer, Kuala Dimensi Sdn Bhd (KDSB);

* Awarding of the PKFZ development contract to KDSB before a project masterplan was finalised;

* PKA’s projections that it would be in a cumulative cash deficit position in 2012 and would not be able to repay the Finance Ministry soft loan instalments on time;

* PKFZ having a low occupancy rate of 14% which is not generating sufficient revenue to cover its operating expenses;

* PKFZ Sdn Bhd incurring losses since its incorporation and having negative shareholder’s funds as at Sept 30 last year; and

* The possible breach of Treasury regulations when the Transport Ministry issued letters of support which could be construed as a guarantee that PKA would meet its obligations on a full and timely basis. Such letters should have been approved by the Finance Ministry.

Earlier report:

PUTRAJAYA: The Cabinet, which discussed the controversial Port Klang Free Zone (PKFZ) project yesterday, is seeking additional information on what had occurred, Prime Minister Datuk Seri Najib Tun Razak said.

“Yes, we did discuss and we are collecting additional information on several matters that had happened,” he told reporters here yesterday.

Transport Minister Datuk Seri Ong Tee Keat said in his blog that after deliberating on the issue for the third time, the Cabinet finally gave the green light for the PKFZ report to be released in its entirety.

Ong said that the Cabinet, at its weekly meeting yesterday, agreed that the Government needed to be transparent on the issue.

He said the Port Klang Authority (PKA) was directed to release the report “as soon as everything is in order”. It is believed his Ministry has to come up with certain additional information before a full report can be released.

The PKFZ issue, Ong said, had been played up and used by the Opposition as their political tool since a few years ago.

“I am glad that the Prime Minister and my Cabinet colleagues share my aspirations that our Government should be transparent and deal with the issues of the day. Sweeping problems under the carpet is not an option,” he wrote in his blog www.ongteekeat.net.

He said that with the release of the report, the Government has proven that it has nothing to hide and that the new administration was prepared to reveal the truth as well as take appropriate action to correct any wrong.

He said this was because the issue had been deliberated during the last two Cabinet meetings.

“The Port Klang Authority (PKA) has no power to release the report because it is being discussed at the Cabinet level,” he told a press conference after chairing a PKA board meeting here on Thursday.

He was unable to say when the Cabinet would decide whether to make the report public or not, adding that he had not had a chance to meet Transport Minister Datuk Seri Ong Tee Keat after Wednesday’s Cabinet meeting.

The Government had last year instructed PKA to commission an audit on the PKFZ project after a public outcry over massive cost-overruns. PricewaterhouseCoopers (PwC) was appointed to task.

The ministry has frequently promised that the report would be made public. Lee had written to PwC on April 30 to seek its consent following Ong’s instruction to release the report within seven days.

However, PwC replied on May 4 that consent would be given subject to certain terms and conditions, requesting indemnity.

On the matter of issuing an indemnity letter to the audit firm, Lee said on Thursday that PKA had been informed by its legal advisers that it could still initiate legal action against the audit firm if the need arose.

“We were told that we could countersue PwC if there was negligence on its part in the event a third party sues them,” he said.

The Malaysian Anti-Corruption Commission has started investigations into the controversy, and will intensify its probe once it has obtained a copy of the PwC report which has detailed cost overruns amounting to billions of ringgit and a trail of improper and poor decisions during the development of the project.

PKA chairman Datuk Lee Hwa Beng said PwC had agreed in principle to the release of the report to the public but needed indemnity from the port authority.

Lee was speaking to reporters after a PKA emergency full board meeting to discuss the issue here yesterday.

Lee added that the PKFZ report was expected to be released after the sole issue at the PKA level was resolved.

It was reported earlier that Lee had written to PwC on April 30 to seek its consent following the instruction by Transport Minister Datuk Seri Ong Tee Keat to release the report within seven days.

However, PwC replied on May 4 that consent would be given subject to certain terms and conditions.

Port Klang Authority chairman Datuk Lee Hwa Beng said the report could only be released with the consent of its auditor PricewaterhouseCoopers (PwC).

He said in a statement today that PwC had made it clear that the said report is confidential to Port Klang Authority and must not be reproduced or distributed, “in whole or in part, to any other party in any way without prior consent of PricewaterhouseCoopers Advisory Services Sdn Bhd.”

Lee said he had earlier written to PwC on April 30 to seek consent to publicly release the report following the instructions of Transport Minister Datuk Seri Ong Tee Keat to release the report within seven days.

“PwC replied on May 4 that consent will be given subject to certain terms and conditions. On Tuesday I met with representatives from PwC and have decided to call for an emergency Board meeting to seek the Board members’ approval on the terms and conditions for the release of the report.

“In light of this, I’ve informed the Transport Minister that I have to resolve this technical issue before the report can be made public despite the deadline given by him,” he said.

Lee gave his assurance that the matter would be sorted out as soon as possible as it is his responsibility to ensure that the full reports, together with the declassified documents are officially released to the public.

“I am concerned with the leaks to the press and wish to state that I and my office play no part in it,” he said.

Writing in his blog www.ongteekeat.net after yesterday’s cabinet meeting, Ong also said the PricewaterhouseCoopers (PwC) report should be made public in its entirety.

“I am made to understand that the PwC report is ready, and in keeping with my promise earlier, it should be made public in its entirety. I have pledged to ensure transparency on this issue and I intend to keep to my words,” he wrote.

Ong said he had extended the tenure of PKA chairman Datuk Lee Hwa Beng, whose one-year term had expired on March 31, 2009.

He also said there was a delay in completing the report due to technical issues, which include the declassification of key government documents relating to the investigation.

“Now that the report is ready, it is only natural that PKA, which commissioned the report, release the findings, after which, I contemplate submitting the report to the MACC and the Public Accounts Committee,” said Ong. MACC is the Malaysian Anti-Corruption Commission.

Separately, Lee said in a statement that he would release the report within a week as directed.

“I will facilitate the process and ensure that the matter is properly resolved so that PKFZ can move forward without the heavy baggage of the past,” he said.

Lee denied that there were attempts by PKA or the Transport Ministry to delay or to stop the release of the report.

“It is the PKA that commissioned the report and likewise the onus to declassify the documents also rested with our port authority. I think the delay has not been significant given the nature and volume of the documents involved,” he said, adding that PKA is committed to accountability and that the public has the right to know the truth.

The Edge business and investment weekly reported this week that the cost of the controversial project could eventually run to RM8 billion and not RM4.6 billion as stated by former Transport Minister Datuk Seri Chan Kong Choy in 2007. The original cost of the project when it was first mooted in 2002 was RM2.3 billion.

The weekly said PKA, which issued bonds to finance the project, will not be able to recoup its money even with the financial support of the federal government, which stepped in two years ago to provide “guarantee” to bondholders that they will be paid. The federal government also undertook to provide soft loans to PKA.

The Edge also criticised the delay in releasing the PwC report, which was completed more than two months ago.

On Sunday, in reaction to The Edge article, Ong slammed the weekly (a sister publication of this newspaper) for suggesting that he was delaying release of the report.

The PKFZ saga started with the sale of land to PKA by Kuala Dimensi Sdn Bhd (KDSB) in November 2002. KDSB, which is 70% owned by Datuk Seri Tiong King Sing who is also the MP for Bintulu and Barisan Nasional Backbenchers Club chairman, sold 999.5 acres of land in Pulau Indah, Selangor to PKA for RM1.09 billion or RM25 per square foot (psf).

KDSB had acquired the land from Pulau Lumut Development Cooperative Bhd for only RM95 million or RM3psf. The Attorney-General later opined that the land could have been acquired for a ‘public purpose’ under the Land Acquisition Act at RM10psf instead of RM25psf.

What made the project even more controversial was that PKA also appointed KDSB to develop the PKFZ and KDSB appointed a related company Wijaya Baru Global Bhd to be the main sub-contractor. Tiong is a shareholder and director of Wijaya Baru, which in turn controls KDSB.

So, essentially Tiong sold the land to PKA at a hefty profit and then also benefited from being given the development and management rights as well as the right to be the main sub-contractor.

Critics had questioned the viability of the mega project and had said that if it was viable, Tiong and his business partners, who included some Umno politicians, would have done it themselves since they owned the land.

The project was first conceived under then Transport Minister Tun Dr Ling Liong Sik and carried through by his successor Chan, who many believed was dropped from last year’s general election over his handling of the matter.

Also under scrutiny was the action of then PKA general manager O C Phang and the PKA board for agreeing to what many felt was a project that was carried out in a way that put the port authority at great financial risk.

When Lee was appointed PKA chairman in March last year, he got the support of Ong to commission PwC to do a thorough investigation into how the port authority got entangled in this financial mess. The accounting firm took around six months to carry out its work.
This article appeared in The Edge Financial Daily, April 30, 2009.

PETALING JAYA: There was no attempt by the Transport Ministry or Port Klang Authority (PKA) to delay or stop the release of the audit re-port on the Port Klang Free Zone (PKFZ).

PKA chairman Datuk Lee Hwa Beng said Minister Datuk Seri Ong Tee Keat had stressed to the PKA that the report had to be released quickly with all relevant documents declassified to make full disclosure to the public.

“It was the PKA that commissioned the report and likewise the onus to declassify the documents also rests with our port authority.

“This has now been accomplished and I think the delay has not been significant given the nature and volume of the documents involved,” Lee said in a statement.

He said he would facilitate the process and ensure that the matter was properly resolved so that the PKFZ could move forward without the heavy baggage of the past.

Now that the report on the PKFZ by auditing firm PriceWaterhouseCoopers (PWC) was completed, the PKA and PWC were now working on the final details for the report to be made public.

“I wish to thank the relevant ministries, government bodies and agencies for the cooperation extended to the PKA and PWC in this very tedious exercise.

“We at the PKA remain steadfast to the commitment that the Government is accountable to the people and that they have the right to know the truth,” Lee added.

In December, Ong and the PKA held a press conference to release a chronology for the PKFZ project together with statistics showing how the PKFZ had grown.

Ong had then said that the PWC report would address whether the project was handled professionally, and if it was cost-effective or exorbitant.

He had also announced in May last year that an audit exercise would be carried out following a public outcry over the RM4.6bil “soft loan” given by the Government to revive the PKFZ.

PETALING JAYA: The audit report on the Port Klang Free Zone (PKFZ) is ready and the Port Klang Authority (PKA) has been given one week to make it public. Transport Minister Datuk Seri Ong Tee Keat said he would contemplate submitting the report to the Malaysian Anti-Corruption Commission and the Public Accounts Committee after its release.

Writing this in his blog (ongteekeat.net), the minister said that by releasing the audit report by PriceWaterhouseCoopers he would be keeping a pledge he made earlier.

“I have pledged to ensure transparency on this issue and I intend to keep my word,” he wrote.

He also announced that he had decided to extend the services of PKA chairman Datuk Lee Hwa Beng whose term of office expired on March 31.

“One of his key priorities now is to ensure the release of the report,” he said.

Ong, who is the MCA president, said that he had directed the PKA last year to commission an independent and credible firm to look into the PKFZ controversy.

“The delay in completing the report is due to several technical issues, including the declassification of key government documents related to the investigations,” he explained.

Now that the report was ready, it was only natural for the PKA, which had commissioned the report, to release the findings.

On Sunday, Ong hit out at his critics, saying that it was grossly unfair for some “snipers”, including certain individuals from certain media, to ignore that declassification had to be sought before the report could be released.

The 405ha PKFZ transshipment hub has been dogged by controversy ever since it was revealed that its original development cost had ballooned from the original less than RM2.5bil to RM4.6bil.

Former Transparency International chairman Tan Sri Ramon Navaratnam commended Ong for handling the situation very well, “by giving due respect to the PKA and allowing it to release the report.”

He said that Ong, by ordering the release of the report, was also ensuring that public interest was upheld.

“It is right and proper that he submits the report to the MACC and Public Accounts Committee after it is released,’’ he said.

If there was any wrongdoing, those concerned must be brought to book, Navaratnam added.