Total amount committed to date was RM4.6 billion. KPA claims it can be settled over 15 years with an annual payment of about RM15 million. Projected income generated per year does not offer such comfort. Even the Accountant General had expressed doubts of KPA’s ability to settle the debt. In fact in the annual report of 2003, he stated that KPA will be insolvent.

At the rate of up-take of facilities within the Free Zone, it may take more than 10 years before 50% occupancy, especially with the development of IDR in Johore. They were hoping with the formation of the National Ports Authority, that they can make use of the hard-earned funds of the other authorities to settle this debt. The way things are going, it may take another 10 years before the National Ports Authority is formed.

Did KPA honestly believe that it could settle this through internally generated funds? Is that the reason why the Minister was “hood-winked” to sign a letters of support or comfort or whatever without the approval of MOF so that Kuala Dimensi Sdn. Bhd. can issue bonds? Isn’t it obvious that it was ulterior motive on the part of “hidden hands” to rob the nation in the name of the project whilst expecting a bailout by the Government?

Was there Criminal Breach of Trust (CBT)?
* Was there a proper study carried out as to the need for such a project?
* What was the basis on which it was agreed that 1000 acres was needed?
* How did they come at a figure of RM25 psf?
* Was evaluation carried out by the Government Valuation department?

Under normal practice, for the development of a Free Zone, land is only provided with basic infrastructure like roads, drainage, electricity, water and Customs Complex. Interested parties were either allowed to develop their own facility or the free Zone Authority will build it for them if so required. Why was this tested and proven practice not adhered to?

Government bodies including statutory authorities have strict rules, regulations and procedures to be adhered to on all matters related to finance and expenditure. KPA is no exception. All financial expenditures must get blessings of the Board and subsequent approval of the Ministry of Finance before any form of financial commitment and expenditure. Why were these procedures not followed? Believe me, procedures are exhaustive requiring input from not only consultants and specialists in the field, but people with technical know-how related to financial estimates, design and construction. Were these approved by the Board? On the other hand, since this is assumed to be a turnkey project involving more than RM1 billion, was approval given by the KPA Board and subsequently by the MOF? If this was not done, who gave the approval to carry out this exercise? Was it the Minister of Transport or the then General Manager of KPA?

There were many Variation Orders.
* Who were the technical experts who investigated and confirmed the need for the Variation Orders and the cost estimates?
* Who approved these Variation Orders? Was it the General Manager of KPA?
* Where these Variation Orders approved by the KPA Board?
* Did the representatives from Ministry of Transport, Economic Planning Unit and the Ministry of Finance give their blessings to these Variation Orders? It is believed these Variation Orders were never sent to the Board. Is it true?

To top it all, here comes the coup de grace: With the exception of the then General Manager of KPA, it is believed that none of the senior officers of KPA wanted to be party to this exercise. Those who were forced to approve cheques and documents did so under protest. A few had to resign in disgust.

If all the above are true, is this not CBT?

KUALA LUMPUR: The Dewan Rakyat rejected an emergency motion to have a royal commission of inquiry into the RM12.5bil Port Klang Free Zone (PKFZ) scandal, saying that the matter was not urgent.

Speaker Tan Sri Pandikar Amin Mulia, in his ruling, said the emergency motion filed by Lim Kit Siang (DAP-Ipoh Timur) under Order 18(1) fulfilled the criteria of being specific and of public interest.

However, he dismissed the application as the matter was not urgent, one of the three criteria required for an emergency motion to be debated in the House.

“A task force and two committees have already been set up to investigate PKFZ,” he said.

In his application, Lim 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 into how the RM1.1bil project in 2002 had ballooned into a RM12.5bil project.

At a press conference in the Parliament Lobby on Monday, 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 sitting of Parliament ends on June 30.

He said this was because the PAC would only have its third meeting on the PKFZ on Wednesday.

“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 told the press.

Lim said it was “ridiculous” that the MPs had to wait for the PAC report, which would only be tabled at year’s end.

Transport Minister Datuk Seri Ong Tee Keat is working on turning the PKFZ project around and there was no reason for him not to confront the issue, his political secretary Simon Lim said in a statement released Monday.

“The minister has been proactive and committed to making the project work,” he said in PETALING JAYA.

He refuted Lim Kit Siang’s claims that Ong was trying to “dodge the bullet” by running away from his ministerial or parliamentary duties, reports SHAUN HO.

Simon Lim said veteran politicians should not jump the gun by making baseless accusations and casting aspersions on the minister.

“He should give due respect to those who have honoured their promises and walked the talk.”

Simon Lim said the minister had been true to his stance on transparency and accountability by releasing the PwC audit report to the public and the PAC.

The minister had also instructed the Port Klang Authority (PKA) to establish a special task force comprising lawyers, accountants and quantity surveyors to look into the findings of the audit, he said.

The minister will be making a ministerial statement on the PKFZ in the Dewan Rakyat next Monday, June 22.

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.

Lim, who was hired to make improvements to the Port Klang Authority (PKA), apparently did not bring in a substantial number of tenants although he had been on the job for almost a year.

The occupancy rate at PKFZ remains at 14% and the port has a long way to go before more tenants could be convinced to take up leases.

His resignation comes in the wake of his unauthorised briefing of government backbenchers even before the Cabinet was briefed on the audit report on PKFZ.

Ironically, Backbenchers Club chairman Datuk Seri Tiong King Sing’s company, Kuala Dimensi Sdn Bhd, was the turnkey developer of PKFZ.

Lim’s action was said to be viewed by Transport Ministry officials as insurbordination as the Prime Minister and the Cabinet were not privy to the report yet nor had they deliberated on its contents at that time.

The general perception was that PKFZ’s performance was far from satisfactory and that a stronger team needed to be in place if the port authority was seriously considering improving its financial position.

It is believed even before Lim’s resignation, there was already talk that he might be removed due to his unauthorised action which ministry officials regarded as highly serious.

Lim’s resignation from both posts had been accepted by PKA chairman Datuk Lee Hwa Beng and endorsed by the board on Thursday.

His resignation would take effect on June 5. His critics said the lobbying for him to stay by certain quarters might have been orchestrated.

It was reported that the Malaysian Anti-Corruption Commission had started investigations into the PKFZ report.

Sources said the project would swell to RM7.5bil, partly due to interest costs over a 20-year period. They also said there was a lack of governance of the project.

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.

It is learnt that a team from the Putrajaya MACC has been investigating and inquiring from those in the know about the project.

Sources familiar with the investigation said the MACC is expected to intensify its probe once it has obtained a copy of the report by accounting firm Pricewaterhouse-Coopers Advisory Services Sdn Bhd (PwC).

They said the MACC would study the report and see if there were new elements which the commission could follow up on.

The MACC is also expected to contact several people in the Port Klang Authority (PKA) as part of its investigations.

MACC director of investigations Datuk Mohd Shukri Abdull confirmed investigations were in progress but declined to elaborate.

It is learnt that the report, which has yet to be made public, detailed cost overruns amounting to billions of ringgit and a trail of improper and poor decisions during the development of the PKFZ.

The PKFZ project was for a cluster of offices and light industrial buildings in the port area, originally estimated to cost RM1.9bil.

However, sources said the report stated that the project cost would swell to RM7.5bil, partly due to interest costs over a 20-year period.

Sources said one of the recommendations was for the PKA to restructure a RM4.6bil soft loan from the Finance Ministry to avoid a potential default in 2012.

The cost would expand further to RM12.5bil if the loan from the Finance Ministry were rescheduled to match PKA’s projected cash flows, the sources said.

They added that PKA’s options included loan rescheduling, government grant and privatisation.

The sources also said there were PKFZ development proposals which were not tabled to the Cabinet for approval.

They also said development contracts totalling RM1.8bil were awarded to a company called Kuala Dimensi Sdn Bhd without competitive bids.

Transport Minister Datuk Seri Ong Tee Keat, meanwhile, said the PwC report was discussed by the Cabinet yesterday.

The issue was also the subject of deliberations last week. Cabinet ministers are also believed to have been given copies of the PwC report.

“The Cabinet members were given the opportunity to study the report in greater detail. I understand that PKA has managed to resolve several technical issues with PwC to release the report, including the issue of indemnity,” he said in his blog yesterday.

Ong said he remained committed to a policy of transparency and openness.

“This is what a ‘People First, Performance Now’ government should be. The people not only have the right to know but should also be assured that the Government is acting in their best interest,” he said.

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.

“The onus is on PKA,” he said, adding that any enquiry on when the audit report could be made public should be directed to the PKA.

Ong was speaking to reporters after the launch of AirAsia Bhd’s Langkawi-Singapore route here yesterday. The minister had on April 29 given PKA chairman Datuk Lee Hwa Beng one week to release the audit report.

PKA did not meet the Wednesday deadline. Lee had subsequently issued a statement explaining that he could not meet the deadline as he had to seek PKA board’s approval on the terms and conditions imposed by PwC for the release of the report.

Lee said PKA had to resolve the technical issue before the report could be made public. As of yesterday, PKA had not given any indication when the report would be released.

PKA had commissioned PwC to do an audit on PKFZ last year after a public outcry over the huge cost overrun, controversial land deals, and the involvement of several prominent politicians.

PKA has had to rely on a RM4.6 billion standby facility from the government to redeem several tranches of bonds issued to finance the project. The cost of the project is said to have ballooned to over RM10 billion.