Lim Kit Siang: 5 unanswered questions on PKFZ Scandal.

Unanswered questions about the RM4.6 billion PKFZ scandal

9 April, 2008

The five questions about the RM4.6 billion Port Klang Free Zone scandal that must be answered by Ong Tee Kiat’s report

I welcome the undertaking by the Transport Minister, Datuk Ong Tee Kiat to give a full report on the RM4.6 billion Port Klang Free Zone (PKFZ) bailout scandal, as during the last parliamentary meeting, his predecessor Datuk Chan Kong Choy was “on the run” to evade accountability and responsibility on the many questions raised on the issue.

There are at least five questions about the RM4.6 billion PKFZ scandal which cry out for answer, and which have now become the responsibility of the new Transport Minister, viz:

1. Was it true that when the Port Klang Authority and the Transport Ministry insisted on buying the 1,000 acres of Pulau Indah land for PKFZ at RM25 psf on a “willing buyer, willing seller” basis, in the face of strong objection by the Attorney-General’s Chambers and the Treasury which had recommended that the land be acquired at RM10 psf, the Cabinet had given its approval subject to two conditions: (i) categorical assurance by the Transport Minister that the PKFZ proposal was feasible and self-financing and would not require any public funding; and (ii) that every RM100 million variation in the development costs of PKFZ would require prior Cabinet approval.

2. In the event, the first condition was breached when the PKFZ project ballooned from RM1.1 billion to RM4.6 billion requiring government intervention and bailout while the second condition was breached with the original PKFZ development costs of RM400 million ballooning to RM2.8 billion without any prior Cabinet approval ever sought for every RM100 million increase in development costs.

3. The Transport Minister had unlawfully issued four Letters of Support to Kuala Dimensi Sdn. Bhd (KDSB), the PKFZ turnkey contractor — to raise RM4 billion bonds, which were regarded as government guarantees by the market. The Transport Minister had no such powers to issue financial guarantees committing the government, as it could only be issued by the Finance Minister and only after Cabinet approval. The first Letter of Support was issued by the former Transport Minister, Tun Dr. Ling Liong Sik on May 28, 2003, which was Liong Sik’s last day as Transport Minister while the other three were issued by Kong Choy.

4. Whether it wasn’t true that in recognition that the four unlawful “Letters of Support” of the Transport Minister had nonetheless given implicit government guarantee to the market that the Cabinet had in middle of last year gave retrospective approval for the unlawful and unauthorized four Letters of Support by the Transport Ministers in the past four years creating RM4.6 billion liability for the government in the bailout of PKFZ.

5. Why no action had been taken against the two previous Transport Ministers, both Liong Sik and Kong Choy, as well as the government officials responsible for the unlawful issue of the four “Letters of Support” - getting the government embroiled in the RM4.6 billion PKFZ scandal?

I will again be demanding for full government accountability and responsibility for the RM4.6 billion PKFZ bailout scandal.

I have submitted the following question on the PKFZ scandal for the first meeting of the 12th Parliament, beginning on April 28, 2008:

“To ask the Minister for Transport to fully explain the RM4.6 billion Port Klang Free Zone (PKFZ) bailout scandal, i.e. on its viability, history of impropriety of land transactions, illegal issue of Letters of Support, Cabinet bailout, retrospective ratification of past illegal decisions by previous Transport Ministers.”

Lim Kit Siang