PETALING JAYA: Prime Minister Najib Tun Razak, who is also Finance Minister, has been urged to immediately bar the Transport Ministry from paying off Kuala Dimensi Sdn Bhd's (KDSB) debts.
PJ Utara MP Tony Pua said the government was under no obligation to pay the company’s debts if contracted works for the Port Klang Free Zone (PKFZ) was incomplete and not done to specifications.
“It makes absolutely no sense for the government to insist on making the payment when the government itself agrees that work has not been carried out.
“The only possible reason for Transport Minister Kong Cho Ha to insist on making the payment, while overriding the decision of the Port Klang Authority (PKA) board of directors who had received the appropriate legal advice, is to protect KDSB and ensure that it does not get into financial troubles with the bondholders,” said Pua, who is also DAP’s national publicity secretary.
Pua was commenting on a statement by the Transport Ministry yesterday.
The ministry had said that PKA would have to make the payment to special purpose vehicles as set out in the payment schedule.
It said “the government had taken all relevant factors into consideration, including the government’s commitment to bondholders, and PKA’s obligations under the agreements signed... PKA had also given an undertaking to make payment to the special purpose vehicles.”
“The ministry’s reason for wanting to make the full payment due amounting to RM372 million as at Jiuly 31, 2010, is completely unacceptable given the fact that PKA is currently disputing the amount of work done by the PKFZ project contractor, KDSB,” Pua said.
He said PKA had also claimed that work on the project was incomplete and not to specifications.
As such, he said there was no legal obligation on the part of PKA or the government to make any payment to any party until these disputes are resolved, especially since the PKA has already filed a suit in the High Court to contest up to RM1.4 billion worth of works.
Undertakings
Explaining the details of the contract, Pua said that as part of the bond agreement's security arrangements, KDSB had issued two letters of undertaking.
The first letter is for the construction, development and completion of the project on a turnkey basis. The second one is to cover any shortfall in the amount payable by PKA vis-a-vis payment obligations under the bond after taking into account the credit balance in the escrow account.
He said KDSB had also granted a “power of attorney to bondholders as security to ensure that the development works are completed as per the terms and conditions of the agreement.
“The bondholders can, however, only invoke and exercise this right if KDSB has defaulted under the agreements.
“The two letters and power of attorney basically means that if the government fails to make payment for the project to the bondholders due to incomplete works, the bondholders will then demand from KDSB any shortfall in the amount payable by PKA,” he said in a statement this morning.
Pua said legal action could also be initiated against KDSB for failing to complete the project and for the bondholders to take over the development works of the project.
“These actions will obviously mean substantial losses for KDSB, a company owned by Barisan Nasional (BN) backbencher's chairman, Tiong King Sing.
“Hence to avoid this, Kong has chosen to instruct PKA to make the payments which are 'due' despite the on-going dispute and litigation, to ensure that one of the biggest beneficiaries of BN patronage projects remains an on-going concern.
“What is perhaps most disappointing is the fact that this decision comes at a time when the government has preached prudence in expenditure and has urged the people to accept substantially reduced subsidies.
“Yet when it comes to one of its own (government-linked companies) like Syabas or KDSB, the BN government will not hesitate to extend hundreds of millions of ringgit to assist these them,” he said.
Pua suggested that the Finance Ministry should request that in the event any payments is made, it should be channelled into a special trust or escrow account manned by independent auditors until the government's litigation with KDSB has been resolved in the courts.
No comments:
Post a Comment