Silence, sense-surround silence, thundering silence from Datuk Seri Ong Tee Keat, MCA President and Transport Minister, to my daily three questions on the PricewaterhouseCoopers audit report on the RM12.5 billion Port Klang Free Zone (PKFZ) Rip-Off despite the open and public directive by the Prime Minister, Datuk Seri Najib Razak to Ong “to provide answers on every question raised by any party” on PwC’s PKFZ report.
Am I surprised? I am not.
However, as there is standing instruction by the Prime Minister to Ong to answer every question on the PKFZ “mother of all scandals” by anyone, I will continue with my daily three question to the Transport Minister, this being the fourth consecutive “3 questions a day”.
My first question today to Ong is why he was being downright irresponsible when he said in Penang yesterday that “outlays for the controversial Port Klang Free Zone (PKFZ) project could end up being less than RM4.6 billion” (“PKFZ could cost less than RM4.6b” – New Straits Times June 2, 2009) by engaging legal experts and consultants to recover the “overcharging” reported by PcW.
Engaging legal experts and consultants to “probe and also consider the recovery of overcharging elements” is going to incur further costs, and its not going to be cheap. Furthermore, there is no guarantee that any money would be recovered. What is certain is that more money would go down the drain!
How can Ong be so irresponsible as to be talking about the PKFZ “white elephant” costing less than RM4.6 billion when the PwC report stated that PKFZ project had escalated to RM7.453 billion and could cost another RM5 billion to reach the astronomical total of RM12.453 billion.?
Probably, Ong does not fully understand the contents and grasp the implications of PwC’s PKFZ audit report.
Let me just refer him to the Executive Summary of PwC’s PKFZ report, which stated:
“Project outlay has escalated from RM1.957 billion to RM3.522 billion, excluding interest cost. Including interest cost, the Project outlay increases to RM7.453 billion
2.5 PKA entered into several agreements with KDSB to purchase the Land and develop the Project on a turnkey basis. The original estimated cost for the land purchase and development works in 2001 was RM1.957 billion. As shown in the chart on the next page, Project outlay has escalated to RM3.522 billion as at 31 December 2008. Interest cost of the deferred payments to KDSB amounted to RM1.425 billion resulting in a total Project outlay of RM4.947 billion.
2.6 PKA was unable to fund its obligations to KDSB from its own resources when the first scheduled payment was due in 2007. PKA secured a 20-year soft loan of RM4.632 billion from MOF, of which RM4.382 billion is available for draw down. This loan would impose an additional interest cost of RM2.506 billion resulting in a total Project outlay of RM7.453 billion.
PKA must restructure the MOF soft loan to avoid a potential default in 2012
2.7 Cashflow projections prepared by PKA management show that PKA would be in a cumulative cash deficit position between 2012 and 2041, after paying two instalments to MOF. Should PKA fail to meet the MOF soft loan instalments as scheduled and if these instalments are deferred to match its projected cashflows, it would incur additional interest cost of approximately RM5 billion. This would further increase the outlay of the Project to RM12.453 billion.”
In fact, there are grounds to believe that not all the costs incurred for the PKFZ project had been brought to the notice and knowledge of PwC.
For instance, it is reported today that Port Klang Authority (PKA) was yesterday sued for a RM147 million bill for “corporate advisory services” by Mega-Wan Corporate Services Sdn Bhd.
As reported by the Sun, this RM147 million bill is made up of three claims for professional fees for corporate advisory and associated services, viz
- RM97.27 million on the management of the PKFZ from January 2006 to August 2007 which covers consultation on the appointment of Jebel Ali Free Zone (JAFZ) to manage PKFZ as well as the eventual termination of the management agreement;
- RM1.9 million to Port Klang Authority (PKA) on issues and queries related to PKFZ project between August 2007 and May 2008; and
- RM48.6 million for professional fees to advise and conduct financial re-engineering rendered to PKA to facilitate the appeal for a RM4.6 billion loan from the Ministry of Finance to fund the PKFZ project.
Ong should explain whether PwC was informed of this RM147 million claim in connection with the PKFZ project when conducting its audit, and if not why, as Mega-Wan Corporate Services Sdn. Bhd had submitted its claim for repayment to the then PKA general manager Lim Thean Shiang as far back as Sept. 12, 2008 when PwC was in the process of conducting its audit.
If PwC had been notified of this RM147 million claim in connection with the PKFZ project, why was it omitted in the PwC audit report as this raises the question of its professionalism?
My second question to Ong is what is the cost of the PwC audit investigation. It is bruited that the fees paid to PwC is RM3 million. Can Ong give the exact sum?
Third question: Why is the PwC audit report on PKFZ going to be available online at www.pka-report.com for only a period of two weeks from 28th May to 10th June 2009, which is a most unusual practice. Could Ong ensure that the PwC audit report on PKFZ should remain on the PKA website so long as the PKFZ scandal is not resolved?
In fact, what Ong should do is to ensure that all the 20 appendices of the PwC report should be uploaded on the same site so that all Malaysians can access them to find out why the interests and rights of present and future generations should be pawned away by a RM12.5 billion PKFZ Rip-Off.
If Ong or PKA have technical problems of putting the appendices on the Internet, the DAP IT team is prepared to render its help and services.