Government double-billed in PKFZ land buy. Ling double-conned Cabinet?

Government double-billed RM720m in PKFZ land buy

UPDATED @ 07:14:51 AM 02-08-2011

By Boo Su-Lyn

August 01, 2011

Dr Ling (second right) arrives for his trial over the PKFZ scandal, in Kuala Lumpur, August 1, 2011. — Picture by Choo Choy May

KUALA LUMPUR, Aug 1 — Putrajaya allegedly forked out RM720 million in additional interest to buy land for the troubled Port Klang Free Zone (PKFZ) project although a six per cent interest rate was already included in the valuation, Tun Dr Ling Liong Sik’s corruption trial heard today. Retired Valuation and Property Services Department (JPPH) director Datuk Sahari Mahadi told the High Court here today that JPPH had valued the land in Pulau Indah in 2000 at RM25 psf considering the government would pay for it in deferred payments over 10 years.
The prosecution said Port Klang Authority (PKA) had purchased the 999.5-acre plot from Kuala Dimensi Sdn Bhd (KDSB) at RM25 psf — totaling RM1.08 billion — and paid an interest rate of 7.5 per cent per annum that resulted in an overall payment of RM1.8 billion.
“Did the RM25 figure include the interest?” asked lead prosecutor Datuk Tun Abdul Majid Tun Hamzah at the High Court here today.
“Yes... (the total amount paid at the end of the 10th year should be) the size of the land multiplied by RM25,” replied Sahari.
Dr Ling, a former transport minister, is charged with deceiving the government by concealing the fact that the interest rate of 7.5 per cent per annum was surplus to the purchase of Lot 67894 at RM25 psf — amounting to a total of RM1,088,456,000 — despite knowing that JPPH had already taken that interest into account when it valued the land at RM25 psf.
The former MCA president also faces two alternative charges of deceiving the Cabinet into believing that the purchase of Lot 67894 at RM25 psf and the 7.5 per cent interest rate were acknowledged and agreed to by the JPPH, despite knowing that there was no such agreement.
Sahari, 63, said today that JPPH had valued the land for the trans-shipment hub at RM21 psf if the government made a lump sum payment.
“The landowner decided to do works on the land. The works are [worth an additional] RM3 psf, so the value became RM21 psf,” he said.
Sahari, who has worked in the JPPH for three decades, added that the department’s original RM18 valuation was based on market value.
The retired civil servant, who was dressed in a black suit, also said JPPH considered making a RM25 psf valuation — despite having earlier priced the land at RM21 psf — so that PKA could sell bonds to fund the purchase in the project, which may potentially balloon into a RM12.5 billion scandal.
But Dr Ling’s lawyer, Wong Kian Kheong, said private valuation firms — Azmi & Co Sdn Bhd and Henry Butcher Malaysia Sdn Bhd — had valued the land at RM29 psf and RM26 psf respectively.
Dr Ling is accused of committing the offences at the fourth floor of the Prime Minister’s Office in Putrajaya between September 25 and November 6, 2002.
The veteran politician faces up to seven years in jail and a fine if convicted of the principal charge under Section 418 of the Penal Code.
The alternative charges carry a lesser sentence of up to five years behind bars and a fine upon conviction.
The trial resumes tomorrow.