Would new Transport Minister support Port Klang Authority in withholding the next payment of RM772 million to KDSB turnkey contractor for the Port Klang Free Zone (PKFZ)?


Would the new Transport Minister, Datuk Seri Kang Cho Ha support Port Klang Authority (PKA) in withholding the next payment of RM772 million next month to Kuala Dimensi Sdn. Bhd. (KDSB) the turnkey contractor to Port Klang Free Zone (PKFZ)?

In September 2007, I was given the schedule of repayments by PKA to KDSB for RM4.6 billion from 2007 to 2017 in connection with bonds raised by KDSB and which plunged the country into the RM12.5 billion PKFZ scandal.

The schedule of repayments as reported to Parliament by the then Parliamentary Secretary to the Finance Ministry, Datuk Seri Dr. Helmi bin Yahya stipulates the following repayments to KDSB:

Year Amount (millions)

2007 RM510
2008 RM660
2009 RM660
2010 RM772
2011 RM487
2012 RM733
2013 RM170
2014 RM170
2015 RM170
2016 RM170
2017 RM179
Total` RM4,681

PKA has repaid KDSB RM1.83 billion from 2007 to 2009 and is scheduled to repay the RM772 million due this year in four parts between June 30 to July 31.

As PKA had filed two civil suits against KDSB last September for overcharging for the PKFZ project, alleging that KDSB had made a false claim of RM83 million for two development works, and with the PKA studying other claims against KDSB, the new Transport Minister should declare whether he is supports the PKA withhold repayments of RM772 million to KDSB.

Transparency International Malaysia president Paul Low has suggested that an escrow account be set up to hold the funds pending the outcome of the litigation as PKA might not get its money back if it makes the payment now and wins its suits later.

In this connection, Malaysians are entitled to know what has happened to the promise made by the Attorney-General Tan Sri Abdul Gani Patail in December last year that “more” and “bigger fishes” would be prosecuted for the RM12.5 billion PKFZ scandal, apart from the four executives arrested and charged in court.

Abdul Gani had declared in the presence of the head of the Malaysian Anti-Corruption Commission (MACC) Datuk Abu Kassim Mohamed and the Inspector-General of Police Tan Sri Musa Hassan that the prosecution of four executives were “just the tip of the iceberg”, that more people were to face charges in relation to the PKFZ scandal and that there were “still several stages of investigation into this case”.

This is the New Straits Times report dated 11th December 2009 on Gani’s press conference announcing the prosecution of four executives in connection with the PKFZ scandal:

“This is just the first phase of investigations and there will be more,” Gani said.

He also said his office, together with MACC and the police, had been investigating the scandal for several months.

“There are lots of issues involved, legal and factual, which are not only complex, but require substantial amount of hours of
evidence gathering.

“The offences investigated include commercial crime, money laundering, abuse of power as well as corruption. We have to look at so many people and identify who is conspiring with whom. If you ask me, everyone implicated is a big fish.”

Gani said the agencies had to comb and sieve all available materials to establish a case against the perpetrators.

“This is certainly not the end of the matter but just the beginning.”

He stressed that they must answer for their roles and actions.

“I decided to prefer charges against these individuals as I could not wait for the authorities to complete their investigations into the whole scheme as that will take a long time. Other individuals will be charged in stages.”

Gani added that the agencies were “very serious” about the case and had not been influenced by any quarters.

“We are very objective. The police and the MACC have done a fine job.

“It cannot be denied that it will take us a long time to complete the probe but do not push us as this can result in an unfair investigation,” he said.

After Gani’s talk about “This is certainly not the end of the matter but just the beginning” and “They must answer for their roles and actions”, Malaysians are entitled to know what has happened to the various phases of the MACC investigation into the PKFZ scandal and whether the thunderous silence in the past six months is because there is not going to be further action whatsoever on the PKFZ files in both the MACC and the Attorney-General’s Chambers?

  1. #1 by yhsiew on Sunday, 27 June 2010 - 6:00 pm

    Datuk Seri Kang Cho Ha was “specially” selected by Najib to accomplish the wish of the latter.

    One should be able to read Najib’s mind by observing what Kang Cho Ha would do with the next payment of RM772 million next month to Kuala Dimensi Sdn. Bhd. (KDSB) the turnkey contractor to Port Klang Free Zone (PKFZ).

  2. #2 by Loh on Sunday, 27 June 2010 - 6:29 pm

    The PKF scandal can only be resolved with the fishes, multiracial, asked to cough out their immoral gains when there is a change in the central government. It is obvious that UMNO leaders, present and past, were also involved in partaking the 12 billion worth of corruption, and that is the reason why Najib chose not to allow OTK to remain overseeing the Transport Ministry. If election of party officials at the MCA election serves to justify the selection of Ministers for MCA, clearly the present Transport minister cannot be appointed to that post. What is more when he said that he would not pursue PKFZ issues. From the non-attention paid to PKFZ, it is now clear that Najib has always wanted to remove the former Transport Minister. He did it with the excuse presented by the 10/10 MCA EGM.

    The parliament seems to have accepted the explanation that some 500 million ringgit paid to Razak Baginda was for services performed. Can the government tell the people what special skills Razak Baginda put in which cannot be performed by specialists in the Navy that warranted outsourcing his services for the purchase of the Scorpion submarine? Razak Baginda is now said to be in UK. One wonders whether the services paid for at 500 million to Razak baginda have been completed, or are they on going. Why did the Ministry of defense did not recruit specialists who could work with the Foreign Ministry to secure the purchase of the Scorpion Submarine at a cost of not even exceeding one million ringgit? Najib chose to outsource Razak Baginda’s company at 500 million ringgit for arranging the purchase of the submarine rather than getting the foreign ministry to perform the task at a fraction of the cost. The outsourcing of Razak baginda’s company did not go through public tender, and it was Najib who had the final say on the sum to pay. The Defense Ministry confirmed that no commission was paid. That saves the government commission charges that might be a normal requirement, to be paid. The government now pays 500 times more than necessary for the services of introducing the Ministry to the source of ‘Submarine provider’. That is corruption. Would MACC investigate the former Defense Minister Najib Razak for corruption in the purchase of the Scorpion submarine?

  3. #3 by undertaker888 on Sunday, 27 June 2010 - 7:02 pm

    only in bolehland where dubious companies get millions and billions doing nothing. Bankrupt is the word awaiting this sorry country run by political retards. Vote them out!!! [email protected] ibrahim would be shouting hak!hak!hak!nep!nep!nep!

  4. #4 by kpt99 on Sunday, 27 June 2010 - 8:02 pm

    Tun Mahatir says Malaysians tend to forget fast.

  5. #5 by son of perpaduan on Sunday, 27 June 2010 - 8:07 pm

    What difference Kong Cho Ha with the rest of MCA eunuch? Dignity, Principle, and Religion put aside first, money always in the front, the rest you can forget it. Kong Cho Ha powerless to make decision on public interest matters.

  6. #6 by the reds on Sunday, 27 June 2010 - 9:11 pm

    Cho Ha is a lembik person. What can we expect from him? He is just a Minister boneka :)

  7. #7 by waterfrontcoolie on Sunday, 27 June 2010 - 10:21 pm

    It certainly looks like BN is challenging all Malaysians to a test. We want to get this through: what can you all do? Especially whenwe have Ibrahim Ali Characters around us further the Father of Pembangunan Malaysia is also supporting us. See you all at the forthcoming Election!!

  8. #8 by Jeffrey on Monday, 28 June 2010 - 12:53 am

    On this question – should our new Transport Minister support PKA’s withholding repayments of RM772 million to KDSB – especially when PKA has filed 2 suits against KDSB for overcharging RM83 million based on false claims for development works. TI (M)’s president Paul Low suggested “an escrow account” to hold the funds (RM772 million) pending the outcome of the litigation as PKA might not get its money back if it makes the payment now and wins its suits later.

    I’m not too sure that Paul Low’s suggestion of escrow account is practical because litigation process takes years, sometimes more than decade. Now how can bondholders wait for years for their interest? If the RM772 million due next month to KDSB were to be substantially used by KDSB to pay bond holders, then, there is no choice but to pay – because no payment means bondholders will call default – a prospect govt surely does not want to incur unless it wants to shake up local/foreign investors’ confidence in our entire Malaysian private debt securities/Bonds market and the Malaysian government’s credibility in support of it!

    After all, isn’t it true that the first premise upon which the government proceeded when it ratified retrospectively the Transport Ministers’ letters of support, irregularly first issued without the Treasury’s approval, is the imperative of preserving local and foreign investor confidence in the Malaysian government’s credibility and the Malaysian private debt securities/Bonds market as a whole??? If so what’s the alternative given this imperative?

    What the govt could do to mitigate risks is to ensure that PKA pays bulk of RM772 million direct to bond trustees/bankers to prevent any risk of KDSB’s frittering it in other areas or setting it off against other of its claims against PKA, contrary to this imperative of investors’ confidence in bonds/private debt securities market and the government’s credibility.

    True, once the RM772 million were paid to KDSB, PKA will lose its leverage of to set off against KDSB. But couldn’t security be taken by PKA of the present assets of KDSB to secure these contingent counterclaims if proven at the end of litigation? I read sometime back that the MACC froze KDSB’s assets in conjunction with its investigations into the PKFZ including a luxury jet. Can’t these assets frozen be securitized? Given the circumstances, I don’t expect KDSB could resist such a requirement.

    There are 2 separate issues. The 1st issue is investigating culprits involved in all kinds of conflicts of interest relating to every aspect of PKFZ scandal.

    This is not to be mixed up with the 2nd issue of how to go forward from here to mitigate tax payers’ exposure. Whilst the 1st proceeds in its inexorable course, the 2nd issue to be pressed by Opposition is why the government cannot help KDSB earlier redeem its bonds. KDSB suggested it; Public Accounts Committee (PAC) chairman Datuk Seri Azmi Khalid appeared to endorse the idea.

    The bulk of whopping RM12.453 billion is made up of interest and compound interest payments to bondholders up to 2051. Why wait till then when given economic climate bond holders at present may be amenable to earlier/premature redemption?

  9. #9 by ekompute on Monday, 28 June 2010 - 4:33 am

    No wonder we need GST.

  10. #10 by ENDANGERED HORNBILL on Monday, 28 June 2010 - 6:47 am

    YB LKS, maybe you should weigh in on the debate between Khairy and Perkassa cannon, Ibrahim Ali on 1Malaysia. Where does UMNO, MCA, MIC stand on this divide between 1Malaysia or 5-6-7Malaysia?

    Of course, Khiary is right – “Jaguh Kampung” is too respectable a term for the big-mouth, loud-mouth, foul-mouth ‘gedebe oportunis’. I mean everybody knows Ibrahim is having his final curtain call on the political scene. He is as good as finished in Kelantan next GE. He is that immoral gedebe who must have hoodwinked PAS to allow him to stand as the Pakatan candidate for Pasir Mas.

    Henceforth, nobody would want to touch this noisome piece of putrefying political junk anywhere in Kelantan or elsewhere. It’s so sad Tun M has sullied his not-so-squeaky-clean image now with his support, maybe even sponsorship, of Ibrahim’s band of gangsters.

  11. #11 by Jeffrey on Monday, 28 June 2010 - 7:45 am

    The Public/Opposition can demand all the investigations and accountability they want but history will repeat again and again because the root causes of the malaise – the inherent patronage system and dynamics of government/political involvement in business – are not addressed. An attempt is made here to explain it, a generalisation of course.

    The common problem of how rakyat’s money is frittered is always the same and recurrent – looking for mega project without thorough study of its feasibility. Concept wise is always grand and visionary whetting every desire for greed but implementation wise, weak. How is PKFZ to be successful when worldwide tariffs are going down, with manufacturing sectors being relocated elsewhere to China, India and Vietnam? All these high sounding talk of project management and contract management, what kind of talent we have to market overseas the spaces in PKFZ? In other contexts esp GLCs appointment to top executive positions and from those downwards follow NEP ‘kulifications’ requirements than qualifications regardless of race and creed.

    Projects have to be “mega” – otherwise how could various parties pilfer through lax control (ostensibly for political funds, and indirectly for own pockets)?? Being mega means you have to leverage debt up to one’s eyeball. Interest charges impose a heavy toll even before revenues roll in. In PKFZ case the bulk of RM12 billion loss if incurred are interest, including compound interest payments. Yet monies could be always be raised if not from banks rapacious for business/loan growth then from bonds/private debt securities market. Especially when the government gives support and is expected to step in to finance any problems faced by the ventures, rating agencies would give ratings for banks and investors to come out with the money assuming risks of viability are well mitigated by govt’s financial support. If govt gives such backing, legal or moral, then naturally on the board of companies are appointed politicians or friends of politicians appointed not on business merits and track record but on connections.

  12. #12 by Jeffrey on Monday, 28 June 2010 - 7:47 am

    There is also a moral hazard problem when people in charge on the board are not only insulated from risk of financial loss being underwritten by public when project fails but would benefit by their positions irrespective of whether project succeeds or fails. Because of the political element here, justification is assumed that one could pilfer to raise funds for political campaigns and electoral purposes in preservation of patron’s continuance of power. Meanwhile individual pockets are also filled up under such pretexts. Cost overruns are order for the day because to justify why contract is negotiated and given to a crony related company, the bid is kept low, and yet those doing business with the company whether contractors or subcontractors have to “grease” company’s officers. To facilitate that lactitude is given to variation of costs where contractors or subcontractors are not bound by fixed amounts but could bill overruns, otherwise how could they recover or maintain the costs of feeding on the sides these officers? The System and dynamics are such that every of such project has built in mechanism to naturally fail over time at high cost to public. It is because from conception to implementation these projects and appointment of implementators are not structured on normal commercial considerations and prudence but political and patronage considerations. Hence these projects had failed/bailed out, still fail and will fail.
    When they do, look for a few scapegoats (accountants, engineers, architects who did a bit of wrong) to appease public anger in the name of accountability whilst others connected politically and are key loyalists to raise political funds for their patrons are kept out of harm’s way. They will take a seat in quiet corner until reinstated at the helm of some other corporations doing this kind of mega deal in the future when and if public have forgotten about his involvement in earlier failed projects .

  13. #13 by House Victim on Monday, 28 June 2010 - 8:03 am

    YB LKS, there seems to have no evidence that the Project had applied and approved by the Parliament according to the Rules & Regulations under the Port Authority Act, such as
    1. The Content and amount in details, including Government Guarantee, and Parties to raise money with Terms & Conditions.
    2. The extension or/and adjustments of the project.

    Therefore, the Project should deemed to be illegal and the Government is not liable!!

    Any liability on the mis-appropriation of Power should be liable by the persons involved.

    Since the matters are under investigation, SURELY ANY FURTHER PAYMENT SHOULD BE STOPPED and any Payment done outside any Proper Approval should be chased after.

    PLEASE GO ALONG RULES & REGULATIONS AND NO MORE POLITICAL!!

    There is NO Legal Standi to pay!!

  14. #14 by dagen on Monday, 28 June 2010 - 9:15 am

    So you see, umno an the enemy of robin hood. The one who robs the poor to fatten the rich.

  15. #15 by Peter on Monday, 28 June 2010 - 12:15 pm

    As i have said, this new transport guy do not have a clue what his job is. He also claimed that he knew nothing about the PKFZ fiasco. Yet he got the cheek to mention that no further investigations were requir the moment he took his new post. What a clown. Actually this is what UMNO/BN wanted, get a “know nothing” clown to run the ministry and hopefully the fiasco will be forgotten. Case close. This is Bolehland justice.
    Meanwhile, i can guarantee those big powerful greedy sharks in KDSB will be paid the M$$$$$$$$$$ of the poor rakyat hard earned money. They are so powerful that they thrown out the poor MCA guy OTK and replaced with a famous porn star.

  16. #16 by Godfather on Monday, 28 June 2010 - 12:37 pm

    There are a number of people in the new administration who would be prepared to withhold the next payment, and who would be prepared to let the KDSB bonds go into default. They are prepared to face the inevitable legal action that the bondholders will take against the Ministry of Transport.

    However, the old guard is arguing for the exact opposite – pay and keep the integrity of the capital markets intact. This old guard is not worried about the dirty linen that would be washed in public – after all, they control the courts, and they can decide what is admissable and what is not. They can confine the legalities to the question of the validity of the letters of support – and suppress everything else. They determine who can be subpoenaed as witnesses.

    This old guard’s real problem is that they want to keep the modus operandi open for future “fundraising”. They don’t want to close the door. They may want to do a repeat once the rakyat’s memory fades. It’s all about keeping their options open to continue [email protected] the taxpayers.

  17. #17 by jjsibu on Monday, 28 June 2010 - 7:19 pm

    Those charged are just scapegoats. Where are the real jaws? In order to flush them out, learn from Taiwan.

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