PKFZ: ‘Gov’t will pay RM700mil to bondholders’


By Christine Chan | Malaysiakini

Deputy Transport Minister Abdul Rahim Bakri has given an assurance that the government will pay what is due to the Port Klang Free Zone (PKFZ) bondholders.

“We have a commitment to the bondholders, therefore we have to fulfill it,” he told the House today, when winding up matters relating to the ministry in the 10th Malaysia Plan.

He was replying Lim Kit Siang (DAP-Ipoh Timor) who had asked whether Port Klang Authority (PKA) would make any payments to PKFZ turnkey contractor Kuala Dimensi Sdn Bhd (KDSB), given the legal dispute between them.

PKA is due to pay RM723 million to the bondholders tomorrow, akthough it has taken KDSB to court for alleged overcharging.

The Internal Revenue Board (IRB), Lim noted further, has also asked PKA to pay RM328 million owed by KDSB in alleged backdated taxes.

Given such a scenario, Lim suggested that the government should consider setting up a third-party account until the dispute is resolved.

Should PKA decide to pay both parties, they would have to cough up over RM1 billion.

On the same matter, Tony Pua (DAP-Petaling Jaya Utara, right) said PKA should not make any payments to the bondholders since it was KDSB that had raised the money to finance the PKFZ project through the issuance of bonds worth RM4.6 billion.

“PKA’s obligation is not towards KDSB’s bondholders,” Pua argued.

At a press conference earlier, Pua had said that the government should hold back payments to KDSB until the court case is finalised.

“PKA can withhold payment to KDSB bondholders on the basis that KDSB had failed to complete its work. PKA could also refuse to pay IRB on the same (grounds). So if PKA says ‘I do not owe money to KDSB’, it is not compelled to pay the taxes owing to IRB,” he explained.

‘Perfect scam of the century’

If the government pays both the bondholders and the IRB, said Pua, ” this would be the perfect scam of the century”.

PKA will have to pay a total of RM1.05 billion to both IRB and the bondholders.

“The result will then be … the IRB gets to collect its taxes, the bondholders get to recover their investment with interest, while KDSB escapes its obligations without having to fork out a single sen of its tax (owed to IRB),” he claimed.

He added that this will also save KDSB owner Tiong King Sing (left), who is Bintulu MP, from being sued by the IRB and bondholders.

However, the burden would then be transferred to the rakyat.

“The complete burden amounting to billions of ringgit is shifted to the hapless and helpless rakyat who will be forced to pay for the follies of the BN government,” he added.

“(This would) enrich KDSB and its shareholders while those possibly guilty of criminal breach of trust such as former transport minister Chan Kong Choy (will) get away scot-free.

  1. #1 by habis on Tuesday, 29 June 2010 - 3:56 pm

    The govt is under no obligations to pay KDSB until full settlement of the court case has been arrived.Why should the rakyat’s money be used to pay for the follies of BN govt while ministers who were responsible for the fiaso were able to get away without having to be penalised.National funds does Not belong to the BN govt and it is held under Trust for the Rakyat. The action of this BN govt constitute a breach of trust and must be held responsible.It just goes to prove that the removal of OTK is the grand design not to pursue PKFZ and to let go scot-free the culprit of this scandal which is a national shame.

  2. #2 by rahmanwang on Tuesday, 29 June 2010 - 4:20 pm

    Now I think Malaysia will be bankrupt before 2019.

  3. #3 by Bigjoe on Tuesday, 29 June 2010 - 4:24 pm

    If the govt does not pay, then KDSB bonds will take a dive and along with it all other govt bonds especially those with similar guarantees. The cost of borrowing would jump and they would have to jack up interest rate and the market will take a dive along with the MYR. Economy is already sluggish, Najib being pushed backed recently by loses in Sibu, Sports betting, GST&subsidies etc. can hardly stand up to a hit on the economy. He is already short of money to BUY-GE-13.

  4. #4 by monsterball on Tuesday, 29 June 2010 - 5:12 pm

    Yes….Malaysia WILL go bankrupt one year before Vision 2020….if we forget easily and keep letting those crooks fool us.
    Remember..more than RM700 million per needed to upkeep the 2 submarines…and supposedly and urgently needed to prepare ourselves for war against Indonesia….as if Soekarno is still alive.
    That’s Najib greatest contribution towards cheating more than RM500 million.cronies and his own pocket under trusted friends.
    He is like Mahathir.. 100% clean..no cheating..for these crooks ..all know…how to use and kill people..if they do not toe the line.
    Since they are Malaysians money…must always behave nice and gentle…and poison minds of Muslims….no sin to steal and buy up the whole country..to be slaves forever to UMNO B.

  5. #5 by donplaypuks on Tuesday, 29 June 2010 - 5:14 pm

    YB

    This is plain dishonesty and highway robbery from and by Najib and his Govt!

    It was already revealed when bond interest payment of $600 million was paid in 2009 that the situation was manipulated by croneys and MoF (Najib) when the debt obligation was clearly KDSB’s!!

    It was then 100% clear the Govt had no obligation to bondholders whatsoever for an issue of bonds by a private company, KDSB. Yet Najib and the MoF lied and conned us!!

    MCA Ministers have testified their “letter of support” has no legal status. So, where is the obligation of Govt to bondholders?

    Let the bondholder mafia sue KDSB and recover whatever they can. That’s how limited liability private companies are supposed to operate.

    This bailout is totally unwarranted and is yet another massive fraud on the Citizens of M’sia.

    Pakatan must NOT allow the financial rape of this country to continue 1 day longer.

    YB, do something, anything! Take out an injunction or file a court case as DAP did against Mahathir & UEM in 1986 and stop the money from fraudulently going to the bondholders and saving the skin of croneys again!

    Move all NGO’s to also file similar lawsuits and cases against Ministers and Govt officials who have acted ultra vires their powers and/or for fraud and breach of fiduciary duties to the Rakyat!!

    Move heaven and earth for justice!!

    Most citizens don’t see a million $ in their entire lifetime; for this kind of $700 million fraud, they HANG people in China. What more $12.4 billion!!

    dpp
    we are all of 1 race, the Human Race

  6. #6 by sheriff singh on Tuesday, 29 June 2010 - 11:21 pm

    Most of the bondholders are foreigners and they need the money to pay for the mess in Greece, Spain, Ireland, Italy and Portugal.

    So we must provide them the means to save themselves. While we suffer.

    More money flowing out.

  7. #7 by Loh on Wednesday, 30 June 2010 - 12:36 am

    Najib claimed that he never promised to end NEP but used NEM to achieve NEP instead. Najib implies by that statement that NEP is a never ending policy!

    If that was so, Tun Razak should not have said that NEP was for 20 years. Without the time limit, the people then would not have agreed to NEP. Najib cannot claim that whether the people liked it or not, Razak could have implemented the policy nonetheless.
    NEP is the cause of Malaysia becoming a failed state. NEP is poisonous to nation building. While it be tolerable for twenty years it has gone on for twice its duration.
    NEP declared a state measurable threshold of Malays participation in commerce. Najib had not established an independent objective assessment of the achievement in that regard but declared the continuation of NEP.
    UMNO has to be accountable for implementing a policy within the time frame of 20 years. UMNO cannot implement the policy wrongly for twice the length of time, and still ask for more.

  8. #8 by monsterball on Wednesday, 30 June 2010 - 5:25 am

    Pay the bondholders…UMNO B cronies and why not.
    How else can UMNO B kitty bank swell up with billions to buy up votes in 13th GE?
    Any organization with admitted corruptions to the tune of RM12.5 billion need not pay anyone…until all the culprits are hurled up for questioning..or all clearly sorted out.
    You can never get the affairs of PKFZ sorted out clearly..as UMNO B crooks with MCA puppets are involved.
    Sorted out…few top guns from both sides should be in jail by now..but UMNO B rules..so all thieves are safe.
    It’s public funds we are talking about…and public have no say at all…as long as UMNO B governs.
    After 50 years…these crooks trully think they own the country and can do as they like with useless balls carriers guarding their high salaries job…defending UMNO B ..for without UMNO B..these so call law makers are good for nothing.
    Brutus played out Julius Caesar.
    Najib selected these unqualified racists law makers to head various departments…to make sure divide to rule ….race and religion dirty politics must flourish…on and on…so that UMNO B can rule forever…with Rustam elected as Melaka MB many times over…the new type of self appointed royalties.

  9. #9 by Jeffrey on Wednesday, 30 June 2010 - 7:47 am

    PKA’s obligations to KDSB are to pay KDSB on timely basis if KDSB discharges quid pro quo its obligations of designing, constructing and completing for PKA the construction of infrastructure/buildings in PKFZ per their Turnkey Project.

    KDSB secured funding of its obligations to PKA via financing from the Bondholders.

    Bondholders agreed to fund KDSB against assurance by the government (via Transport Ministers’ letters of support subsequently ratified and elevated to status of firm guarantees by the Ministry of Finance) that provided KDSB executed or has executed its obligations to PKA on timely basis, PKA – a govt agency for which the government is reponsible – will perform its obligations to KDSB by ensuring the stream of revenue from PKA to KDSB in order that KDSB would not renege on its financial obligations to its financier/bondholders, and that the bondholders could then rely upon as triple ‘A’s govt’s backed revenue stream as security for KDSB’s repayment of monies together with interests due to the bondholders.

    The promised source of revenue stream is PKA, and ultimately the government drawn from public coffers. Its a revenue stream available to KDSB provided it performs its turnkey obligations. Its a revenue stream that bondholders financing KDSB could tap for repayment under letters of support/guarantees – if KDSB performed its turnkey obligations to PKA. Its also a revenue stream that the Inland Revenue could tap by direct garnishment at source from PKA – if KDSB performed its turnkey obligations to PKA, got payment from PKA, and after deducting costs including interest payments to bondholders, made profit.

    Here amid the charges and countercharges between PKA & KDSB, the general position is that:-

    1. KDSB has executed and performed timely its obligations to complete infrastructure/building in PKFZ for PKA.

    2. If KDSB asked from PKA for cost overruns that were uncontrolled or exorbitant, it was only because PKA, by Turnkey contract, agreed to pay these cost overruns to KDSB.

    3. If KDSB performed its obligations, its PKA’s turn to honour its promise of immediately releasing the promised revenue stream for the contracted sum and cost overruns. Delay means PKA, the first cause in financial jam up, has to pay interest, damages etc.

    4. The cost escalated from initial cost of RM1 point something billion to an estimated RM4.947 billion up to 2017 due principally to interest & compound interest incurred by PKA’s delayed payment and discharge of its financial obligations to KDSB and by extension ultimately to bondholders relying on PKA’Govt’s promise to pay timely. Govt in 2007 gave PKA a soft loan facility of RM4.382 billion for a period of 20 years to fund its debt to KDSB. Amortising the repayment of this soft loan over 20 years, the cost to PKA by interest payments would accrue to another RM7.453 billion by 2036 tallying at RM12.453 billion by 2051 (if nothing were done by PKA to successfully commercialise PZFZ by then).

  10. #10 by Bigjoe on Wednesday, 30 June 2010 - 8:17 am

    Not to stray from the topic. Its UNBELIEVABLE the judge on Tian Chua case says that Tian Chua is not disqualified by his ruling because he intended it to be so and his interpretation of the Constitution.

    What a freaking joke of a judge!!!

  11. #11 by Jeffrey on Wednesday, 30 June 2010 - 8:20 am

    From the above it is clear that the first cause of all problems is delay by PKA to pay KDSB. It fails to pay because of poor cash flow and poor cash flow is because since 2007 it could not sell/let sufficient of PKFZ’s factories, warehouses and light industrial units whether to foreign or local purchasers/lessees/tenants – for whatever reasons whether due to economic conditions local or worldwide in this industry or due to poor marketing or promotion campaign, incompetent personnel or worse still dishonest personnel pilfering, or the fact that the whole grandiloquent project, considering all factors, was a non-starter, looking good at concept stage, but unfeasible at stage of implementation and commercialization. PKA’s financial woes are compounded by late/compound interest payments due to KDSB.

    This means:

    (a) If KDSB were in position to vary costs and demand from PKA costs overruns, and milk it, it was only because PKA agreed to them by agreement!

    (b) If KDSB’s financiers/bond holders are in the position to demand and secure KDSB’s repayment to them, it is only because PKA held out to these financiers/bond holders that they all could rely on PKA’s revenue stream to keep its turnkey contractor KDSB in funds to discharge KDSB’s financial liabilities to them.

    (c) If KDSB’s financiers/bond holders are in the position to so on rely on PKA’s promise, it is because of Government of Malaysia’s promise via Minister of Transport’s letters of support that PKA’s solvency to meet its financial obligations to KDSB and by extension to its financiers/bond holders were “supported” by the Government of Malaysia for its agency PKA;

    (d) If there were doubt about legality or bindingness of these irregular “letters of support” issued by MOT without MOF’s initial approval, all vestige of doubt in these respects were removed when govt via MOF gave soft loan and ratified status of these support letters to that of firm legal guarantees;

    (e) If govt had to convert letters of support from moral to legal bindingness of guarantees it is because when dealing with the financial, private debt securities markets (financiers, banks, bond holders), the govt’s credibility relating to support, whether moral or legal for its agency like PKA (ii) and (ii) financial, private debt securities markets must be unswerving and unflinching for reasons of maintaining its own sovereign ratings or else some of the consequences mentioned by BigJoe in #3 will befall with devastating consequences to the economy of the country as a whole.

  12. #12 by dagen on Wednesday, 30 June 2010 - 8:37 am

    Its ok monsterball for us to go bankrupt one yr before 2020 for jib said by the very next yr we would leap frog a whole load of other countries to become a high-income earning country. Trust me on this one. Jib is right!

  13. #13 by Jeffrey on Wednesday, 30 June 2010 - 8:47 am

    In the circumstances, It would not be exactly correct for Tony Pua to argue:-

    (i) “PKA’s obligation is not towards KDSB’s bondholders” and that “government should hold back payments to KDSB until the court case is finalised” if imperatives of govt’s credibility to markets in (e) of the preceding posting above holds true; and

    (ii) “PKA can withhold payment to KDSB bondholders on the basis that KDSB had failed to complete its work” because, firstly, there is no suggestion that, by 2007, KDSB has failed to complete its work. It was PKA that failed to (pay timely) KDSB and its bondholders because PKFZ did not generate the requisite revenues to support PKA’s financial obligations owing to doubtful viability of the project at first instance. If KDSB has not completed balance of project, it would be so entitled to because of PKA’s failure to pay KDSB, as first cause, that in turn constricted KDSB’s revenue sources to complete the rest of project for PKA; and

    (iii) “So if PKA says ‘I do not owe money to KDSB’, it is not compelled to pay the taxes owing to IRB” if imperatives of govt’s credibility to markets in (e) of the preceding posting above holds true just like in the case of (i).

    The salient points of this scandal are:

    Firstly, the greater portion of the blame should fall on PKA and the government for conceiving, and pushing ahead with a costly project already proven not feasible/viable. We tend to shift blame to KDSB and bondholders – and not, as it rightly should be to PKA and its backer the govt – simply because the latter is custodian of our public funds to be dissipated if KDSB, its bondholders and IRB get their respective cuts!

    Secondly much of escalation of PKFZ costs to over RM12 billion is due to interest payments because the govt keep on supporting a project, which until now is not viable or feasible, and hoping to recoup everything long run by 2051! It could cut loss now, make payments through PKA, KDSB, to redeem all bonds before their maturity dates. This course is not taken: for what reason – to save face ?

    Thirdly, the other mitigating factor is that those parts of payments by PKA to IRB as well as interest/compound interest payable by PKA on government loans to government (contributing to this RM12 billion) are all (I would imagine) monies from Govt’s/public offers’ left pocket to right pockets.

  14. #14 by Jeffrey on Wednesday, 30 June 2010 - 9:00 am

    Typo is last para – “public Coffers” – not public offers!

  15. #15 by k1980 on Wednesday, 30 June 2010 - 9:39 am

    So it is now RM12.5 billion + RM700 million
    = RM13.2 billion (and rising)

    Oh, ah kong!

  16. #16 by Godfather on Wednesday, 30 June 2010 - 9:50 am

    “We tend to shift blame to KDSB and bondholders – and not, as it rightly should be to PKA and its backer the govt – simply because the latter is custodian of our public funds ….” Jeffrey

    So, counsellor, could we as taxpayers sue the government for misappropriation of funds or dereliction of duty as custodian ? Any locus standi ?

  17. #17 by Godfather on Wednesday, 30 June 2010 - 9:56 am

    Most, if not all, of the KDSB bonds were placed with the EPF, so if KDSB defaults, the EPF subscribers would be affected. All discussions about the integrity of our capital markets being affected are disingenous because the markets took a risk on the letters of support, and they are allowed the full extent of the law to seek redress over this issue. In any case, the government has indirectly admitted liability, so taxpayers have to pay. So in addressing my question to Jeffrey above, perhaps I should also add:

    Can we sue the government for premature admission of liability ?

  18. #18 by Jeffrey on Wednesday, 30 June 2010 - 10:58 am

    To Godfather’s question, first the caveat I am no legal expert on these matters but based on general knowledge & sense, the answer is “no”.

    Government’s premature admission of liablity is ostensibly to protect capital markets. It may be “disingenious” to you but not to others who may deem it an exercise of public duty on govt’s part to make a judgment call for public interest given the bad situation of PKA’s cash flow problems and bad call to enter into the project in the first place.

    I don’t think one would have legal standing to sue the government directly for the above reason. Besides it does not affect any individual citizen or class of citizen directly – so any suit brought on behalf of rakyat for depleting national coffers by premature admission of liability will by nature constitute public interest litigation.

    Yes or no to locus standi for public interest litigation depends on society its cultural values social system etc, so the court would say, and in our case since the 1988 case where our Kit here sued Govt of Malaysia relating (I think to UEM), it was already decided that there’s no locus standi for class action of public interest nature. For so called legal styanding to arise there must be direct connection and nexus between government sued and the person suing – in that the latter party alone has to be directly adversely affected by the government wrong doing. It cannot be a case where he is affected in conjunction with, and he also represents all other or a class of fellow citizens allegedly similarly affected adversely. In milieu where since 1988 till now, rights recognition is not insisted broadly by Malaysians and certainly not acknowledged by ruling government, persons including Kit representing the general interest of rest of us public to sue for public good are considered “busy bodies, cranks and mischief makers” (the judge’s words-not mine) against which the judicial and court system should be protected.

    Vincent/Tan Berjaya’s case is different – it has legal standing basis/standing to sue if it chooses, aside from whether it could succeed-because Berjaya group has “special” interest (not general, diffused, societal, fragmented public interest) when it loses money directly from the govt’s flip flop on licensing sports betting.

    The other interesting question is even if forgetting that our law does not allow public interest litigation/locus standing – supposing the situation had been otherwise, the govt has been (successfully) sued for losing RM12 billion for wasting on PKFZ and has to pay citizens RM12 billion, where do you think its going take the damages of RM12 billion from? Its also from the public coffers.

    I understand the Godfather’s question as suing the govt, and not any particular Minister making bad call causing public to lose money. However even in the latter’s case, I think Minister’s bad call is protected by immunity unless on can prove specifically bad faith and acting out of scope of its duty, in private capacity.

  19. #19 by Jeffrey on Wednesday, 30 June 2010 - 11:02 am

    “…unless ONE can prove” in last para

  20. #20 by Godfather on Wednesday, 30 June 2010 - 11:08 am

    In a nutshell, what Jeffrey is saying is that the taxpayers are [email protected]

  21. #21 by Jeffrey on Wednesday, 30 June 2010 - 11:25 am

    In a nutshell the criteria for (locus standi) or legal standing to sue govt as set out in the 1988 case between Kit Siang and Govt of Malaysia is that of a direct connction/nexus on part of the suing party being immediately directly and adversely affected in pecuniary sense and not in some fragmented diffused societal and general sense of being affected individually as well as in conjunction with other fellow citizens, in terms of use or misuse of tax payers monies that he contributes also along and in conjunction with other fellow citizens, which otherwise could be used for other public good beneficial for all.

    I also think its probably the case in many other societies and judicial system. So in a nutshell tax payers are always ‘[email protected]’ when they, by majority vote, vote in the wrong guys and government…

    In a nut shell tax payers ‘[email protected]’ themselves by voting wrong those who abuse them, and in that sense they seserve the government they get and vote.

    Also in a nutshell in democracy the minority that vote the right guys will get [email protected] by the majority who persist in voting the wrong guys.

    Therefore in a nutshell Democracy of one man one vote where majority will prevails is in the case of majority exercising voting rights unintelligently a system of Mob Rule in denigration of Democracy than (ironcally) promoting it.

    And therefore in also a nutshell we are engaged in discussion in this blog for public dissemination to spread the right message so that more people will learn how to think correctly – and not vote wrongly!

  22. #22 by Jeffrey on Wednesday, 30 June 2010 - 11:27 am

    Are we finished with “nutshells”?

  23. #23 by monsterball on Wednesday, 30 June 2010 - 12:12 pm

    “Who are the bondholders?”…subject at Malaysiakini for all to read.
    Bond holders?….why UMNO B cronies la.

  24. #24 by House Victim on Wednesday, 30 June 2010 - 2:02 pm

    Godfather :
    “We tend to shift blame to KDSB and bondholders – and not, as it rightly should be to PKA and its backer the govt – simply because the latter is custodian of our public funds ….” Jeffrey
    So, counsellor, could we as taxpayers sue the government for misappropriation of funds or dereliction of duty as custodian ? Any locus standi ?

    http://blog.limkitsiang.com/2009/09/19/why-didn%E2%80%99t-attorney-general-gani-patail-prosecute-previous-transport-ministers-ling-liong-sik-and-chan-kong-choy-for-unlawfully-issuing-four-letters-of-support-landing-the-taxpayers-with-the-r/
    #41 by House Victim on Tuesday, 22 September 2009 – 11:36 pm

    The case is a collective fraudulent of the Cabinet, AG, PKA where
    1. The Cabinet has gone beyond AUTHORIZATION by the Parliament where a rough approval was given at only RM1 something billion, with details to be provided, and approved further.
    2. The letter of “Guarantee” by the MOT is not valid as
    a) only MOF has the legal standi to do so and subjected to point 1 above.
    b) As in Point 4.78 of the PWC PKFZ Report “there is no express or implied guarantee with regards to the
    Repayment Amount / Sum.” in the “Letter of Guarantee”
    so it cannot be a letter of Guarantee.

    3. PKA had not gone through the proper procedures for the additional amount, and, together with the details of expansion or extension.
    #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!!”

    Therefore, what had been done by PKA is raising fund is out of Authorization by the Government who had in turn failed to seek authorization from the Parliament.

    4. If the bond holder are EPF, then, another Fraudulent party will be the Authority on EPF on how can they bet the EPF on one which has not proper Letter of Guarantee?

    The Credibility of the Government already Broke when they had not followed Proper procedures allowing Fraud playing by the Cabinet, MOT, MOF and the Subordinates – PKA.
    IT WILL FURTHER BRREAK THE CREDIBILITY IN PAYING OUT WHERE the Government had NO Liability in paying to PKA for settlement of liability of PKA which has NOT been authorized.

    Tony Pua is correct that PKA should settle its own shit! And the Parliament should conduct the responsibility of those over-approving the Project, Soft-loan and etc..
    =====================================

    As evidenced by the Court case on Toll concession and the Water Concession, the General Public has legal Standi in challenging the Government, especially the Cabinet concerned on Breach of Trust, Fraud playing of
    Tax-payer money without being approved or properly approved which is MORE THAN MISAPPROPRIATION!! Operating in “Black Box” in the open eyes of the Parliament and the People!!

    The Immunity of any law would surely exclude deliberate Fraud laying!!

    The AG should have taken PKA and the Cabinet to court if they have a heart to do their job! And, again, from the legal point of view, AG has also Breach of Trust in fulfilling their Duties!!

    PR should search through the memo of Parliament meeting on when and What had been approved for PKFZ. Then, rebutting what had not been properly done!!

    IF GOVERNMENT IS NOT TAKING PROPER PROCEDURES, IT ALREADY BROKE!! PAYING TO WHAT IS NOT LIABLE IS JOKE AND BREACH OF TRUST!!

    If Malaysian Trade Union Congress (MTUC) andCharles Santiago can stand up for the Water Concession case, why can’t PR do it in this case??

  25. #25 by Godfather on Wednesday, 30 June 2010 - 2:45 pm

    Yes, the government is definitely treating us as nuts and therefore having no locus standi.

  26. #26 by sheriff singh on Wednesday, 30 June 2010 - 3:13 pm

    It is the war chest for the coming Sarawak State Elections. Be prepared.

  27. #27 by Godfather on Wednesday, 30 June 2010 - 3:16 pm

    No, Sheriff, the money is all gone. They are desperately trying to figure out the next scam to finance the 2013 elections. This is especially after the failure of Ascot’s betting licence.

    For Sarawak, the timber revenues have never stopped flowing.

  28. #28 by steven chan on Wednesday, 30 June 2010 - 5:34 pm

    Even though we have locus standi to sue the Govt for mismanagement the judges will always be in their favour so it will just go back to square one. Only thing to do is to boot them all out in the next GE.

  29. #29 by Godfather on Thursday, 1 July 2010 - 2:03 pm

    Robert Phang makes a plea to Najib not to pay the KDSB bondholders. He says that the government is accountable to the rakyat, and not to the bondholders.

    I guess we will have a disillusioned philantropist very soon.

  30. #30 by Jeffrey on Friday, 2 July 2010 - 1:43 pm

    Robert Phang says “PKA’s obligation is not towards bond holders” rakyat. Even former Transport Minister Ong Tee Keat (OTK) writes in his blog “these private bonds were secured against repayments from the various principal agreements between KDSB and PKA. The bondholders are not PRIVY to these agreements.” He said the responsibility of paying the bondholders was with KDSB and if default on payment occurs, the proper remedy should be obtained against KDSB.” On legalities. OTK also said the letters of support issued by the ministry in the early 2000s were not government guarantees. They were issued in contravention or Section 14 of the Financial Procedures Act 1957 requiring MOF’s approval, not given at time of issuance. Other legal reasons have been researched by House Victim in posting #24.

    What is not taken into consideration are the following: –

    1. whatever ambiguities and irregularities of legal status and bindingness of support letters, and whether they constitute legally binding guarantees have been removed by the subsequent conduct of govt and MOF to ratify/confirm these as binding guarantees. This is confirmed by AG, the government’s lawyer. The government is estopped from denying legal bindingness of MOT’s support letters which AG on behalf of govt holds out to bondholders as binding.

    2. On question of PRIVITY (raised by OTK) when hullabaloo first erupted concerning issue of MOT’s “irregularities” in relation to its ussuance without MOF’s approval required by Financial Procedures Act 1957, Bond holders could and would have called default on KDSB had it not been for Govt coming out to represent that it “ratified” and treated support letters as good as legal guarantees. Bond holders relied and still relies on this representation on Govt’s part. They therefore have a legal recourse against govt if it backtracks on that representation based on the privity between Govt and bond holder direct that in consideration of the latter not calling default on KDSB govt will treat and honour support leters as legal guarantees.

  31. #31 by Jeffrey on Friday, 2 July 2010 - 1:45 pm

    On the question of “merits” of bond holders entitlement (vis-à-vis taxpayers), don’t forget that (discounting leakage from corrupt practices) bulk of bondholders monies given to KDSB are per general understanding with MOT and all parties supposed to be channeled by KDSB to build infrastructure and industrial and factory lots in PKFZ owned by PKA in turn owned by govt.

    The Monies of bondholders have gone to these assets now held by PKA/Govt : why shouldn’t bondholders be paid? Surely PKA & Govt cannot get these assets acquired via bond holders money “free” – Never mind if asset value has devalued due to lack of demand, I guess Govt is amortising by soft loans to PKA in hope that some time in the future demand could arise to commercialise them.

    When harping on RM12 billion loss, don’t forget that:

    Firstly much of RM12 billion are interest, and interest on interest due to either financing from lender govt or the investors (bond holders) that include EPF up to 2051.

    So if bondholders like EPF don’t get paid by Govt when their monies are used to construct and acquire assets of PKA/Govt in PKFZ, is there fair to bondholders including EPF who is supposedly custodian also of rakyats savings – not to mention confidence in the private debt securities/financial market when dealing with govt agencies?

    Secondly as long as govt meddles with business confidence of these markets must be protected.

    Of course everytime government does business it is likely to lose and scr*w public monies – because it does not follow business parameters but pilfering principles – which is why our Lim Kam Put says govt not doing anything is the best.

    That is however another arena of debate from the question of how to move on relating to PKFZ.

    If you say Govt duty is to people, yes then govt should not do business and fritter public money. However if you allow it to do business through its agencies like PKA or other GLCs then you cannot say govt owes no duty to pay bondholders or the markets whose money raised in reliance of govt assurances, moral or legal, have been substantially utilised by turnley contractor KDSB to create asset value for govt – in PKFZ’s cse it’s the infrastructure, light industrial lots and factory warehouses constructed by turnkey KDSB on govt’s/PKA’s land in PKFZ.

  32. #32 by Jeffrey on Friday, 2 July 2010 - 3:13 pm

    So its not so much of the question of legality of letters of support – if they were ultra vires or illegal in the beginning – they have been since regularised by ratification/confirmation by top govt lawyer the AG on behalf govt telling Bond holders that they can treat and rely on these as legal and binding guarantees.

    The rela question is whether KDSB has performed its part of obligation of constructing, completing the turkey works of infrastucture and buildings in respect of as contracted with PKA. If KDSB has done its part then PKA has to pay KDSB for work done & materials brought in in the PKFZ. If PKA has an obligation to pay KDSB then govt has an obligation to pay because PKA is owned by govt.

    The revenue streams from PKA to KDSB (procceds of turnkey contract from PKA to KDSB) are probably securitised at initial stages by KDSB’s assignment of these payments (owing from PKA to KDSB) to bondholders represented by their trustee as security for bondholders’ financing and the debts from KDSB to the bondholders.

    This simply means that by such securitisation by way of assignment, the bondholders, as assignee, will have a right to directly claim the moneys from KDSB’s debtor, ie PKA and by extension PKA’s owner the govt of Malaysia (subject to KDSB having performed its part of the bargain of constructing and completing PKFZ’s infrastructure and buildings) .

  33. #33 by PoliticoKat on Monday, 5 July 2010 - 12:15 am

    How interesting. If I recalled correctly the BN government stated that the bonds were illegally issued and guaranteed using a fake letter. Now the BN government is actually backing said fake letter with real money.

    Does this not set a bad precedence for future con-man. Now any con-man needs to do is write a letter saying “the Malaysian government guarantees to give your money back”. Take his ill gotten gains and the Malaysian government will be forced to recognize the con-man’s letter as legit and pick up the bill.

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