PKFZ: All screwed up - Jeff Ooi

Port Klang Authority (PKA) releases audit report on Port Klang Free Zone (PKFZ)

In the February 3 PwC's audit report on PKFZ controversy, what do the PM, the Minister, PKA and even Kuala Dimensi have in common?

A RM12.5b royal cock-up!

Opening warning: If PKA failed to immediately restructure the MoF soft loan of RM4.632 billion, the first potential default in repayment may be as imminent as 2012.

Here's the final warning from PricewaterhouseCoopers on Page 48:

Shareholder's funds turned negative by Financial Year End (FYE) 2007. PKFZSB has been in net current liabilities position since its first financial period, FPE 2006. Therefore, without continuing support from PKA, PKFZSB would be insolvent.

Key weaknesses are in the two C's: Conflict of interest (leading to weak governance and weak project management) and cost overruns.

Who is to hang to dry?

While the actual masters may be shielded, the immediate collateral damage is a trio of BN politicians who were named in the damning PwC audit report, two of whom cited for "possible conflict of interest" involving the controversial project.

They are... drum roll... Deputy Finance Minister Chor Chee Heung, Backbenchers Club chairman and Bintulu MP Tiong King Sing, and Semanta state assemblyman Abdul Rahman Palil.

• CHOR CHEE HEUNG, at the material time, served as deputy chairperson of Wijaya Baru Global Berhad (WBGB) from April 2004 to July 2007. On the other hand, WBGB is the parent company of Wijaya Baru Sdn Bhd (WBSB), which in turn is the main contractor to turnkey developer Kuala Dimensi Sdn Bhd.
  
• TIONG KING SING, according to the report, was a 32% shareholder of WBGB, which has a 45% stake in WBSB, the main contractor to the turnkey developer. In addition, Tiong is also 70% shareholder of WBHSB, which is the sole proprietor of Kuala Dimensi, the turnkey developer.
  
• ABDUL RAHMAN PALIL was a PKA board member from 1997 to 2003, and also president of Koperasi Pembangunan Pulau Lumut Bhd (KPPLB), which were the original landowners of PKFZ project site.

Other parties cited for possible conflict of interest are:

• Perunding BE Sdn Bhd, which was the quantity surveyor consortium appointed by PKA to assess the final cost for the project, but it was previously acted for Kuala Dimensi.
  
• Rashid Asari & Co, a legal firm, was also cited for possible conflict of interest. It was appointed PKA’s legal advisor, but it had also acted in the sale of same land by KPPLB to Kuala Dimensi in 1995.

Interestingly, the PwC report did not make any reference to Tiong as having any conflict of interest.

UPDATES: PKA website at www.pka-report.com is acting up and access is barred. If you need a copy of the report (PDF, 1.05Mb) please let me know (jelutong at jeffooi dotcom). Some Little Birds may be ready to help.

And I certainly need volunteers to help me analyse the report for my Parliament debates (June 15-30).

Let's do the maths

How did the final figure of RM12.5 billion come about?

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