Thursday November 5, 2009

PAC recommends MACC or police to probe two over CBT claims

By LEE YUK PENG and ZULKIFLI ABD RAHMAN

KUALA LUMPUR: Former Transport Minister Tan Sri Chan Kong Choy and former Port Klang Authority (PKA) general manager Datin Paduka O.C. Phang have been named in the Public Accounts Committee (PAC) report for alleged criminal breach of trust (CBT) over the Port Klang Free Zone (PKFZ) project.

The PAC recommended that the Malaysian Anti-Corruption Commission (MACC) or the police investigate Chan and Phang.

The committee, which had investigated the scandal-ridden project, said the two had breached Section 14 (1) of the Financial Procedure Act 1957 by issuing three letters of support and three letters of undertaking for the project without the Finance Ministry’s approval.

“This means that they are liable for criminal breach of trust under Section 409 of the Penal Code,” said the report which was made available to MPs and the press at Parliament House yesterday.

The PAC said the letters had implicitly placed responsibility on the Government to ensure there was allocation for the PKA to fulfil its obligation under the development agreement.

The report also said Phang and the Transport Ministry secretary-general should be investigated for appointing Kuala Dimensi Sdn Bhd (KDSB) as the PKFZ developer, also without approval from the Finance Ministry.

The minutes of the PAC inquiry showed that Datuk Zaharah Shaari was the secretary-general at the time when KDSB was appointed.

Chan was said to have signed the letters of support to get a favourable rating from an agency for the issuance of bonds to raise money for KDSB in funding the project.

The report said the issuance of bonds was improper as it led to the Government suffering huge losses as the funds acquired under the Government’s guarantee was not fully utilised to implement the project.

PAC has recommended that the Finance Ministry review the redemption of bond to prevent accumulating losses from the high interest rate.

The letter of undertaking issued by Phang was also against the Government’s decision, the report said, as when the PKFZ project was approved, the Government had decided that the project should be developed by the PKA via a self-financing method.

However, PKA apparently could not do so through this method — as stated in the Auditor-General’s reports of 2003 to 2007.

PAC also found that Phang had committed a misrepresentation when she issued a letter of undertaking to OSK Securities Bhd, stating that PKA would seek Government help to remit funds from Budget allocations to a special reserve account that was managed by the PKA.

The Authority did not have the approval from either the Transport or Finance Ministries to do this, it said.

On the PKA board of directors, the committee said they failed to monitor the Authority’s financial situation although the 2004 A-G’s report raised the fact that the PKA’s financial status did not have the capacity to develop the PKFZ.

The Chief Secretary was recommended to take action against civil servants appointed as board of directors of PKA for failing to carry out their duties efficiently.

At the Parliament lobby, PAC chairman Datuk Seri Azmi Khalid said, apart from Chan and Phang, there were other officials named in the report.

He said it would be up to the police and MACC to take “whatever action” against those involved.

“We don’t know whether there was corruption involved. Sometimes, it’s negligence, sometimes it’s about not knowing that was happening,” he said.

“Whatever action that needs to be taken, it’s up to the police and the MACC to investigate further. The law has adequate provisions.”

Deputy Inspector General of Police Tan Sri Ismail Omar said Bukit Aman had been investigating those allegedly involved in the PKFZ scandal.

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