KUALA LUMPUR: An independent expert told the High Court that the purchase price of the Port Klang Free Zone (PKFZ) project land was consistent with the valuation done by the Valuation and Property Services Department (JPPH).

He also said the RM25 psf price in the Sales and Purchase Agreement (SPA) and the JPPH calculation letters did not include interests which has become a major point of contention in this high profile trial.

Mok Chew Yin, 58, who is an accountant and executive director of BDO Chartered Accountants, said his calculations used the discounted cash flow (DCF) method to derive the figure.

He pointed out that using the DCF calculation showed that the present value, in all three scenarios, always came back to RM21 psf which was the cash value of the land as stated by the department.

Mok pointed out that according to the JPPH Valuation letter and the transcripts of the oral testimony of former department deputy director Datuk Mani Usilapan, the land was not going to be paid for in cash.

“The RM25 psf figure is a calculated figure based on the terms on which the 6% interest rate has to be charged and added on a yearly basis.

“These cash flows are then discounted at a discount rate of 8.25% to arrive at the present value of RM21 psf as determined by the JPPH,” the second defence witness told the former transport minister Tun Dr Ling Liong Sik cheating trial yesterday.

Mok said Dr Ling engaged BDO to prepare a report on its understanding of the mathematical calculation of land value based on the valuation letters issued by JPPH dated Sept 29, 2000 and Oct 9,2000 and to express its opinion as an independent expert on whether sale and purchase of the land is consistent with the valuation concept as stated in JPPH's valuation letters.

Dr Ling is accused of deceiving the Government by not revealing to the Cabinet an additional interest rate of 7.5% annually in the RM1.088bil (at RM25psf) purchase of the land for the project at the Prime Ministers Office in Putrajaya between Sept 25, 2002 and Nov 6 the same year.

He also claimed trial to two alternative charges of cheating, which carries a lesser penalty.

Mok said that an interest of 6% interest has to be added annually to the rate of the land value of RM25psf for a 10-year repayment or RM25.82psf for 15 years repayment tenure in order to derive at special value of RM21psf.

He spent quite sometime taking the court through the calculations on the “special value” of RM21psf.

He said any change of the financial terms would result in a different “base price” in order to derive a cash price of the land of RM21psf and that includes the repayment period.

“Based on our calculations, the present value of the total repayment amounts (principal sum of RM1,088.456mil plus total interest charged of RM720.015mil equivalent to RM1,808.471mil) as stated in the SPA is equivalent to a cash price of RM20.77psf, based on the discount rate of 8.25%,” he said.

He concluded that RM25psf (for 10 years repayment period) or RM25.82psf (for 15 years repayment period) as stated in the JPPH's letters respectively and the RM25 psf as stated in the SPA do not and cannot include the interest charged.

Mok showed different illustrations which could arrived if interests were not included in the calculation on the price of the land.

“If 7.5% interest is not charged in SPA, the present value will only be RM13.03 psf. It is much lower than RM21 psf than determined by the JPPH..

“If you don't charge and add on the interest, the cash value or present value will be way below the RM21 psf determined by JPPH.”

He also said that although the SPA used an interest rate of 7.5% when JPPH used 6% in their calculation, the effective interest rate of the SPA was only 5.84% (below the rate used by JPPH) as interest was waived in the first 2two years of the SPA.

This had the effect of bringing the real or effective interest rate down to 5.84% when in the JPPH example, interest of 6% was to be charged every year.

The real interest Kuala Dimensi Sdn Bhd would be getting from the SPA was just 5.84% interest as there was no interest chargeable in the first two years and no payment for the first four years as stated in the SPA, he added.

The hearing will continue on Thursday.

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