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Thursday, July 29, 2010

Ex-Transport Minister Tee Keat questions PKA bond payment


Yow Hong Chieh, Malaysian Insider

Datuk Seri Ong Tee Keat has questioned the Transport Ministry’s latest decision to force Port Klang Authority (PKA) to pay RM222.58 million to Freezone Capital Bhd (FZCB), saying the government should consider the reasons for not fulfilling the bond obligation.

The former transport minister said the government should ask PKA about its refusal to pay instead of forcing the payment by the deadline this Saturday.

“We must look at both sides of the story — the justifications, the rationale — given by PKA as to why they chose to defer payment,” Ong told The Malaysian Insider last night.

The former MCA president said one factor influencing PKA’s decision to hold back monies was the outstanding allegations of fraudulent claims made on projects, especially new additional development work, where no work had been carried out.

“Do you think that you’d still want to pay them?

“That explains why the panel that I formed to probe into the possible wrongdoings and the 20 points raised by PwC (PricewaterhouseCoopers) in the review report made such a recommendation to the PKA board [to defer payment],” Ong explained.

He was sceptical of the government’s argument that failure to pay bondholders would lead to adverse effects on the local bond market.

“The payment that was due on June 30 last year; when it was deferred, we saw no crash.

“But, of course, ultimately after several days the PKA board was told to pay,” Ong revealed.

The government yesterday ordered PKA to honour its final bond obligation to FZCB despite the board’s ongoing suit against turnkey contractor Kuala Dimensi Sdn Bhd (KDSB).

Transport Minister Datuk Seri Kong Cho Ha had said that the ministry would stick to the original schedule set before, which stipulates that the board had an obligation to fulfil a final payment of RM372 million, a second part of the RM723 million repayment due to bondholders this year.

Of the total, PKA is obliged to pay RM222.58 million to FZCB and the remaining RM150 million to the special port vehicle (SPV) by July 31 this year.

The board had last month disbursed some RM350 million to Transshipment Megahub Bhd (TMB) and Valid Ventures Bhd (VVB).

It is due to make more payments to three other SPVs besides FZCB up until 2017.

Sources in PKA yesterday told The Malaysian Insider that the directors of PKA risk being held liable for hundreds of millions of ringgit after being asked to pay bondholders of the controversial Port Klang Free Zone (PKFZ) project, despite ongoing legal disputes over the amounts owed.

The sources said the directors were advised that should PKA win its lawsuit against KDSB but fail to recover any money, the directors could be held responsible for money already paid out.

Ong himself got embroiled in the PKFZ scandal when KDSB CEO Datuk Seri Tiong King Sing accused him of accepting RM10 million in donations from the company during the 2008 MCA elections.

This prompted the Malaysian Anti-Corruption Commission to start investigations, but the case was dropped last week due to lack of evidence.

“I’m glad that I was vindicated,” Ong said simply.

Despite this, the former MCA president said it was an “undeniable fact” that the allegations have negatively impacted his support base.

“But one thing’s for sure... my detractors and those who are still lurking in the dark, who are having a hand in... making such allegations against me, they have managed in tarnishing my image as well as destroying my political career,” he said.

Tiong also forced Ong to admit that he had taken free flights on KDSB-owned private jets while he was transport minister and during the probe on PKFZ by his ministry.

When asked why he took these flights, Ong replied that he was merely making use of a jet that other MCA leaders had already secured for their own use.

“I was offered a seat,” he said.

He rubbished Tiong’s claims that he should have paid for these flights and said that KDSB could not charge him as the company did not even have a licence to carry passengers in the first place.

Ong’s RM500 million defamation suit against Tiong for alleging that the Pandan Jaya MP had taken RM10 million from KDSB is still ongoing.

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