KDSB may sue over PKFZ report
By Shannon Teoh, The Malaysian Insider
Unhappy with the report on the RM12.5 billion Port Klang Free Zone (PKFZ) scandal, Kuala Dimensi Sdn Bhd (KDSB) is mulling legal action against the port authority as well as the audit firm which it calls “mischevious”.
Hitting back at implications of profiteering in the PKFZ report, group deputy chief executive officer Datuk Faizal Abdullah said that the position review that was finally made public yesterday was “not done in good faith” and questioned if PricewaterhouseCoopers (PwC) had any ulterior motive.
“Yes, I want to firmly say that it is an option against either or both,” he said of PwC and the Port Klang Authority (PKA).
“Why does it use terms like ‘may’ or ‘potential’? Just say yes or no and be a gentleman about it and then we can challenge it based on facts. Instead, it has released a report with three conditions. Why hide?” Faizal told The Malaysian Insider after a press conference.
He was referring to conditions set by PwC which appear to limit or absolve it from any liability due to the contents of the report. The accounting firm said its only duty is to the PKA and is not obliged to respond to any queries while the public was “not authorised to use or rely on the report to arrive at any conclusion.”
The much-anticipated report has implicated several politicians from Barisan Nasional (BN) who have all sat or are still sitting on the board of either KDSB or companies under the same Wijaya Baru group.
This includes BN backbenchers chief Datuk Seri Tiong King Sing who has a 70 per cent stake in Wijaya Baru. Faizal said that the Bintulu MP could not attend the press conference as he was making visits in his constituency leading up to Gawai celebrations.
In his defence of KDSB, Faizal said that the nearly 1,000 acres of land that it had sold to PKA for RM1.1 billion was for a valuation below that of their own.
He said even though they had bought the land in 1995/6 for RM3 per square foot (psf), they had first valued it at RM28 psf in the 2002 sale but agreed on RM25 psf and not the government valuation of RM10 psf due to several factors:
– RM10 was for compulsory acquisition which was not possible because it is not a public interest project
– added reclamation and infrastructure works
– it had to buy back parcels it had sold off for RM16-17 psf in 1996 for RM21-23 in 2001 to complete the deal
– PKA would enjoy deferred payment that began only after four years from the transfer of the land
When asked why deferred payment had influenced the valuation when it was also collecting interest, Faizal said that the various concessions, including the four year leeway meant that the structuring of the deal was not so straightforward.
He added that the four year period showed that KDSB was interested in the long-term success of the project.
“We ensured that PKFZ was ready in two years. So PKA could already collect revenue two years before they had to start paying us back,” he said.
He added that to date, KDSB had so far only collected RM360 million from PKA for the land, which he says is between 20-30 per cent of the total sum.
When asked about the letters of support that the Transport Ministry had issued to back RM4 billion worth of bonds, he said that he considered them to be letters of support rather than letters of guarantee.
However, he said that PKA would be liable in the case of a default as each bond issue was tied in with an agreement with PKA and special purpose companies for each bond were set up to receive payment from PKA.
So the only way there could be a lack of funds would be if PKA did not pay up.
He added that bondholders “should have asked and found out” for sure whether the letters of support meant that the bonds were guaranteed by the government.
“You should have asked, you are in the finance business,” Faizal said, adding that the letters were more of a form of acknowledgement of the projects being overseen by the government and were for the benefit of rating agencies.
Faizal also said that he was frustrated at the negative reports and perception surrounding PKFZ, saying that it had scared off investors and affected Wijaya Baru stocks, which has plummetted from five-year highs of over RM2 to about 30sen today.
