PORT KLANG, May 28, 2009 - malaysianinsider
Despite a rising cost of over six times the original RM2 billion budget, no one is authorised to say who is at fault in the Port Klang Free Zone (PKFZ) scandal except the Malaysian Anti-Corruption Commission (MACC).
Without interest, the outlay for the project that began in 2001 stands at RM3.522 billion.
The condition set by the Port Klang Authority (PKA), coupled with a report to be lodged tomorrow with the MACC by chairman Datuk Lee Hwa Beng would appear to block any independent witchhunt into the mismanagement.
Lee told a press conference that the conditions were to protect PKA and that it could not single out any guilty party as it "does not have any investigative powers".
However, the report named Deputy Finance Minister Datuk Chor Chee Heung, who was chairman of PKA and Umno's Sementa assemblyman Datuk Abdul Rahman Palil as individuals with potential conflicts of interest.
Chor was a board member of one of the contractors, which shares a common director with landowner Kuala Dimensi Sdn Bhd (KDSB), when he was chairman while Abdul Rahman was president of the original owner of part of the acquired land.
Chor was joined on the board of the contractor by Barisan Nasional Backbenchers chief Datuk Seri Tiong King Sing who is also a KDSB director. Another director of KDSB is former Umno treasurer Datuk Seri Abdul Azim Mohd Zabidi.
The "position review" by PricewaterhouseCoopers (PwC) revealed that the initial cost of RM1.957 billion had escalated to RM3.522 by the end of last year.
Deferred payments to KDSB,which was tasked with completing the building development, will result in the turnkey developer gaining RM1.43 billion in interest by 2017 due to a 7.5 per cent rate over 15 years.
But PKA was unable to meet the first scheduled payment in 2007, forcing it to seek a 20-year soft loan worth RM4.63 billion from the finance ministry which will now incur RM2.51 billion in interest.
This brings a total outlay of RM7.45 billion by 2036, said PwC.
But PwC says that cashflow projections show that PKA will be unable to service this loan by 2012, resulting in another RM5 billion in interests.
In the year 2051, PKA will have paid off its debt and seen the project outlay hitting RM12.45 billion.
PwC has recommended that the government loan be restructured to lower the final figure.
The firm also pointed to PKA's weak governance and project management as the root cause of the overspending.
It adds that the land acquired for the free zone was above market value of RM10.16 per square foot. Instead PKA paid RM25 per square foot and KDSB may have overcharged interest between RM51 milllion to RM309 million for the land purchase.
Several DAP leaders were also present to collect a copy of the report and view the appendices which is not allowed to be copied or taken out of the PKA office.
DAP parliamentary leader Lim Kit Siang claimed the documents confirmed that previous transport ministers Tun Dr Ling Liong Sik and Tan Sri Chan Kong Choy had "illegally issued letters of support" to KDSB, allowing it to raise RM4 billion in government bonds, a move that can only be made by the finance ministry after Cabinet approval.
Selangor state executive councillor Ronnie Liu called the project a "white elephant" as documents show it can only turn around in 2023, adding that if the federal government could not manage the matter, then Selangor should be given a chance.
Transport Minister Datuk Seri Ong Tee Keat has stated in his weblogthat Lee would also be submitting the audit by PwC to the parliamentary Public Accounts Committee.
The MCA president has also directed PKA to find legal and professional remedies in hopes of reversing the ballooning costs. Ling was a previous party president while Chan formerly a deputy president.
The public can also view the report at www.pka-report.com until June 10.