Archive for August 4th, 2007

RM4.6 billion Port Klang Free Zone scandal – heads must roll or Abdullah’s integrity campaign in tatters

The RM4.6 billion Port Klang Free Zone (PKFZ) scandal will be top agenda in the forthcoming parliamentary meeting — as I have submitted a question asking the Finance Minister to explain in the first week of next Parliament later this month why the multi-billion ringgit malpractices and cost overruns were not checked despite warnings from Attorney-General and Auditor-General.

I also wanted to know whether the Federal Government has now decided to bail out the RM4.6 billion PKFZ project with taxpayers’ money.

It is most regrettable and irresponsible on the part of both the Finance Minister and Transport Minister that they had maintained a deafening silence despite many disturbing reports in the past two months about the RM4.6 billion PKFZ scandal — in particular recent reports in Malaysiakini and Singapore Business Times, viz:

  • That the development costs for PKFZ have ballooned to RM4.63 billion from the original estimate of RM1.1 billion;
  • That the government has to step in to salvage the 405-hectare PKFZ project with a bail-out package as a result of massive cost overruns;
  • The PKFZ had been approved on the assurances that it would both feasible and self-financing. It has proved to be neither.
  • The controversy over the purchase of the 1,000 acres of land for the PKFZ, with the Finance Ministry and Attorney-General Chambers proposing forcible land acquisition at official valuations — then RM10 a sq foot — but the port authority got its way to buy it at RM25 per sq foot on a willing-buyer-willing-seller basis and the Transport Ministry’s assurance that the PKFZ would be both feasible and self-financing.
  • The multi-billion ringgit cost overruns were unauthorized and therefore illegal as any RM100 million increase in a project’s cost had to be approved first by the Ministry of Finance, which had not been done.
  • The Transport Minister had illegally and without sanction from the Finance Ministry issued letters of support to enable Kuala Dimensi, the private company tasked by the Port Klang Authority to develop the site, to issue bonds in excess of RM4 billion to cover its costs — the totality of which have now to be bailed out by the Federal Government. The unauthorized and unlawful letters of support by the Minister of Transport “were instrumental in getting the bonds at the time a triple-A rating” as such letters “are akin to government guarantees”.
  • The Cabinet has ordered the Chief Secretary to investigate whether the Transport Ministry had wrongly issued the letters of support which has resulted in the RM4.6 billion PKFZ scandal.

Has the Prime Minister, Datuk Seri Abdullah Ahmad Badawi given his approval for the first multi-billion ringgit bail-out operation in his premiership? Read the rest of this entry »