Developer doubts audit report, 'we'll sue' threat
Andrew Ong | May 29, 09 9:22pm
A key player in the Port Klang Free Zone project has questioned the integrity of the audit report issued by international firm Pricewaterhouse Coopers (PwC) on the
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controversial project.

At a press conference in Petaling Jaya late this afternoon, Wijaya Baru Holdings Sdn Bhd (WBHS Deputy CEO Faizal Abdullah said the audit report had ‘mischievously' left out certain information and this omission was damaging to his company.

kuala dimensi kdsb pc on pkfz report 290509 faizal abdullah 01WBHSB is the sole proprietor of Kuala Dimensi Sdn Bhd, the turnkey developer for PKFZ. PKFZ is managed by the Port Klang Authority (PKA) which is under the authority of the Transport Ministry.

Faizal (left) said that on page 25 of the audit report, PwC had wrote material that was ‘highly defamatory' to his company with regards to potential conflicts of interest arising from the sale of the land on which PKFZ now sits.

"The report failed to specify the process by which Kuala Dimensi bought the land from KPPLB, and (how it was sold) to PKA seven years after that.

"Without revealing the process, people will think that there was collusion," said Faizal.

Land deal aboveboard

He explained that in 1995, Kuala Dimensi bought the land from Korperasi Pembangunan Pulau Lumur Berhad (KPPL following a KPPLB annual general meeting attended by more than 600 members.

klang pkfz pricewaterhousecoopers pkfz the parties involved 280509The PwC audit report had named Sementa assemblyperson Abdul Rahman Palil, who was a PKA board member between 1997 and 2003.

The report said that Abdul Rahman's previous position as KPPLB president could have given rise to a possible conflict of interest in the project.

Faizal said that Kuala Dimensi had intended to turn the land, which was swamp land at the material time, into a mixed-development area consisting of commercial, agricultural and residential projects.

Following this, PKA started negotiations with Kuala Dimensi to purchase the land for the development of the PKFZ project in late 1998. The deal was finally inked in 2002.

"Everything was done aboveboard," Faizal stressed, adding that in any event, PwC had gone beyond its scope in looking at the land deal.

'In bad faith' claim

Faizal also took PwC for to task for using ambivalent words in its report which he said may tarnish Kuala Dimensi's image.

port klang free zone pkfz white elephant 280509"Why use the words ‘the potential interest overcharge' or ‘may have wrongly compounded'. Can't they clearly state whether there is overcharging? Is it because they are not sure themselves?" he said.

Faizal said that Kuala Dimensi was currently compiling information in order to rebut the various allegations.

"This just demonstrates that a lot of things in the report are not the gospel truth," he said, adding that WBHSB had been advised that PwC did not act in good faith.

Asked if legal action was an option, Faizal replied: "Firmly, yes! It may be against both (PKA and PwC) or just one of them."

Faizal also said that PwC should have been a ‘gentleman' and not impose conditions which absolved PwC of legal liability.

Faizal also revealed that PKA has been on schedule with its payments to Kuala Dimensi amounting to RM360 million which Faizal said was between 20 to 30 percent of the total amount due.

Support letters or guarantee letters?

Faizal also confirmed that ‘letters of support' by past transport ministers Ling Liong Sik and Chan Kong Choy to back Kuala Dimensi's issuance of RM4 million worth of bonds were not guarantee letters.

"As a contractor and as a layman, it is more of a letter of comfort and support," he said.

The letters were part of the three-inch thick appendix to the audit report, available for viewing at the PKA headquarters in Port Klang until June 10.

When pointed out that the documents appeared like guarantee of returns letters, Faizal said the onus was on the investor to check the contents of these letters of support.

ong tee keat pkfz klang visit 060508 12He said the letters of support were necessary in order for a rating agency to grant ratings.

Faizal lamented the fact that while the PKFZ project was viable, it has been plagued with bad publicity and this caused clients to turn away.

He revealed that WBHSB shares were also affected and were now at a RM0.30 low from a RM2 high five years ago.

But the culprits involve in this I belief will go free as usual the Ministry and government will wash off the hand


Ong: We will not close PKFZ
Jun 3, 09 1:38pm
Transport Minister Ong Tee Keat today said the government will not bow to opposition's calls for a closure of the Port Klang Free Zone (PKFZ), despite the damning disclosure last week following the release of an audit report by PriceWaterhouseCoopers (PwC).
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ong tee keat pkfz klang visit 060508 12The minister, in his latest blog posting while accompanying Prime Minister Najib Abdul Razak's official visit to China, said his ministry and government is working intensely on a roadmap to recovery for PKFZ.

"Closing down PKFZ as suggested by the opposition is clearly a knee-jerk reaction, which spells of political agenda and a defeatist attitude," said Ong.

"We must make wise decisions based on the best input available from relevant parties. We should take this situation seriously when billions of ringgit and the future of our children are at stake," added the minister.

penanti by election 300509 lim kit siang and pkfz report.jpgOng also blasted veteran opposition politician Lim Kit Siang (right), claiming the DAP supremo did not keep up-to-speed on the government's plan to resolve the PKFZ scandal.

"He asked me for the way forward when I have clearly spelt out that the Port Klang Authority (PKA) would act on four fronts on the findings on the very day the report was released," he said.

The four fronts are:

* To seek legal recourse for contractual shortcomings or irregularities;


* To seek professional advice on the restructuring of financial obligations of PKA;


* To improve and tighten governance issues at management and board levels of PKA;


* To further beef up the day-to-day management of PKFZ to strengthen operations and improve its financial returns.


‘We're not sitting still'

Ong said at this very moment, professional experts and entrepreneurs have been roped in to provide their views and expertise on how to bring PKFZ back on track for which it was originally conceived.

"We are not sitting still and playing rhetoric. In the weeks and months ahead, my ministry and PKA will put in place a series of action plans to lessen the pain on taxpayers," he said.

"If the opposition has constructive inputs, we would be more than happy to accommodate their ideas on how to save the project and make it thrive."

The minister said he would continuously engage and update the public on the actions that would be taken under the roadmap.

"Therefore, I see no reason to waste valuable time to engage in fruitless public debates of any form that does not help to solve the problems.

"It appears that public debates are the opposition's obvious idea of resolving the country's ills."

Ong also said he has instructed the PKA to submit 14 copies of the report as well as the appendices to members of the Public Accounts Committee (PAC) for scrutiny.

The PKFZ audit report indicated the project has ballooned from RM1.96 billion when the free-trade zone was conceived in 2001, to a staggering RM12 billion.
pkfz report lee hwa beng pc 280509 2
The astronomical figure includes mounting interest costs, according to the PwC report released last week.

"The original estimated cost for the land purchase and development works in 2001 was RM1.957 billion ... (the) project outlay has escalated to RM3.522 billion as at Dec 31, 2008.

"Interest cost of the deferred payments to KDSB (Kuala Dimensi Sdn Bhd) amounted to RM1.425 billion resulting in a total project outlay of RM4.947 billion," the report stated.

Why MCA and UMNO members are so quiet about this issue they know well public money has been misused and whats action have the government taken to identify and charge the culprits in this dilemma
If the BN government doesn't act swiftly and take action against the culprits
without fear or favor they tend to loose again peoples confidence on Premier aswhole...................,

PKFZ suit: Firm claims it helped save millions
Hafiz Yatim | Jun 4, 09 3:25pm
A consultancy company which has filed a RM147 million suit against Port Klang Authority (PKA) has claimed it had helped save the Transport Ministry from further losses following its failed venture with Dubai-based Jebel Ali Free Zone International.
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ong tee keat pkfz klang visit 060508 12The company, Mega Wan Corporate Services Sdn Bhd, which named PKA as the defendant, filed the lawsuit at the Kuala Lumpur High Court on Monday for unpaid corporate advisory services over a period of 18 months from Jan 15, 2006.

The revealing statement of claim was served to PKA yesterday and a copy has been subsequently made available to reporters.

Among its services rendered included facilitating the RM4.6 billion from the Finance Ministry, where it undertook to provide consultation with the relevant parties concerned.

Following Mega Wan's re-engineered cash flows and appeals, the Finance Ministry agreed to revise the terms and conditions of the soft loan that was agreed previously.

jebel ali free zone port dubai 040609 01Mega Wan’s statement of claim detailed the background of the deal where the Port Klang Free Zone (PKFZ) - a project entrusted by the government to PKA - was envisaged to be a transshipment mega-hub mirroring the successful Jebel Ali Free Zone in Dubai (left).

PKA had subsequently appointed Kuala Dimensi Sdn Bhd (KDS as the free-zone developer and Jebel Ali was hired as managers of the project on Oct 24, 2003 with the task to conceptualise, manage and market the project.

Jebel Ali run day-to-day operations

According to the agreement, Jebel Ali was required to look after the day-to-day operations of PKFZ. However, Jebel Ali had no legal entity in Malaysia and initially operated through PKA.

This caused problems to Jebel Ali, and on its insistence a “vehicle” - the Port Klang Free Zone Sdn Bhd (PKFZS - was established, and it was wholly owned by PKA.

PKFZSB held a board meeting on Dec 7, 2005, where it agreed to appoint Chuck Heath, Samir Chaturvedi and Noel Gulliver from Jebel Ali as director, alternate director and PKFZSB managing director respectively.

Mega Wan claimed the appointments were not made known to PKA resulting in Jebel Ali given a free hand in the operational and financial management of PKFZSB, which resulted in poor management practices.

ong tee keat pkfz klang visit 060508 05Following Mega Wan's appointment in January 2006, it informed PKA of the poor management practices by Jebel Ali and following consultations, the consultancy firm took steps to address the issues surrounding PKFZ by Jebel Ali.

Subsequently, PKA executed a service and operation agreement between it and PKFZSB on Oct 31, 2006, to ensure Jebel Ali’s management of PKFZ would be in line with the intention of the port authority.

From that agreement, a supplementary agreement was made between PKA, PKFZSB and Jebel Ali for additional provisions to their management agreement.

However, Jebel Ali refused to comply with the supplementary agreement that resulted in Mega Wan being required to play a “more extensive and multi-faceted role” of a corporate advisor.

Mega Wan alleged it advised PKA to assert and review their rights under the management agreement. However, Jebel Ali refused to cooperate with PKA which led to an impasse and eventual mutual termination between PKA and Jebel Ali.

Project could have been in worse shape

Mega Wan claimed without its involvement in dealing with Jebel Ali, the project would be a major disaster for PKA, the Transport Ministry and the nation, as the costs would have been higher than the development costs of RM4.63 billion.

The was because PKA would have to fork out management fees to Jebel Ali for a period of 15 years, disbursement of funds to manage PKFZSB under Jebel Ali's multi-million ringgit budgets and other costs attached to the project such as interest payable to KDSB and Finance Ministry.

port klang pkfz mega wan bill to pka 040609The company claimed its involvement since December 2005 has enabled PKA to re-position itself on the correct track and steer the PKFZ project to what it was originally intended for.

Mega Wan claimed that its timely involvement had prevented Jebel Ali from continuing as manager, which would result in claiming autonomous control of the PKFZ project, and PKA would be shackled by the agreement to disburse funds to Jebel Ali.

The consultancy firm claimed that PKA had little or no control over the financial commitments with Jebel Ali and PKFZSB, before its involvement.

Mega Wan alleged it was with its “foresight, wisdom and untiring efforts” which had managed to steer PKA out of trouble and making it to break free from Jebel Ali, without any form of compensation.

Mega Wan’s multi-million ringgit bill

It also claimed PKA's release from the agreement with Jebel Ali had allowed the authority to freely manage PKFZ, and this is attributed to its involvement from January 2006 to August 2007, which it is charging RM97.27 million.

Mega Wan claimed it provided on-going advisory services to PKA in relation to the PKFZ project from August 2007 to May 2008 and for this, it is charging another RM1.915 million.

The company is charging another RM48.665 million, in advising and preparing the marketing target and operation viability of PKFZ, a projected profit-and-loss account, consolidated cash flow and viability analysis.

It claimed that it sent invoices to PKA on Sept 12, 2008, and numerous reminders were also sent. However, no payment has been paid.

Following this, it is claiming the total of RM147 million, plus interests, costs and other relief deemed fit by the court.

Malaysians Cepat Lupa I am amazed with you guys out there ,when I ran the topic Malaysians are born suckers ,I guess I offended alot of them but did you realize
thats the truth ,I received 1000s of email complimenting and condemning again that the truth.

I case of this PKFZ you guys will sleep over it and forget about it ,you are always welcome to speak your mind constructively and dont worry about the enforcement ,we are not condemning we are correcting .
I was stopped by SB guys and questioned but
they know I have not mention anything wrong but they caution me, for the country to move forward we must think out of the box and comment what is right ,then only we all can see changes, we should not be buyers weather they are from the government or opposition when we find something is not right voice it out .

Sleep over it and continue sleeping we will end no where

Task force and two panels to act on PKFZ report
By ROYCE CHEAH, NG CHENG YEE and BEH YUEN HUI

PUTRAJAYA: The Government has set up a special task force and two committees to seriously deal with issues arising from the Port Klang Free Zone (PKFZ) audit report, with one of the committees being headed by anti-corruption body Transparency International Malaysia.

Transport Minister Datuk Seri Ong Tee Keat said the Port Klang Authority (PKA) task force was formed together with a PKA ad hoc corporate governance committee and a PKFZ executive committee.

“The PKA task force has been given two months to give its recommendations on how to right the wrongs and pursue appropriate legal remedies,” Ong said.

When asked if the results from the task force would eventually lead to long drawn-out legal battles, Ong said it was not fair to pre-judge the matter at this juncture.

According to a statement by PKA, the task force is to be headed by senior lawyer Vinayak Pradhan, from legal firm Skrine.

He is to be assisted by Skrine partner Lim Chee Wee, PricewaterhouseCoopers Advisory Services (PwCAS) managing director Chin Kwai Fatt and PwCAS senior executive director Lim San Peen.

Ong also said he would not engage in a tit-for-tat with the Opposition, which had been harping on a number of issues surrounding the PKFZ project.

“A new website, www.pkfznews.com.my, will address all these questions.”

Ong said the website would be completely transparent in addressing all questions.

A check on the website showed that a number of questions raised by various quarters were answered there.

“There should be no apprehensions.

“I understand that the whole nation is watching the development as it unfolds. We are mindful that we must act in the best interest of the people,” Ong told a press conference yesterday.

Asked whether this meant the ministry was serious in taking action against those responsible for the escalating cost, Ong said the ministry would have to work within its jurisdiction.

The PKA ad hoc corporate governance committee, led by TI-M president Datuk Paul Low, would put in place a long-term control mechanism to ensure the PKA board and management follow good governance rules and regulations.

The PKFZ executive committee meanwhile is to be headed jointly by PKA chairman Datuk Lee Hwa Beng and Chartered Institute of Marketing Malaysia president Tan Sri Dr James Alfred.

It has been tasked with reviving the PKFZ, which may see its initial cost of about RM2bil escalate to a much higher amount due to interest charges.

Lee said the only cost involved in setting up the committees and task force would be professional fees to be paid to those in the task force.

“Those in the committees would only be getting meeting allowances,” he said, adding that it would take two weeks to decide on the terms of reference for the task force.

In Kuala Lumpur, Bernama reports that the Public Accounts Committee (PAC) queried the PKA yesterday over the escalating cost of the PKFZ project.

Its deputy chairman Dr Tan Seng Giaw said the PAC had set aside two days to enable PKA officials to shed light on the fiasco.

“We want to know who decided to ignore the Attorney-General’s recommendation that the land in Pulau Indah should be acquired by the Government,” he told reporters after meeting PKA officials.

PKFZ - royal commission urgently needed
Gooi Hsiao Leung | Jun 11, 09 4:54pm
I refer to the Malaysiakini report
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PKA gets cracking on PKFZ report.

Barely two weeks after Ong Tee Keat had vowed to publicly address all questions relating to the PKFZ scandal, the MCA president and transport minister appears to be suffering severe fatigue from the hooks and punches he is receiving from the public and the opposition.

Most notably of late from none other than the DAP supremo, Lim Kit Siang, himself.

Ong Tee Keat now says he will no longer engage in a 'tit for tat' battle with the opposition, despite his earlier pledge to answer all questions over the scandal. Instead, Ong has set up a new website which he claims will address these questions.

I am truly disappointed at Ong's seemingly apathetic refusal to engage the 36 specific and serious public interest concerns, and the questions raised by Lim Kit Siang.

The latest of which is the legality over the 'Letters of Support' issued by Ong's two former party bosses - Ling Liong Sik and Chan Kong Choy - culminating in the PKA's losses potentially reaching over RM12.5 billion.

The new PKA website, purportedly set up to answer the opposition and public's questions, is nothing but a sham, containing current official government press statements without substantively addressing the public's questions over the specific issues of concern and findings highlighted in the PKFZ report.

To add insult to injury, public access to the online PKFZ report and appendices expired on June 10 - just two weeks after the release of the report itself. Anyone who has tried to look at the report will understand how difficult and restrictive access is.

From handing over your name and IC, to indicating your acceptance to the terms and conditions of the release - including a bizarre term that 'no person may use or rely on the report to come to any conclusions'.

Once you gained access to the voluminous online report, you were required to read it in its entirety online - no option to download, save or print the report for ease of reading.

So much for the 'openness and transparency' espoused by Prime Minister Najib Abdul Razak's 'People First, Performance Now' administration.

What are the official terms of reference for setting up the new task force? There is nothing in Ong's press statement to indicate that this task force will investigate any wrongdoing of those directly responsible for PKA's current state of affairs.

Those directly involved in the PKFZ affair must be made accountable to the public - from the cabinet ministers responsible for endorsing the policy decision to acquire the land for PKA at a highly controversial inflated price of RM1.088 billion, to the PKA board, comprising of representatives from the ministry of finance, the Economic Planning Unit of the Prime Minister's Department, and the ministry of transport overseeing this project - in whose hands they incurred colossal losses.

The rotten stench of this scandal rises to the highest echelons of power.

Nothing short of establishing an independent royal commission of inquiry, bringing those involved in the scandal to answer directly to the public, will address the public outrage and disgust over the PKFZ scandal.