Since we’re at it, we need RCI on PKFZ, too

It is the season for royal commissions of inquiry (RCIs). With the ongoing inquiry into the country’s foreign exchange losses, there’s a clarion cry for one more on the Memali incident.

There has been rhetoric from government leaders – minister included – made mostly for political expediency. While critics are cynical and question whether only one man – former prime minister Dr Mahathir Mohamad – made the decisions on these issues, there are many who believe that “everything including the kitchen sink” will be thrown at him.

While some may be looking at other “Made by Mahathir” decisions in their efforts to demonise him, let’s look at a serious issue which has cost taxpayers billions of dollars and it happened under the watch of three prime ministers.

The Port Klang Free Zone (PKFZ) started during Mahathir’s term, developed during Abdullah Ahmad Badawi’s tenure and finally completed under Najib Razak. Major efforts were made to cover up the scandal and prevent publication of the sordid facts which made it the biggest financial scandal until the emergence of 1Malaysia Development Bhd (1MDB).

It took a courageous transport minister, Ong Tee Keat, to convince the cabinet to commission an independent investigation. The voluminous report by PriceWaterhouseCoopers (PwC) must now be gathering dust in the filing cabinet at the Port Klang Authority (PKA).

As if the authorities were keen in nailing the culprits, flurries of activities were initiated in the aftermath of the PwC report. A task force headed by Skrine & Co lawyers Vinayak Pradhan and Lim Chee Wee was set up to look at the criminal elements in the case.

A Committee of Corporate Governance co-headed by then Transparency International Malaysia president Paul Low and Malaysian Institute of Accountants president Nik Mohd Hasyudeen Yusoff was also set up. The former also drew up the PKA’s whistleblowers’ policy.

The Transport Ministry set up an executive committee headed by the then PKA chairperson Lee Hwa Beng and finally, an 11-man “Super Task Force” headed by then chief secretary to the government Mohd Sidek Hassan.

The contents of the PwC report provided several gems of mismanagement, misuse and abuse of power and money, and criminal offences. A confidential dossier on the probable and possible offences was present to Najib by lawyers acting for PKA.

Najib appointed Mohd Sidek’s “Super Task Force” to inquire into the dossier but nothing came of it. He retired soon after and nothing was heard from his successor or any of the other members.

Coincidentally, Mohd Sidek is currently chairing the RCI on the forex losses.

Charges were brought against several people including two past transport ministers – Ling Liong Sik and Chan Kong Choy. All were cleared of wrongdoing.

So, where did the money go? The government guaranteed and gave letters of support for the bonds issued to the turnkey contractor of the project – Kuala Dimensi Sdn Bhd. Why was it done? Do ministers have the power to commit the country by issuing such letters without cabinet approval?

No one held accountable

How and why did the cost of the project – RM2 billion increased by two-and-a-half fold? The dossier showed among others, there were double payments made for certain infrastructure contracts and PKA’s common seal was used unlawfully on legal documents which committed PKA to certain dubious contracts.

There was a proposal to hold 42 people, including two former ministers, who sat on the PKA board during this period of transgression to be charged for dereliction of duties. A resolution to report them under the Companies Act for dereliction of duties was tabled at a meeting of the board. Except for Lee and M Rajasingam, the others voted against it.

Both did not last long and when Ong left the ministry, they were seen as recalcitrant, and their terms were not extended. When Teh Kim Poh came on board as chairperson, he instructed that the complaint by PKA to the Bar Council’s Disciplinary Board be withdrawn. Rashid Ansari & Co had acted for both the sellers of the land KDSB and the buyers – PKA – an act which is in contravention of the Legal Profession Act. When asked the reasons, Teh could not offer a plausible explanation.

The PKA also decided to withdraw its RM720 million suit against KDSB. On Sept 25, 2009, PKA filed the suit against KDSB seeking rectification of the agreement signed on Nov 12, 2002, for the land worth RM1.88 billion. It sought a declaration that it should not be charged an interest of RM720 million on the balance purchase price of the land under the agreement and sought a refund of the interest paid to KDSB.

PKA contended that mistakes and fraud were involved in the agreement and that the value of each square foot of the land should be RM21 and not RM25. It also claimed that the purchase price was inclusive of interest as stated in the agreement and that it would be paid over 15 years.

On Feb 7, 2012, the Shah Alam High Court allowed KDSB’s application to strike out the suit but on June 25 that year, the Court of Appeal reinstated the suit and allowed the PKA’s appeal. Last year, the Federal Court refused to grant leave to KDSB to appeal.

There were several other instances when decisions made by the previous board had been reversed.

The original cost was estimated and budgeted at RM2 billion but it ballooned to RM4.8 billion. With interest payment on the bonds, PKA will have to pay the Treasury in excess of RM12 billion.

So, if there was no wrongdoing, why is PKFZ in such a mess? Wasn’t it supposed to be the Jebel Ali Free Zone of the East? What caused it to become one of the most expensive white elephants from the country?

PKA was financially strong until the PKFZ project begun. It had almost RM500 in reserves. It was on the verge of insolvency and only timely intervention by the Treasury prevented this catastrophe.

So, who brought PKA to its knees? What was the cause of the increase in costs? Was it used for the right reasons or was it misused? Did the management of PKA and PKA act on their own folly or were they directed from elsewhere? Why did it withdraw the report and discontinue the civil suit against KDSB?

There are scores of other questions that can be raised from the PwC report. One question had always bothered taxpayers: If the PKA did not receive a sen from the bonds, why is it being compelled to pay towards it?

Now that the three letters – RCI – are on the lips of many of our ministers, would someone turn to a serious issue – the affairs of the PKA and PKFZ – which definitely warrant a royal commission of inquiry?

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R NADESWARAN broke the PKFZ scandal and followed it closely for nine long years and even wrote a book on it. He steadfastly holds the view that somebody must be held accountable for the billions that have disappeared. Comments: citizen.nades22@gmail.com. - Mkini