PKFZ panel: Possible fraud in developer’s claims amounting to hundreds of millions of ringgit

(The Star) PUTRAJAYA: Hundreds of millions of ringgit in claims by Kuala Dimensi Sdn Bhd – the main developer of Port Klang Free Zone (PKFZ) – have been found to be either over-charged, unsubstantiated or even possibly fraudulent.

This was the findings of a special task force that was set up to investigate the legal and financial aspects of the project.

The eventual amount in dispute could run up to as much as RM1bil.

The Port Klang Authority (PKA) board of directors, at its meeting yesterday, decided to commence legal action against Kuala Dimensi and the other parties involved.

They also directed PKA chairman Datuk Lee Hwa Beng to lodge a police report today over the matter.

The allegations against Kuala Dimensi were contained in a statement issued by Lee after the board meeting.

However, it was learnt that what was revealed yesterday was only the “tip of the iceberg and many more revelations of wrong doings are expected in the days ahead”.

“Our lawyers will henceforth deal with Kuala Dimensi chief executive officer Datuk Seri Tiong King Sing and its deputy Datuk Faisal Abdullah.

“Since there may be instances of fraudulent claims and taxpayers’ money are involved, we will make a police report at the Klang police station so that appropriate investigation is taken,” said Lee in the statement.

Copies of the 370-page report, with 2,500 appendices, by the task force were also handed over to Transport Minister Datuk Seri Ong Tee Keat by its head Vinayak Pradhan of legal firm Skrine and Co at the ministry here.

Other members of the panel are Skrine partner Lim Chee Wee, PricewaterhouseCoopers Advisory Services (PwCAS) managing director Chin Kwai Fatt and PwCAS senior executive director Lim San Peen.

Among others, the task force, which was set up on June 10 to look into the legal and financial aspects of PKA and PKFZ, had found that Kuala Dimensi had:

>POSSIBLY made fraudulent claims on electrical infrastructure worth RM55.8mil, which had yet to be carried out on the site, and 33kv supply works and civil infrastructure works worth RM83mil as TNB had rejected the proposal for Kuala Dimensi to undertake the work.

>NOT provided any document to support its claim of at least RM231mil as preliminaries under the development agreements while at the same time, it had made claims for items, which they were not contractually entitled to, such as claim for the procurement of a performance bond and payment for insurance premiums totalling RM5mil.

>NOT justified its claim for variation works of RM62mil under Additional Development Works and New Additional Development Works agreements.

>APPEARED to have made an “over claim” for hotel works, for which Kuala Dimensi had claimed RM69.6mil compared to the quantity surveyor’s valuation of RM44.7mil.

>NOT produced any invoice or payment voucher for the RM61mil which the company claimed was professional fees and expenses incurred.

>CLAIMED RM254.9mil as extra work done even though the purported revised works fell within the scope of the original works envisaged in the main development agreement.

Lee said while PKA members still required more time to consider the lengthy report in detail, several decisions had been made in the meantime.

“The board had decided that the quantity surveyor continue to re-measure the value of works performed by Kuala Dimensi in order to establish the real sum owing to the main developer.

“Presently, they have identified a difference of at least RM93mil between the claims made by Kuala Dimensi and the measurements made by the quantity surveyor.

“We believe that there will be further differences in the re-measurement exercise.”