They should be investigated over the wrongful issuance of three letters of support by Chan and three letters of undertaking by Phang, according to the PAC report on the PKFZ issue, copies of which were distributed in the Dewan Rakyat yesterday.

The report said the PAC was informed by the Attorney-General that the three support letters issued by Chan, the transport minister then, and the three letters of undertaking issued by Phang were implicitly a form of guarantee from the government to ensure there would be allocations for PKA to enable it to meet its obligations under the development agreement for the multi-billion ringgit project.

“Therefore, a thorough investigation must be conducted by the Malaysian Anti-Corruption Commission (MACC) and police into this matter as the letters were issued without the approval of the Finance Ministry, as required under Section 14(1) of the Financial Procedure Act 1957.”

For their actions, Chan and Phang can also be charged with criminal breach of trust under Section 409 of the Penal Code, read with Section 409B.

Section 409 provides for a minimum jail sentence of two years and maximum of 20 years plus whipping, and also a fine, upon conviction.

The report by the PAC, headed by Datuk Seri Azmi Khalid, also found:

> Phang went against government decision when issuing the letters of undertaking because when approving the PKFZ project, the government had decided the project should be through self-financing by PKA.

> Phang and the transport ministry had failed to inform the Cabinet early on PKA’s inability to finance the project itself although the matter had been raised in the Attorney-General’s Report on the PKA financial reports for 2003, 2004, 2005, 2006 and 2007. They also failed to discuss with the finance ministry and Economic Planning Unit about obtaining allocations for the project.

> Phang committed misrepresentation when issuing the letters of undertaking to the PDS (Private Debt Security) trustee, OSK Securities Bhd, stating that PKA would be asking the government to remit funds from the budget allocation to the special reserve account or special code of account managed by PKA when it did not have the transport ministry or finance ministry’s approval to do this.

> The cost of the project could be reduced by PKA if it followed the finance ministry’s directive on the method of financing the project, that was, by issuing bonds with government guarantee as the interest rate on the bonds would be around 4% compared to the interest charged by Kuala Dimensi Sdn Bhd (KDSB) at 7.5%.

The PAC also recommended that the MACC probe several actions by Phang on the PKFZ project, such as appointing KDSB as the contractor, signing the agreement on the sale of land and on PKFZ development with KDSB, and appointing Jebel Ali Free Zone International (JAFZI) as consultant and then terminating its service without the approval of the PKA board of directors or the finance ministry.

It also wants the issuance of the letters of undertaking by Phang which contravened the Financial Procedure Act 1957 to be investigated, as well as other violations of the laws, procedures and government directives with regard to the PKFZ project by her as PKA general manager, Bernama reported.

It said Phang should have known the laws and procedures as she had served in several government departments and ministries before, including the finance ministry.

The PKFZ created a controversy when its cost of development has shot up from RM2 billion to RM4.6 billion.

In an immediate response, Prime Minister Datuk Seri Najib Abdul Razak said there will be no cover-up in the Port Klang Free Zone (PKFZ) probe, and that action will be considered against the culprits in accordance with the laws.

He said the special task force headed by Chief Secretary to the Government Tan Sri Mohd Sidek Hassan to oversee the PKFZ issue will take into account the PAC report. The task force met this morning.

Speaker Tan Sri Pandikar Amin Mulia ruled that the motion tabled by Lim Kit Siang (DAP – Ipoh Timur) was specific and of public interest but not urgent.

“A task force and two committees have been set up to investigate PKFZ,’’ the Speaker said.

Lim had said the Pricewaterhouse Coopers (PwC) audit report was “most unsatisfactory” as its terms of reference were restricted to “a position review” instead of a wide-ranging inquiry.

At the Parliament lobby, Lim said the PKFZ audit report and its appendices should be immediately tabled in Parliament and given to MPs without waiting for the Public Accounts Committee (PAC) report.

Lim said the PAC report would not be ready in time before the current Parliament meeting ended on June 30.

This was because the PAC would only have its third meeting on the PKFZ on Wednesday, he said.

“She (Parliament secretary Datuk Roosme Hamzah) informed me that the PwC report and its appendices will be tabled in the House together with the PAC report,” he added.

PORT KLANG: An independent auditor will be appointed to go through the accounts of the Port Klang Free Zone.

Transport Minister Datuk Ong Tee Keat said the fact that the Port Klang Authority was doing so was proof that the government was transparent.

He also gave an assurance that a witch hunt was not being carried out.

Newly appointed PKA chairman Datuk Lee Hwa Beng said Price Waterhouse Coopers was the recommended auditor.

Ong said there was a misconception that the PKFZ was a white elephant.

“Some have even labelled it as an abandoned project while others are questioning its feasibility,” he told reporters after his first visit to the PKFZ here.

He said that the RM4.6 billion soft loan to the project was not a government bailout.

He said a bailout would have to be in the form of a grant which the recipient would not be required to pay back.

As of March 31 this year, he said PKA had bought the site from Kuala Dimensi Sdn Bhd for RM238 million besides paying RM480 million to develop the free zone.

He said the free zone started commercial operations in November 2006 and had so far earned RM11.8 million from operations.

When asked whether the project was viable he said he would leave it for the people to decide.

He said the project comprised 256 hectares of open land development, 512 light industry units and a 500,000 sq ft office block.

Of these, only 13 per cent of the open land had been taken up, 30 of the industry units were occupied while the occupancy rate for the office block was 1.2 per cent.

Ong said there were 47 investors in the PKFZ with investments totalling RM748 million providing 972 jobs.

He said another 46 investors were expected to sign agreements this year, bringing in a further RM614 million in investments and 830 jobs.

The next signing ceremony will be between PKFZ and Halal Development Corporation on Monday.

He said there were projections of the PKFZ creating up to 30,000 jobs and investments of up to RM6 billion by 2015.

On the Parliamentary Public Accounts Committee’s investigations into the free zone, he said PKA and PKFZ were cooperating in the matter.

On the state government’s proposal to take over the project, he said the ministry was open to all suggestions.

“We are still waiting but nothing has been put forward to us,” Ong said.

Bagaimanapun, Menteri Pengangkutan, Datuk Ong Tee Kiat, berkata sebuah syarikat perakaunan bebas akan dibentuk untuk mengaudit status kewangan projek itu terlebih dulu.

“Proses pengauditan itu akan dijalankan secara bebas dan Jawatankuasa Kira-Kira Wang Negara (PAC) berhak menjalankan siasatan tanpa sebarang pengaruh luar.

“Syarikat perakaunan ini akan dilantik Pengerusi Lembaga Pelabuhan Klang yang baru, Datuk Lee Hwa Beng,” katanya pada sidang media selepas mesyuarat pasca Kabinet di kementeriannya di sini, semalam.

Projek PKFZ menimbulkan kontroversi hingga terdapat segelintir pihak yang menyebarkan dakyah mengenai projek itu menerusi SMS.

Menteri Besar Selangor, Tan Sri Abdul Khalid Ibrahim, pernah membuat kenyataan bahawa Kerajaan Persekutuan gagal menguruskan PKFZ dengan baik sebelum meminta projek itu diserahkan kepada kerajaan negeri.

Ong berkata, hasil siasatan itu perlu dimaklumkan kepada orang ramai selepas terdapat pihak yang membuat tuduhan projek itu sebagai ‘gajah putih’ dan dikaitkan dengan pelbagai skandal.

“Biarlah siasatan dijalankan bagi mengetahui kebenarannya dan apa langkah yang perlu diambil,” katanya.

Katanya, beliau akan melawat projek itu minggu depan bagi melihat sendiri perkembangannya sejak dimulakan November lalu.

PORT Klang Free Zone Sdn Bhd (PKFZ), which manages and markets the RM4.6 billion free zone in Pulau Indah, Selangor, has begun a campaign to allay negative perceptions about it and its operations.

It is in talks with potential investors and working with trade associations to win them over after being recently hit by controversies surrounding the project, a senior PKFZ official said.

Critics of the project had questioned the project’s development cost which had ballooned from an original estimate of RM100 million to RM4.6 billion, including land acquisition.

“When investors ask me about the controversies (involving the cost of developing the project), I ask them whether they are a politician or a businessman … because invariably a businessman will see the viability of the development,” PKFZ general manager for business development Chia Kon Leong told Business Times yesterday.

He was speaking after a visit by the Public Accounts Committee (PAC), which is investigating the PKFZ project’s operations following recent controversies.

A 16-member delegation comprising members from the Audit Department, the Finance Ministry and PAC headed by Datuk Shahrir Abdul Samad, had toured the PKFZ site earlier.

Shahrir, after the meeting, questioned why a provision had been made in the PKFZ project for additional expenditure of 20 per cent to be factored into the RM2.8 billion development cost.

“We are curious about this 20 per cent provision.This has been factored into the RM2.8 billion development cost,” he added.

He said the Port Klang Authority, which owns the free zone, has agreed to get back to the PAC with an explanation for the provision.

Shahrir said the PAC was satisfied with explanations so far, but he added: “We are not finished with PKFZ. We will have a briefing with the Attorney General.

“Then we will look at other areas before we table a report to the Dewan Rakyat.”

“We are not a group of anti-development people. We are interested in the financial procedure. We want to know how the cost overrun occurred in a government project,” he said.

The project first raised eyebrows when PKA bought 405ha in Pulau Indah in 2002 for RM1.088 billion, or RM25 per sq ft from Kuala Dimensi Sdn Bhd.

The land purchase was followed by RM1.845 billion in costs for the development of the zone.

In July, the then zone operator Jebel Ali Free Zone Authority withdrew from a contract to manage the PKFZ.

Last month, the Transport Ministry said the government had agreed to extend a loan for an unspecified amount to PKA to help cover the cost of the project which had ballooned to RM4.6 billion.

To date, PKFZ has 32 confirmed investors, taking up 31.2ha of open land for development and investing some RM725 million into the free zone.

Chia said there are another 12 customers that have booked 98 acres for
construction.

These investors are in the process of obtaining licensing, but have not signed any agreement or put up a deposit with PKFZ.

Pengerusi PAC, Datuk Shahrir Abdul Samad, berkata kerajaan memperuntukkan 20 peratus daripada RM2.8 bilion kos keseluruhan pembangunan PKFZ sebagai perbelanjaan luar jangka untuk digunakan apabila ada keperluan.

Beliau berkata, oleh kerana PKFZ dijangka siap sepenuhnya awal tahun depan, PAC mahu Kementerian Pengangkutan memberi penjelasan jumlah peruntukan luar jangka yang sudah dibelanjakan bagi menyiapkan projek mega itu.

“Pembinaan hotel perniagaan dan dewan pameran dijangka siap sepenuhnya bulan depan, manakala jalan masuk utama pula dijangka siap Disember ini.

“Oleh kerana jumlah 20 peratus peruntukan untuk perbelanjaan luar jangka ini sangat besar, PAC mahu tahu berapa jumlah perbelanjaan dan tujuan peruntukan itu digunakan,” katanya.

Beliau berkata demikian pada sidang akhbar selepas menyertai enam lagi Ahli Jawatankuasa PAC melawat PKFZ yang diakhiri dengan taklimat hampir dua jam yang disampaikan Pengurus Besar Pembangunan Perniagaan PKFZ, Chia Kon Leong, di sini, semalam.

Kos keseluruhan projek PKFZ meningkat kepada RM4.632 bilion selepas LPK memutuskan untuk membangunkan projek itu secara serentak selepas mendapat nasihat Jebel Ali Free Trade Zone (Jafza) yang ketika itu bertindak sebagai pengurus zon bebas berkenaan.

Kementerian Pengangkutan pada 23 Ogos lalu menjelaskan, LPK membangunkan PKFZ secara serentak membabitkan kawasan seluas 400 hektar dengan kos RM1.845 bilion.

Pengerusi PAC, Datuk Shahrir Abdul Samad, berkata pihaknya mahukan penjelasan kerana pada akhirnya keputusan adalah untuk membeli dan bukan untuk pengambilalihan (acquisition) tanah itu.

“Jadi keputusan atau pilihan membeli tanah itu berasaskan kepada ‘willing buyer, willing seller’ berbanding mengambil alih tanah itu berasaskan pendapat undang-undang.

“Kita nak penjelasan daripada Peguam Negara kerana akhirnya keputusan adalah untuk membeli dan menolak pilihan satu lagi iaitu untuk acquire atau untuk mengambil alih. Jadi di sini mungkin letaknya perbezaan nilainya (tanah),” katanya selepas sesi mendapatkan penerangan mengenai isu itu di Bangunan Parlimen, di sini semalam.

Shahrir berkata, PAC dijangka berjumpa Peguam Negara selepas Ramadan.

Kontroversi mengenai PKFZ yang kini diuruskan Lembaga Pelabuhan Klang (PKA) timbul berikutan laporan bahawa kos menubuhkan PKFZ meningkat daripada jumlah asal RM1.1 bilion kepada RM4.7 bilion dan kerajaan memberikan pinjaman mudah yang perlu dibayar balik dalam tempoh tujuh tahun kepada PKA.

Ketika keputusan ingin diambil, pejabat Peguam Negara mencadangkan tanah itu diambil alih mengikut Akta Pengambilalihan Tanah (Land Acquisition Act) tetapi cadangan itu tidak dipersetujui pihak terbabit.

A MEETING between the Public Accounts Committee and Port Klang Authority (PKA) officials has raised more questions than answers.

PAC chairman Datuk Shahrir Abdul Samad said the committee was “unsatisfied” with how the meeting went.

“The problem with the Port Klang Free Zone is far bigger than what the papers have reported,” he said yesterday.

“Far too many questions were left unanswered.”

When asked whether he was satisfied with the discussion, Shahrir said: “Look at us (the committee members). You can see from our body language that we are not.”

The two-hour meeting was meant to allow the PAC to question PKA officials on the RM4.6 billion Port Klang Free Zone (PKFZ) project.

The project first raised eyebrows when PKA bought 405ha in Pulau Indah in 2002 for RM1.088 billion, or RM25 per sq ft, from Kuala Dimensi Sdn Bhd. The land purchase was followed by RM1.845 billion in costs for the development of the free trade zone.

In July, port operator Jebel Ali Free Zone Authority (Jafza) withdrew from a contract to manage PKFZ.

Last month, the Transport Ministry said the government had agreed to extend a loan of an unspecified amount to the heavily-indebted PKA to help cover the total cost which had ballooned to RM4.6 billion, including interest and other charges.

Shahrir referred to the auditor-general’s report on PKA for the 2005 financial year, showing PKA’s liquid assets to be inadequate in financing its capital obligations.

“According to the report, PKA’s liquidity as of December 2005 was RM231.75 million, while the tax surplus was RM26.63 million, so PKA would need additional financing to meet its capital obligations of RM4.11 billion.”

Those present at the meeting included PKA general manager Datin Paduka O.C. Phang and Transport Ministry secretary-general Datuk Zakaria Bahari.

KUALA LUMPUR: The Public Accounts Committee (PAC) will find out whether the government loan extended to the Port Klang Authority (PKA) for the RM4.6 billion Port Klang Free Zone (PKFZ) constitutes a “bailout”.

PAC chairman Datuk Shahrir Samad said that although public sentiment was convinced the loan was a rescue operation, investigations had to be carried out before such a conclusion could be reached.

“We have to investigate the matter first. Once an investigation has been made, I will meet other PAC members and get to the bottom of this,” he said.

According to sources in the PAC, the parliamentary watchdog’s upcoming meeting on the PKFZ controversy will focus on two questions: Whether the soft loan amounted to a government bailout and whether the pullout by the Jebel Ali Free Zone Authority (Jafza) has affected foreign investor confidence in Malaysia.

Jafza withdrew from a contract to manage the PKFZ last month.

The project first raised eyebrows when PKA bought the 405ha in Pulau Indah in 2002 for RM1.088 billion or RM25 per sq ft from Kuala Dimensi Sdn Bhd.

The land purchase was followed by RM1.845 billion in costs for the development of the free trade zone.

On Thursday, the Transport Ministry said the government had agreed to extend a loan of an unspecified amount to the heavily-indebted PKA to help cover the total cost of RM4.6 billion, including interest and other charges, for the PKFZ.

The ministry maintained that the PKFZ was a national project which would enhance Port Klang as a loading centre, stimulate the economy, create spin-off activities and provide jobs.

Pengerusinya, Datuk Shahrir Samad, berkata pihaknya sedang mengumpul maklumat mengenai setiap aspek berkaitan, termasuk bagaimana kos projek itu boleh meningkat sehingga kerajaan terpaksa meluluskan pinjaman mudah kepada LPK.

Beliau berkata, PAC tidak terburu-buru bertemu dan mendapatkan keterangan LPK mengenai kontroversi berkenaan sehingga selesai penyelidikan dan memperoleh semua maklumat berkaitan.

“Memang banyak perkara nak dibincangkan dengan LPK, tetapi sebelum itu kita perlu buat persiapan rapi, termasuk mengumpul maklumat dan penyelidikan terperinci supaya memudahkan kita apabila bertemu mereka.

“Kita kena kaji setiap perkara sebelum kita dapat mengemukakan pelbagai soalan, termasuk mengapa terpaksa membuat pinjam daripada kerajaan dan bagaimana kos pembinaan boleh melambung naik,” katanya ketika dihubungi di sini semalam.

Kelmarin, Kementerian Pengangkutan berkata, kos bagi projek PKFZ di Pulau Indah, Selangor beroperasi November tahun lalu, meningkat kepada RM4.632 bilion selepas LPK memutuskan untuk memajukannya serentak bagi keseluruhan kira-kira 400 hektar kawasannya.

Jumlah kos keseluruhan PKFZ itu, termasuk kos pembelian tanah, kos pembangunan bersama dengan kos faedah 7.5 peratus, yuran profesional 10 peratus dan kos lain yang hanya dihadkan kepada 20 peratus jika digunakan.

Shahrir berkata, pihaknya belum menetapkan tarikh untuk memanggil pengurusan LPK dan bukannya syarikat lain berkaitan termasuk Kuala Dimensi Sdn Bhd (KDSB) kerana ia adalah syarikat persendirian.