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Speech by Lim Kit Siang at the launching of Lee Hwa Beng's book: “PKFZ: A Nation's Trust Betrayed” on Tuesday, 17th April 2012: 

A Pakatan Rakyat government in Putrajaya will set up a Royal Commission of Inquiry into the RM12.5 billion PKFZ scandal

Firstly, I thank the organisers for inviting me to this book launch for Dato' Lee Hwa Beng's publication “PKFZ: A Nation's Trust Betrayed” (written together with Lee Siew Lian) in the company of Datuk Ong Tee Keat, one of the early “transformation” ministers in the “transformation” Cabinet of Prime Minister, Datuk Seri Najib Razak.

I commend Dato' Lee Hwa Beng for his book on his three-year “national service” as Port Klang Authority Chairman after the 2008 general elections to try to pry open the Port Klang Free Zone (PKFZ) scandal to promote a culture of accountability, integrity and good governance.

Unravelling the full horrors of the PKFZ scandal – which I have described as not only “a can of worms” but “a swamp of crocodiles” - and bringing to justice those responsible for this “heinous crime” against the nation is, however, a still very uncompleted work.

The PKFZ scandal was one of the dominating issues in Parliament before and after the 12th general elections on March 8, 2008.

On 27th November 2007, I moved a censure motion in Parliament by way of a token RM10 salary cut against the then Transport Minister, Datuk Chan Kong Choy for the consistent wall of denial, equivocation and prevarication in refusing to give full and proper parliamentary accounting for the PKFZ scandal.

I tried to make things easy by reducing the public furore over the PKFZ scandal into five simple questions. After each question, I specifically asked Chan to give a “yes or no” answer – to deny if the facts I had mentioned were untrue, and to explain and justify what he and the government had done if what I had said was undisputed and true.

The five questions were:

  1. Was it true that when the Port Klang Authority and the Transport Ministry insisted on buying the 1,000 acres of Pulau Indah land for PKFZ at RM25 psf on a “willing buyer, willing seller” basis, in the face of strong objection by the Attorney-General’s Chambers and the Treasury which had recommended that the land be acquired at RM10 psf, the Cabinet had given its approval subject to two conditions: (i) categorical assurance by the Transport Minister that the PKFZ proposal was feasible and self-financing and would not require any public funding; and (ii) that every RM100 million variation in the development cost of PKFZ would require prior Cabinet approval.

  2. In the event, the first condition was breached when the PKFZ project ballooned from RM1.1 billion to RM4.6 billion requiring government intervention and bailout while the second condition was breached with the original PKFZ development cost of RM400 million ballooning to RM2.8 billion without any prior Cabinet approval ever been sought for every RM100 million increase in development cost.

  3. The Transport Minister had unlawfully issued four Letters of Support to Kuala Dimensi Sdn. Bhd (KDSB), the PKFZ turnkey contractor, to raise RM4 billion bonds, which were regarded as government guarantees by the market. The Transport Minister had no such powers to issue financial guarantees committing the government, as it could only be issued by the Finance Minister and only after Cabinet approval. The first Letter of Support was issued by the former Transport Minister, Tun Dr. Ling Liong Sik on May 28, 2003, which was Ling's last day as Transport Minister while the other three were issued by Chan.

  4. Whether it wasn’t true that in recognition that the four unlawful “Letters of Support” of the Transport Ministers had nonetheless given implicit government guarantee to the market that the Cabinet had in mid-year (2007) to give retrospective approval for the unlawful and unauthorized four Letters of Support by the Transport Ministers in the past four years creating RM4.6 billion liability for the government in the bailout of PKFZ.

  5. Why no action had been taken against the Transport Ministers, Ling and Chan, as well as the government officials responsible for the unlawful issue of the four “Letters of Support”.

In his reply in Parliament on the RM10-cut motion, Chan completely ignored the five questions on the core issues of the PKFZ scandal, as well as other questions which I had posed, including:

  • How Chan could claim that he did not know that as Transport Minister he did not have the powers to issue Letters of Support which were tantamount to government guarantees in the issue of RM4 billion bonds by Kuala Dimensi Sdn. Bhd, as only the Finance Minister had such powers and also after getting prior approval by the Cabinet. How could Chan claim ignorance of this important financial principle when Chan had been Deputy Finance Minister for close to four years from Dec. 1999 to June 2003? Did Chan completely waste his close to four years as Deputy Finance Minister and learnt nothing?

  • Why Chan did not seek the advice of the Legal Adviser of the Ministry of Transport on whether he had the authority and powers to sign the Letters of Support but relied instead on advisers from outside the Ministry?

  • Why for more than three years from May 2003 to December 2006, the Finance Ministry was in the dark and completely unaware that four unauthorized Letters of Support involving RM4 billion bonds had been issued by the Transport Ministers as it was only in December 2006 that the Treasury was informed by the lead arranger for the bonds that such Letters of Support had been issued by the Transport Ministers and that they constituted government guarantees for the bond issues?Wasn't this shocking evidence of a shambolic government, with the right hand not know what the left hand was doing?

Datuk Ong Tee Keat inherited these questions after he took over as Transport Minister after the 2008 general elections, but despite all the post-308 political tsunami developments, like the Pricewaterhouse Cooper (PwC) audit report into the PKFZ and the ongoing charges against two former Transport Ministers, Tun Ling Liong Sik and Chan Kong Choy, the full story of the PKFZ scandal including adequate answers to the questions I posed in Parliament in November 2007 have still to be told.

In one of my 108 questions which I had posed during my three-questions-a day on the PKFZ in mid 2009 after the Prime Minister had publicly said he had directed his Transport Minister to “provide answers on every question raised by any party” involving the PKFZ scandal, I had asked Ong why he had misled Parliament and the nation in denying that his two predecessors as Transport Minister, Ling and Chan, had unlawfully issued four Letters of Support to Kuala Dimensi Sdn. Bhd (KDSB), the PKFZ turnkey contractor, to raise RM4 billion bonds, which were regarded as government guarantees by the market.

May be Ong can throw some light on this question, now that he is no more in the Cabinet.

As recounted by Hwa Beng's book, after the PwC report, the Prime Minister announced the setting up of a “Super Task Force” on the RM12.5 billion PKFZ scandal in September 2009, headed by the Chief Secretary to the Government Tan Sri Mohd Sidek Hassan.

What has happened to this PKFZ “Super Task Force” as two and a half years later, Najib has not released even an iota of news with regard to the activities and findings (if any) of this Super Task Force.

It is a timely reminder that only a handful of people involved in this mother of all scandals have been investigated and charged. To date, the following six people have been charged: OC Phang, former general manager of the Port Klang Authority (PKA) for criminal breach of trust; Steven Abok, the former Chief Operating Officer of Kuala Dimensi Sdn Bhd for making false claims; Architect Bernard Tan Seng Swee of BTA Architect for making false claims; Law Jenn Dong, former engineer at Kuala Dimensi Sdn Bhd (KDSB) for making false claims; Tun Ling Liong Sik, the former transport minister, for cheating the Malaysian government; and Chan Kong Choy, another former transport minister for cheating former Prime Minister, Tun Abdullah Badawi.

But as Lee Hwa Beng’s book shows, there are many people associated with this scandal who have not been properly called to account. As such, Najib should immediately release the findings of this “super task force” and let the public know the answer to the following questions:

i. Whether former Port Klang Authority chairman, Ting Chew Peh, should be charged for his role in signing the agreement, known as LA1, to buy the land for RM1.088 billion “calculate at the rate of RM25 per square foot on special value basis” and to interest at a rate of 7.5% “before the port authority even received the Cabinet’s formal approval”. Ting, together with OC Phang, signed this agreement even though he knew, from his experience as a Cabinet Minister for 9 years, that it was “the usual practice” for “a Cabinet decision to be carried out only after receiving the official extract”.

ii. Whether former Port Klang Authority chairman and current Housing and Local Government Minister, Chor Chee Heung should be charged for any actions taken on his part as a result of possible conflicts of interest during the 4 month period in which Chor was both a non-independent director and deputy chairman of Wijaya as well as the PKA chairman. During this period, the PwC report on the PKFZ scandal noted that “Minutes of the Board did not indicate that Datuk CHor Chee Heung either declared his previous involvement in [Wijaya] to the Board or withdre himself from the deliberations”.

iii. Why only Steven Abok, the former COO of KDSB was charged, while Tiong King Sing, former controlling shareholder and CEO of Wijaya Baru Global Berhad and KDSB, and former UMNO treasurer, Azim Zaibi, former chairman of Wijaya as well as KDSB have been let off scot-free despite having played key roles in the land sale to PKA and the subsequent turnkey development contracts and bond issuance.

iv. Whether former Sementa state assemblyman, former Koperasi Pembangunan Pulau Lumut Bd (KPPLB) chairman as well as PKA director, Rahman Palil, had shortchanged the members of KPPLB by arguing against a compulsory acquisition of the PKFZ land by the federal government.

v. Whether Najib himself knew that PKA could not service its long term debt commitments when he, sitting in for Abdullah Badawi in a Cabinet Meeting in June 2007, approved the RM4.6billion soft loan to PKA.

Najib’s ‘elegant silence’ on the PKFZ scandal since 2009 makes a mockery of the Government Transformation Program’s Corrruption NKRA which list one of its chief objectives as eradicating ‘grand corruption’.

With this non-existent commitment on the part of the Prime Minister to bring those responsible for this massive scandal to justice, it is no surprise that Malaysia’s ranking on the Transparency Corruption Perception Index dropped four places from 56 in 2010 to 60 in 2011.

The lack of action taken by this ‘Super Task Force’ is yet another example of a long list of gigantic U-turns made by Najib and his administration since becoming Prime Minister in 2009.

After the publication of the PwC report, I had in June 2009 given notice to Parliament Speaker to move an emergency motion of urgent public importance to establish a Royal Commission of Inquiry (RCI) into the RM12.5 billion PKFZ scndal, stating:

“The PricewaterhouseCoopers (PWC) audit report into the PKFZ made public on May 28, 2009 was most unsatisfactory as its terms of reference were restricted to 'a position review' instead of wide-ranging inquiry as to how a RM1.1 billion scandal in 2002 under Tun Ling Liong Sik as Transport Minister, could more than quadruple to RM4.6 billion under Datuk Seri Chan Kong Choy as Transport Minister in 2007 and now further doubled to RM7.453 billion and heading towards the figure of RM12.5 billion under the present Transport Minister!

“Although the Prime Minister had on 29th May publicly directed the Transport Minister to answer every question raised by any party on the PwC report on PKFZ, and I had been posing three questions a day on the PKFZ since 30th May, no satisfactory answers had been forthcoming from the Transport Minister.

“RM12.5 billion is not chicken-feed. It is equivalent to five RM2.5 billion BMF scandals. RM12.5 billion can be used to build 25 universities at RM500 million each; 125 hospitals at RM100 million each; 1,250 schools at RM100 million each; 312,500 low-cost houses at RM40,000 each or give everyone of the 27 million Malaysians regardless of age a payout of RM338!

“Only a Royal Commission of Inquiry, where previous Transport Ministers, PKA Chairmen and Board members, as well as the relevant government officials in the Transport Ministry and Finance Ministry are summoned to testify on their role can do justice for accountability and integrity in the ‘scandal of scandals’.”

This motion was denied.

I posed this question in my introduction to Hwa Beng's book: “Would Malaysians have to await a new government in Putrajaya before the full story of the infamous PKFZ story is fully told and all the parties involved in PKFZ 'mother of all scandals' brought to book?”

Let me conclude by declaring that if Pakatan Rakyat makes it to Putrajaya in the next general elections expected any time now, a Royal Commission of Inquiry would be set up to get to the bottom of the RM12.5 billion PKFZ scandal.

*Lim Kit Siang, DAP Parliamentary Leader & MP for Ipoh Timor



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