PKFZ arrests met with widespread cynicism

By Lee Wei Lian

PETALING JAYA, Dec 10 — The arrests of several former executives and vendors in connection with the scandal-hit Port Klang Free Zone (PKFZ) have failed to stem widespread perception that the real masterminds have yet to be accounted for.

Analysts and sources contacted by The Malaysian Insider say they harbour doubts whether those arrested today in connection with PKFZ represent “the real planners” behind the project’s woes, and the Najib administration’s handling of PKFZ will send a message on how it plans to address corruption.

The stakes involved in PKFZ are high for the government, which is attempting to reform the economy into one driven by private investment, and the port project has also hurt Malaysia’s image and honesty rankings.

Investors who financed the multi-billion PKFZ project recently expressed concern about whether the debt they hold will be repaid, even as Malaysia’s ranking tumbled to a record low of 56 out of 180 countries in anti-graft watchdog Transparency International’s 2009 corruption perception index, in part due to PKFZ-related issues.

Police this morning picked up Port Klang Authority ex-general manager Datin Paduka OC Phang; architect Bernard Tan Seng Swee; and Stephen Abok, the COO of Kuala Dimensi (KDSB), the main contractor of PKFZ.

They were later charged with criminal breach of trust (CBT) at the Klang Sessions Court.

The scandal is a sensitive one for the government, as it could potentially implicate former and present Barisan Nasional leaders based on findings of various probes and investigations.

PKA chairman Datuk Lee Hwa Beng had in August lodged a report with MACC against OC Phang, KDSB, Tan and Barisan Nasional backbencher chief, Datuk Seri Tiong King Sing, who has a controlling stake in KDSB.

The Parliamentary Public Accounts Committee (PAC) had in November recommended that the police and MACC investigate Phang and ex-transport minister Tan Sri Chan Kong Choy for CBT, and speculation has been swirling over the past few weeks that Chan would be arrested.

According to sources, Chan was also alleged in a special task force report on PKFZ as having failed to comply with treasury guidelines.

Cabinet documents that were leaked onto the internet also suggest that the cabinet was aware as far back as 2007 that PKFZ costs had exploded from RM1.1 billion to RM4.6 billion.

Attorney-General Tan Sri Abdul Gani Patail had also told the PAC that the four “Letters of Support”, issued by Chan and another ex-transport minister Tun Dr Ling Liong Sik from 2003 to 2006 for the RM4 billion worth in bonds issued by KDSB and its subsidiaries, were tantamount to Letters of Guarantee that had been unlawfully issued.

The issue of PKFZ’s bonds being backed by questionable letters of guarantee forced the government to reassure investors that it would guarantee the debt, which in turn led to the opposition accusing the government of bailing out KDSB.

Chan, however, has denied that the letters of support he issued were letters of guarantee.

Other prominent political personalities that have been linked to PKFZ include KDSB chairman and former Umno treasurer, Datuk Azim Zabidi.

When contacted, deputy president of Transparency International Datuk Mohamad Ali Hasan proposed that a public inquiry be held to get to the bottom of the PKFZ scandal and urged the new super task force that was established to probe the issue to speed up its reporting.

“We do not need just arrests. There needs to be a public inquiry so that the public knows what it going on,” he said.

The PKFZ project, an ambitious trans-shipment hub in the state of Selangor, was originally projected to cost less than RM2 billion but may now end up costing over RM12.5 billion by some estimates and had to be rescued with a RM4.6 billion government soft loan in 2007.

In October, PKA had also filed a civil suit against Phang for breach of duties in connection with the scandal-plagued PKFZ project.

PKA chairman Lee alleged that Phang had failed to comply with Treasury guidelines and safeguard PKA’s interest when entering into agreements for the construction of the PKFZ project.

PKA also filed a RM920 million lawsuit against KDSB and BT Architect.

This comes after it filed a separate RM720 million lawsuit against KDSB a week earlier, bringing the total amount being legally disputed to RM1.64 billion.

Reuters recently reported that corruption issues could hamper Prime Minister Datuk Seri Najib Razak’s bid to attract more investment.

It said that while measures announced to open up the economy have been impressive and attracted “flickers” of interest, the efforts could still founder due to cases like PKFZ.

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