November 04, 2009 14:14 PM

PKFZ: PAC Wants Chan Kong Choy, OC Phang Investigated For CBT

KUALA LUMPUR, Nov 4 (Bernama) -- The parliamentary Public Accounts Committee (PAC) has recommended that former Transport Minister Tan Sri Chan Kong Choy and Port Klang Authority (PKA) former general manager Datin Paduka O.C.Phang be investigated for criminal breach of trust over the Port Klang Free Zone (PKFZ) scandal.

They should be investigated over the wrongful issuance of three letters of support by Chan and three letters of undertaking by Phang, according to the PAC report on the PKFZ issue, copies of which were distributed in the Dewan Rakyat on Wednesday.

The report said the PAC was informed by the Attorney-General that the three support letters issued by Chan, the transport minister then, and three letters of undertaking issued by Phang were implicitly a form of guarantee from the government to ensure that there would be allocations for PKA, to enable it to meet its obligations under the development agreement.

"Therefore, a thorough investigation must be conducted by the Malaysian Anti-Corruption Commission (MACC) and police into this matter as the letters were issued without the approval of the Finance Ministry, as required under Section 14(1) of the Financial Procedure Act 1957.

For their actions, Chan and Phang can also be charged with criminal breach of trust under Section 409 of the Penal Code, read with Section 409B.

Section 409 provides for a minimum jail sentence of two years and maximum of 20 years plus whipping, and also a fine, upon conviction.

The report by the PAC, headed by Datuk Seri Azmi Khalid, also found the issuing of the letters of undertaking by Phang to be against the government's decision because when approving the PKFZ project, the government decided that the project should be through self-financing by PKA.

It said Phang and the transport ministry had failed to inform the Cabinet early on PKA's inability to finance the project itself although the matter had been raised in the Attorney-General's Report on the PKA financial reports for 2003, 2004, 2005, 2006 and 2007.

Besides that, they also failed to discuss with the finance ministry and Economic Planning Unit about obtaining allocations for the project.

Phang was also found to have committed misrepresentation when issuing the letters of undertaking to the PDS (Private Debt Security) trustee, OSK Securities Berhad, stating that PKA would be asking the government to remit funds from the budget allocation to the special reserve account or special code of account managed by PKA when it did not have the transport ministry or finance ministry's approval on the matter.

The PAC also found that the cost of the project could be reduced by PKA if it followed the finance ministry's directive on the method of financing the project, that was, by issuing bonds with government guarantee as the interest rate on the bonds would be around four per cent compared to the interest charged by Kuala Dimensi Sendirian Berhad (KDSB) at 7.5 per cent.

It said the failure of Phang, who was also the chairman of PKFZ board of directors, and the transport ministry's secretary-general, to ensure that all the laws and regulations pertaining to the implementation of the PKFZ project were adhered to, should be viewed seriously.

The PAC therefore proposed that legal action be taken against those responsible.

The PAC report dated Oct 27 also identified three matters that should be probed by the MACC, including the conflict of interest in making decisions involving consultant BE Sdn Bhd and the legal firm, Rashid Asari & Co.

BE Sdn Bhd was a member of the quantity surveyor consortium appointed by PKA to determine the actual cost of the project and had also acted for KDSB for the infrastructural works, while Rashid Asari & Co was involved in two of the four development agreements signed between PKA and KDSB.

The PAC also recommended that the MACC probe several actions by Phang on the PKFZ project, such as appointing KDSB as the contractor, signing the agreement on the sale of land and on PKFZ development with KDSB, and appointing Jebel Ali Free Zone International (JAFZI) as consultant and then terminating its service without the approval of the PKA board of directors or the finance ministry.

It also wants the issuance of the letters of undertaking by Phang which contravened the Financial Procedure Act 1957 to be investigated, as well as other violations of the laws, procedures and government directives with regard to the PKFZ project by her as PKA general manager.

It said Phang should have known the laws and procedures as she had served in several government departments and ministries before, including the finance ministry.

The PKFZ project, launched in July 2004, was based on the JAFZI model in Dubai and is renowned internationally as a successful and rapidly growing free zone.

The PAC began probing into the PKFZ project when it became a public issue as the cost had spiralled from RM1.957 billion to RM4.947 billion.

The committee met between June 11 and Sept 3 this year where it interviewed witnesses, including Transport Minister Datuk Seri Ong Tee Keat and former minister Tun Dr Ling Liong Sik, besides Chan.

In its probe, it also referred to the Auditor-General's reports and the report from PricewaterhouseCoopers, besides asking the National Audit Department to check and confirm several matters with regard to the PKFZ plan and implementation.

The government had on Sept 9 also decided to set up a special task force headed by the Chief Secretary to the Government to identify the weaknesses in implementing the PKFZ project and managing the facility, as well as propose remedial measures.

-- BERNAMA

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