CHAN and PHANG in 'DOUBLE TROUBLE'

Published: Wednesday November 4, 2009 MYT 10:53:00 AM
Updated: Wednesday November 4, 2009 MYT 1:02:55 PM

PAC wants Chan Kong Choy and OC Phang investigated for CBT (Update)

By LEE YUK PENG

KUALA LUMPUR: The Public Accounts Committee (PAC)has recommended that the Malaysian Anti-Corruption Commission (MACC)or the police to investigate former Transport Minister Tan Sri Chan Kong Choy and former Port Klang Authority (PKA)general manager Datin Paduka OC Phang for criminal breach of trust over the Port Klang Free Zone (PKFZ) project.

The committee, which is investigating the scandal-ridden PKFZ, has found both Chan and Phang to have breached Section 14 (1) of the Financial Procedure Act 1957 by issuing three letters of support and three letters of undertaking without the approval of the Finance Ministry.

PAC said the Attorney-General revealed that the three letters of support issued by Chan and three undertaking letters issued by Phang had implicitly placed responsibility on the Government to ensure there is allocation for PKA to fulfil its obligation under the development agreement.

“Hence, thorough investigation by the MACC or police on these matters were required as the letters were issued without approval from the Finance Ministry as required under the Act,’’ it said.

The report also said that the issuance of bond was also improper as it had resulted in the government suffering huge losses as fund acquired under the government’s guarantee was not fully utilised to implement the project.

PAC recommended that the Finance Ministry review the redemption of bond as soon as possible to avoid accumulating losses from the high interest rates.

It said the letter of undertaking issued by Phang was against the government’s decision as when the PKFZ project was approved, the government had decided the project to be developed via self -financing by PKA.

It said Phang and the Transport Ministry has failed to inform the Cabinet in a timely manner.

PKA was also unable to develop PKFZ through self-financing as stated in the Auditor-General’s report of 2003, 2004, 2005, 2006 and 2007.

Both the PKA and the ministry also did not have discussions with the Finance Ministry and Economic Planning Unit to obtain allocation for the project.

PAC also finds that Phang had committed misrepresentation when issuing letter of undertaking to OSK Securities Bhd stating that PKA will be requesting the government to remit funds from budget allocation to special reserve account or special code of account managed by PKA.

PKA did not have approval from the Transport Ministry nor the Finance Ministry on this matter, it said.

On the board of directors of PKA, PAC said the board had failed to monitor the financial situation of PKA although the 2004 AG’s report had raised the fact that PKA’s financial status did not have the capacity to fulfil its obligation to develop PKFZ.

Chief secretary of state was recommended to take action against civil servants appointed as board of directors of PKA for failing to carry out their duty in an efficient and proper manner.

PAC also supports PKA’s decision to set up a task force to study cases of misappropriation and had listed out several issues that the MACC could probe.

Among them were conflicts of interest involved in the decision-making where Perunding BE Sdn Bhd, which is under the Quantity Surveyor Consortium appointed by PKA to determine the actual cost of the PKFZ.

Perunding BE Sdn Bhd was also the quantity surveyor for Kuala Dimensi Sdn Bhd (KDSB), contractor for PKFA, for infrastructure work.

Another conflict of interest matter involved legal firm Rashid Asari & Co, where it was involved in two of the four development agreements signed between PKA and KDSB.

The firm was also involved in the sales and purchase of land between Koperasi Pembangunan Pulau Lumut Bhd and KDSB back in 1995.

Several action by Phang such as the appointment of KDSB as contractor, signing of sale and purchase of land and appointing JAFZI then later KDSB to develop PKFZ were done without approval from the Finance Ministry.

Phang had also failed to comply financial procedures and legal procedures in implementing PKFZ.

“The general manager was recommended to be investigated as the general manager should be aware of such procedures as she had served in several ministries and departments, including the Finance Ministry,’’ it said.

The PAC report is signed by its chairman Datuk Seri Azmi Khalid (BN- Padang Besar), Dr Tan Seng Giaw (DAP - Kepong), Datuk Nur Jazlan Mohamed (BN - Pulai), Tan Ah Eng (BN - Gelang Patah), Hanim Samuri (BN- Ledang), Datuk Seri Panglima Mojilip Bumburing @ Wilfred (BN -Tuaran), Liang Teck Meng (BN - Simpang Renggam), Alexander Nanta Linggi (BN - Kapit), Datuk Abdul Rahman Dahlan (BN - Kota Belud), Datuk Kamarul Baharin Abbas (PKR - Teluk Kemang), William Leong (PKR -Selayang), Datuk Kamaruin Jaffar (PAS - Tumpat) and Tony Pua (DAP -Petaling Jaya Utara).

(Source: The Star Online)