Could the PKFZ project become a RM12.5 billion “mother of all scandals” if the three Transport Ministers and four PKA Chairmen – all from MCA – had not been equally incompetent and negligent as the PKA managers from day one?

The Public Accounts Committee (PAC) Chairman blamed the RM12.5 billion Port Klang Free Zone (PKFZ) scandal on “a group of incompetent people” from day one. (NST)

The ad hoc committee on corporate governance probing the PKFZ fiasco, headed by Transparency International chairman Datuk Paul Low Seng Kuan, denounced the PKA Board members for “gross negligence” in failing to discharge their fiduciary duties diligently, resulting in the RM12.5 billion PKFZ scandal.

Both Azmi and Low are only half right. Could the PKFZ project become a RM12.5 billion “mother of all scandals” if the three Transport Ministers (Ling Liong Sik, Chan Kong Choy, Ong Tee Keat) and four PKA Chairmen (Ting Chew Peh, Yap Pian Hon, Chor Chee Heung and Lee Hwa Beng) – all from MCA – had not been equally incompetent and negligent as the PKA managers “from day one”?

Yesterday, the second Transport Minister mired in the RM12.5 billion PKFZ scandal, Tan Sri Chan Kong Choy appeared before the PAC in its inquiry into the PKFZ scandal, ensconced by a lawyer and two aides as well as lugging a box of relevant documents, giving the impression as if he is appeared as an accused in a public inquiry.

Chan created PAC history in 52 years in being the first to appear with counsel before a PAC hearing. Why was this necessary and why did the PAC Chairman allow Chan to appear with counsel? This is indeed most extraordinary and even self-incriminating.

Even more extraordinary was that Chan produced an opinion from a Queen’s Counsel in the UK that the three Letters of Support which he had signed in support of PKFZ were not letters of guarantee.

How much did it cost Chan to get the opinion of a Queen’s Counsel for him to go to the PAC with it to back up his argument? Easily over 10,000 sterling pounds i.e. RM60,000 to RM100,000.

Why didn’t Chan get a Queen’s Counsel opinion when he was the Transport Minister in 2007 to convince the Cabinet that his three Letters of Support were not government “Letters of Guarantee” for the RM4 billion bonds raised by the PKFZ turnkey developer, Kuala Dimensi Sdn. Bhd. (KDSB) as Malaysian taxpayers would have been spared being victims of the RM12.5 billion PKFZ scandal?

In 2007, the Cabinet was advised by the Attorney-General and Treasury that the four Letters of Support to KDSB to raise RM4 billion bonds were implicit government guarantees to the bond market..

As a result, the Cabinet gave retrospective approval for the four unlawful and unauthorized Letters of Support, one issued by Tun Dr. Ling Liong Sik in May 2003 and three by Chan, creating the RM4.6 billion liability for the government in the bailout of PKFZ which is now set to become a RM12.5 billion scandal.

What is most shocking is that Chan did not formally table the opinion of the Queen’s Counsel to the PAC but only referred to it orally. This is most improper and irregular and Chan should be recalled to formally table the opinion of the Queen’s Counsel, so that it becomes part of the documentation of the PAC report in its inquiry into the PKFZ when submitted to Parliament.

As reported in the New Straits Times, Azmi said the PAC is expected to table its findings on the PKFZ scandal in the Dewan Rakyat by October when the House resumed its sitting. It will also prepare a report for the Malaysian Anti-Corruption Commission to revisit the project and look into certain areas which were not touched by the commission in its earlier investigation.

Azmi has got his parliamentary responsibilities as PAC Chairman all wrong. His duty as PAC Chairman is to report to Parliament and not to MACC or even the government. His job is to ensure that the PAC report and recommendations on the PKFZ scandal is first tabled in Parliament and not to submit any report to the MACC or elsewhere.

It is then for Parliament to decide whether to accept the PAC findings and recommendations, including whether the PAC report should be forwarded to MACC for necessary action, or whether to reject the PAC report because it is unsatisfactory and unacceptable.

In the latter circumstances, Parliament should invoke its full powers to hold an inquiry of the full House into the PKFZ scandal, should it arrive at the conclusion that the PAC report falls far short of parliamentary standards and expectations.

In which case, all the witnesses who had appeared before the PAC, including the current and previous Transport Ministers, Tee Keat, Kong Choy and Liong Sik can be recalled.

Azmi should not forget that PAC is delegated by Parliament to inquire into the PKFZ scandal and Parliament must decide whether to accept its findings and recommendations before further follow-up action is taken on the PAC report.

This point must be emphasized especially in a case of such great public interest and controversy like the RM12.5 billion PKFZ scandal.

As Parliament is reconvening on Oct. 19, and two weeks notice is required for a motion to accept or reject the PAC report on the PKFZ inquiry, Azmi should ensure that the PAC report on the PKFZ is circulated to MPs by end of September to allow MPs time to study it and decide whether a special motion on the PAC report on the PKFZ scandal should be moved – although formally, the PAC report would only be tabled in Parliament on Oct. 19 itself.

  1. #1 by k1980 on Thursday, 30 July 2009 - 11:23 am

    Who said the three Transport Ministers and four PKA Chairmen had not been competent? They are all exemplary experts in emptying the coffers. Ronnie Biggs, one of the 1963 Great Train Robbers would have been proud of them

  2. #2 by SpeakUp on Thursday, 30 July 2009 - 11:39 am

    Remember … being incompetent is not against the law. See where this is heading? Already know this from the start, they know how to cover tracks well.

  3. #3 by dawsheng on Thursday, 30 July 2009 - 11:49 am

    “In general, the huge project was managed by a very incompetent
    group of people,” PAC chairman Datuk Seri Azmi Khalid said
    here yesterday. – NST

    Azmi Khalid should get his head examine.

  4. #4 by Godfather on Thursday, 30 July 2009 - 11:51 am

    Oooooooo….there was no criminal intent, no negligence – only incompetence and poor governance. Tell you what, we will improve our governance from now onwards. We will reduce our incompetence by bringing in more professionals. We will even be more transparent by putting independent directors on the board, including a rep from Transparency International.

    In the meantime, we will need the bailout for the RM 12.5 billion project. What has happened has happened in the past. Mistakes were made, and we are sorry, but the project needs to be rescued with taxpayers’ money.

    And the rakyat are the poor suckers who will believe in this story.

  5. #5 by SpeakUp on Thursday, 30 July 2009 - 11:52 am

    Godfather … you are good! Yes, that will be the story … anyways, they did have the pro to handle it, one was nicely escorted out of the country! Hahahahahahaaaaa …

  6. #6 by taiking on Thursday, 30 July 2009 - 12:43 pm

    Yes indeed incompetence is what they would hope to use as explanation to account for the 12.5b pkfz issue.

    And no doubt they have taken directions from umno. And in implementing the directions two assumptions must kick in: (1) that they are clever; and (2) that all voters are stupid and are real suckers.

    An incompetence of that size is without more indicative (strongly so, if I may add) of something else. It is not an easy task at all to bore a financial hole of that size through sheer and utter incompetence alone. One may possibly gamble away that kind of money in a casino. But even that effort takes time what more when one is looking a national project with numerous consultants (both technical and financial) on the job.

  7. #7 by SpeakUp on Thursday, 30 July 2009 - 1:19 pm

    taiking … of course money was siphoned away. From the start the land was purchased like RM10 more that the valuation. If it started like that then how la? Each VO was to make more money, more jobs = more profits (of which is already inflated for sure).

    Audit them carefully, show EACH invoice la … you will see then how much was taken.

  8. #8 by Yee Siew Wah on Thursday, 30 July 2009 - 1:19 pm

    12.5 billion bucks!!! of rakyat hard earned money and the excuse given is just incompetence. What a great excuse for these greedy and unethical bums to get scott free!!!
    The ad hoc committee guys either they need to have their brains examined or just planted there by the same very bums who are being investigated on this scandal. Its all sandiwara.
    This is bolehland at one of the best.
    Another time and money wasting committee.
    End result, revamped and everyone goes scott free, forgotten and enjoy their $$$$$$$billions!!!!
    Heard that one of the ex-transport minister going to migrate to Australia. Sure, with the $$$billions.

  9. #9 by House Victim on Thursday, 30 July 2009 - 1:37 pm

    Whether the Project and those soft-loans had been approved by the Parliament according to Rules and Regulation to reach such a content and amount should be the key points to be revealed or confirmed. A number of violations are obvious and they are out of the jurisdiction of PAC.

    Is there any Committee in Parliament which should look after Rules & Regulations or monitor the Cabinet? The Opposition should make their own report to demand the set-up of an appropriate Committee. Otherwise, this kind of shows can never be ended or could anything meaningful be done!

  10. #10 by ekompute on Thursday, 30 July 2009 - 1:38 pm

    “The Public Accounts Committee (PAC) Chairman blamed the RM12.5 billion Port Klang Free Zone (PKFZ) scandal on “a group of incompetent people” from day one. (NST)”

    Not quite apt. I don’t think these people are incompetent. Their agenda is different, that’s all. And I bet they don’t mind you calling them incompetent. Better that than saying that they are corrupted or having a different agenda. You should see how competently they bargain when they are using their own money. Ask their renovation contractor and you will know.

  11. #11 by Ken G on Thursday, 30 July 2009 - 1:52 pm

    YB Kit, train your guns on the 5 useless advisory panels of the MACC. If they has been doing their jobs competently would the MACC turn into Umno’s Gestapo to attack the S’gor govt instead of fighting real corruption? On the other hand if they have no power to act, why have them at all to whitewash the MACC?

  12. #12 by SENGLANG on Thursday, 30 July 2009 - 1:53 pm

    Now they try to put the dead corpse into some body who this some one was exactly from where these three MOT were all about.

    How can you you put blame on PKA? AND pka WAS UNDER MOT? Why can ‘t they are man enough to admit mistake and take responsibility? It does not matter you have retired or not .

    Just could not understand why they are still a lot of stupid fellow supporting MCA

  13. #13 by ChengHoi on Thursday, 30 July 2009 - 2:04 pm

    It is not that difficult to understand why there are still people supporting MCA if indeed billion dollars are at stake. These are not stupid people. These are $mart people.

  14. #14 by dawsheng on Thursday, 30 July 2009 - 2:14 pm

    “We will get the views of the Attorney-General (Tan Sri Abdul
    Gani Patail) on the minister’s letter,” Azmi said. – NST

    For what, more fallacies of false dilemma to justify a heinous crime without criminals?

  15. #15 by dawsheng on Thursday, 30 July 2009 - 2:25 pm

    How much did it cost Chan to get the opinion of a Queen’s Counsel for him to go to the PAC with it to back up his argument? Easily over 10,000 sterling pounds i.e. RM60,000 to RM100,000. – LKS

    What is RM100k to back up and found not guilty of robbery worth hundred of millions?

  16. #16 by sheriff singh on Thursday, 30 July 2009 - 2:45 pm

    “In 2007, the Cabinet was advised by the Attorney-General and Treasury that the four Letters of Support to KDSB to raise RM4 billion bonds were implicit government guarantees to the bond market..”

    Crucial words: ” Attorney General and the Treasury”, “implicit government guarantees”.

    Crucial questions:

    1. WHY was it necessary for the 3 Ministers of Transport to issue the four “letters of support” in the first place?

    Would PKA and PKFZ be able to attract investors and banks to lend them money (billions) without these “letters of support”?

    2. HOW did the banks and other investors view these four “letters of support” to convince themselves to lend and to provide financing totalling Billions of ringgit?

    If the letters were worthless, would the investors buy the bonds and provide financing?

    3. HOW did the lawyers acting for the banks and investors view the four “letters of support” and advise their clients?

    Did the lawyers conclude that the four letters were in fact, guarantees and can be relied upon? Or did the lawyers tell their investing clients that the letters were worthless, but still the investors lent their good money?

    4. In the eyes of the investors, did the four “letters of support” mitigate the risks to them, the banks and the investors?

    5. HOW were the Facility instruments RATED by the Rating Agencies? Did they give high ratings because of strong government support? Or did they give poor ratings because the four letters were “worthless”? What was the Rating Agency’s conclusion and their basis?

    The crucial issue here is: “Would the banks and investors proceed to lend money WITHOUT the four “letters of support”?

    It is therefore pertinent that the INVESTORS’ perspective be examined to determine HOW they viewed the four “letters of support”, to convince them to lend PKA and PKFZ billions of now lost money.

    Go after the Arrangers and Lead Managers of the facilities. Haul them up for questioning. Ask them WHY it was important for PKA and PKFZ to honour their payments of RM 600 million at the end of June if the four letters were worthless (and therefore the terms of the Facilities Agreements are erroneous, perhaps void and cannot be relied upon) ?

    Look at the Terms and Conditions of the various Facilities. Do they in fact REQUIRE that GUARANTEES from the government be OBTAINED as a CONDITION for the Facilities?

    The QC’s opinion is irrelevant. You can easily pay another QC to opine that the four letters were in fact guarantees. That’s how they earn their living. They say what you want them to say. They can always come up with some reasons to support their opinion (just like some of our judges?).

    Look wider. The can of worms has been opened. The worms are out there.

  17. #17 by Godfather on Thursday, 30 July 2009 - 2:58 pm


    The worms have sprouted wings and have flown the coop.

  18. #18 by Godfather on Thursday, 30 July 2009 - 3:04 pm

    MCA is trying to close the can of worms as instructed by big brother UMNO.

    It was supposed to be the perfect BN scheme to raise money for political purposes – UMNO’s treasurer is the chairman of the main contractor, Selangor UMNO’s exco member is the chairman of the fisherman’s cooperative, MCA runs PKA, and a Sarawakian bag carrier with experience in distributing goodies gets the job of coordinating payments.

    Ong Ta Kut is really caught between a rock and a hard place. The only available compromise is the promise that it would not happen again. They think that with time, the taxpayers will forget.

  19. #19 by i_love_malaysia on Thursday, 30 July 2009 - 3:26 pm

    While the PAC is still working on this issue, it seems that there’s no budget to this PKFZ project, it is never ending and there’s no limit to the amount to be spent!!! The contractor will continue to issue VO and the govt will continue to sign the VO and payment made!!! This is the most profitable project on earth!!! No wonder 1 Singapore Dollar is equalled to RM2.50, it will be 1 Singapore Dollar = RM10.00 when reaching year 2020 or 1 Singapore Dollar = RM1 Million by then if more Letters of Support were issued & more VOs signed and INCOMPETENT BN govt still get elected in future GEs!!!

  20. #20 by i_love_malaysia on Thursday, 30 July 2009 - 3:29 pm

    Only INCOMPETENT people were able to cari makan in the BN govt, Competent people have to cari makan outside BN govt!!!

  21. #21 by i_love_malaysia on Thursday, 30 July 2009 - 3:44 pm

    A retired man would still have to answer for any wrong doing done when he is still not retired!!!
    A dead man would still have to answer to God for any wrong doing done when he was alive!!!

  22. #22 by taiking on Thursday, 30 July 2009 - 6:00 pm

    A woman has been seefoured to bits and you claim that it was a pure accident. Believable? 10,000 women have been seefoured to bits and you still claim that it was a pure accident. Believable? Oh pleeese man. Tell that to my rear.

  23. #23 by HJ Angus on Thursday, 30 July 2009 - 8:12 pm

    This new format is very inconvenient.
    First need to log in, then have to repeat particulars and also that silly Captha.
    I will not be submitting any spotted errors in your articles in future if this is the confirmed format.

    [admin – We apologies for the drastic action taken yesterday. The theme/layout was changed to the basic form because the server was under heavy load, and the current theme does add additional load, it was a necessary temporary action. As for the recaptcha; its to protect this site from SPAM comments in addition to help the research]

  24. #24 by OrangRojak on Thursday, 30 July 2009 - 8:47 pm

    This new format
    I realise democracy doesn’t extend to LKS’ blog design, but this is even uglier than something I would do. It would be almost better to receive an email, or a leaflet stuffed through my gate.

    (Complaints about the new design acknowledged. I also find it more user-unfriendly. Asking the IT manager to revert. – kit)

  25. #25 by frankyapp on Thursday, 30 July 2009 - 11:06 pm

    “In general,the huge project was managed by a very incompetent group of people.”….PAC chairman Datuk Seri Azmi Khalid. If that was the case,why then the Federal government kept employing them ?. What had happened to both the internal and external auditor’s reports ?.If these guys were incompetent,surely cracks would have appreared some way along the line. How come nobody saw it ?. Frankly,I’m not convinced by Datuk Azmi.

  26. #26 by oldman99 on Thursday, 30 July 2009 - 11:11 pm

    looks like pka team will be the sacrificial goat. i smell kari kambing on the way…the people eating it will be the ex-lorry ministers. everything will be blamed on the pka.

  27. #27 by HJ Angus on Friday, 31 July 2009 - 1:05 am

    If you look back into the BMF scandal in the 80s, it too had ministers making arrangements in financial deals as this is quite common for government backed projects.
    If such projects are for the common good of the people like schools and hospitals, the “letter of comfort” by ministers to banks etc usually works out well.
    But after so many years of such a practice with little checks and balances, it appears that most people had a hand in the money pudding, from the project promoters, to the government officials who overseered the deal and those who approved the financing arrangements.
    So I guess is a proper RCI is conducted, we should see transport officials, AG officials and treasury officials having to face charges of graft/dereliction of duties/conspiracy to defraud/CBT.
    But in Bolehland I don’t think very much will happen as the system is broken and needs fixing.

  28. #28 by House Victim on Friday, 31 July 2009 - 2:36 am

    1. PKFTZ was allowed to start with own Fund raising. Therefore any Guarantee from the Government had already violated this basic conditions.

    2. The Operation of PKFTZ is to be under Port Authorities Act (PAA), such that
    a) Section 6 – if capital is to be provided by the Government, then the Content and Amount of the Project has to be approved by the Parliament, then can MOF allocated the amount with terms and conditions being specified. What amount had been approved by the Parliament as “Capital” for the project?
    Any additional should go through similar process with details of variation.
    b) According to PWC- Report 4.4
    “Issue 1 The proposal to purchase the Land was approved by the Cabinet. However, subsequent development proposals were not tabled to the Cabinet for approval”
    Therefore, the Parliament or at most the Government should only be liable for the purchase of Land!!
    c) Should any Borrowing be needed, approval must be sought from MOF. Therefore, any Guarantee should be issued by MOF and not MOT!!
    d) Referring to PWC-Report 4.78, besides the Guarantee of MOT is there. there is also a Contradictory statement in the letter that ““there is no express or implied guarantee with regards to the Repayment Amount / Sum.”
    Therefore, the three letters can no way be a letter of Guarantee even if MOT has the power of Guarantee!!

    e) 4.28-4.32 UNDER Issue 7
    “PKA could have reduced its funding costs had it complied with MOF’s recommendation to issue government-guaranteed bonds and developed the Project in phases”

    When the bonds were not issued according to MOF recommendation, surely the Government cannot be taken as responsible for the Bonds, even if MOF had given the guarantee!!

    3. The Validity of the Four Letters was known to the “World” for years. Should any Bank or public who had taken in those Bond be silent over the years?

    The only possibility is the bonds are with “internal Circulation”.

    4. My Personal Opinion are
    a) The Project did not get approval from the Parliament, except on the purchase of land. But, it has been done with BIAS.
    b) The Government should not bear any responsibility, more than the piece of land, but subject only to the terms and condition when approved by the Parliament. This could be under PAC.
    c) The Soft-loan from MOF has been outside proper procedures, if not being approved by the Parliament. So, a misappropriation should be concluded by PAC if under their jurisdiction. Action should be taken by the appropriate Committee by the Parliament.
    d) The rest should be misappropriation of the Ministers of MOT and PKA and to be due with accordingly.

    LEGALLY, SIMPLE!! The Complications are caused NOT because of Political but CRONIES!!
    As even Political, they should follow the Laws!!

  29. #29 by House Victim on Friday, 31 July 2009 - 2:40 am

    2. c) Power to Borrow is under PAA
    Power to borrow money
    8A. The authority may, from time to time with the approval of the Minister of Finance, borrow, by way of overdraft or otherwise,
    such sums as it may require for meeting its obligations and discharging its functions under this Act and may secure the repayment of any
    sum borrowed by way of a mortgage or charge, legal or equitable, of any property vested in the authority, or of any revenue received by the authority under this Act.

  30. #30 by SENGLANG on Friday, 31 July 2009 - 8:50 am

    After so many days of huha, please read the analysis by RPK in the Malaysia today of today.

    PKFZ is just the Chinese Angpow to MCA nothing else. All other are just for shows. More money will incurred on this and that investigations and all butshits. It may just save more money by forgetting about PKFZ and they are still supporters of MCA.

    Why spend more money on educating the bunch of thieves/ robbers on transparency and accountability? What a waste of more taxpyers money?

    How can we say those sitting on the PKA are incompetent while they are all well known for one reasons or others?

    The true is PKFZ is the rewards to MCA FOR JOBS WELL DONE BY THE grand old man. And the moneys come from you Chinese, so why is the quarrel now?

  31. #31 by jbozz on Friday, 31 July 2009 - 2:07 pm

    As long as the piranhas still have some water for it to survive, it can breath some air till the next rainning season approach if it is not eaten alive by the stork.

    People revolution happen in France decade ago where the supressed peasants rise from injustices to overthrown the monarchy. Are we ready to rise and banish BN?

    Don’t think so, most Malaysian are hardworking they work hard to feed their childrens, pay car instalment, and other commitment. There is basically no time to go out the street and mass protest to overthrown government like Thailand, Indonesia, and Philipines. Surprisingly Malaysian are very calm, and able to tolerate such for sake of their childrens having better life.

  32. #32 by limkamput on Friday, 31 July 2009 - 10:41 pm

    Told you before, the letters of support are of no use and consequence. Next, pursue why lettters of guarantee were issued so easily. Who order the letters of guarantee issued. Trust me MCA ministers have no such power.

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