Thursday March 21, 2013
Expert: SPA for PKFZ and figure determined by department almost similar
KUALA LUMPUR: The sale and purchase agreement (SPA) for the Port Klang Free Zone (PKFZ) land was consistent with the valuation done by the Valuation and Property Services Department (JPPH), which had determined that the cash price or net present value (NPV) was at RM21psf.
Sajjad Ahmad Akhtar, 65, a chartered accountant, told the High Court that as payment for the land was not to be made by cash, any agreed form of payment would have to reflect an NPV of RM21psf using the discounted cash flow (DCF) target rate of 8.25% fixed by JPPH.
He said his DCF analysis of payments under the SPA produced an NPV of RM20.76psf, which was almost exactly the same as the RM20.75psf determined by JPPH before it rounded this up to RM21.00psf.
The SPA, Sajjad also said, had explicitly indicated that an interest of 7.5% was payable in the land deal, adding that this could be noted in the document dated Nov 12, 2002 between Kuala Dimensi Sdn Bhd (KDSB) and Port Klang Authority (PKA) for the sale of the 999.5-acre land.
The managing partner of PKF-CAP LLP said the key features of present or special value fixed at RM21psf on a cash basis and face value of RM25psf on a deferred payment basis were consistent in both the JPPH letters and SPA.
“It is almost identical. We calculated independently. We obtained a net present value at RM903,769,651 (RM903.8mil), which is approximately RM20.76psf. This is very close to the special value determined by JPPH of RM21psf. It is highly consistent,” said Sajjad, adding that he had used a discount rate of 8.25%, which was that used by JPPH, in his analysis.
Total repayment over the period of 15 years, he added, would amount to RM1,808,470,600 (RM1.81bil).
Sajjad said he also performed a DCF analysis, assuming that no interest was chargeable with the consideration price of RM1,088,455,000 (RM1.08bil) to be repaid over 15 years.
“The NPV obtained for the land is RM13.02psf. This is significantly lower than the valuation of RM21psf determined by JPPH. From this, it is apparent that the price of RM25psf cannot and does not include 7.5% interest charge.
“The deemed value was set at RM25psf and the 7.5% interest has to be charged over and above the RM25 in order for the payments to reflect the NPV of RM21psf as determined by JPPH (after discounting),” he said.
Sajjad was testifying in the trial of Tun Dr Ling Liong Sik, who is alleged to have deceived 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 PKFZ land at the Prime Minister’s Office in Putrajaya between Sept 25, 2002 and Nov 6, 2002.
He also claimed trial to two alternative charges of cheating, which carry a lesser penalty.
Sajjad insisted that the additional interest had to be added over and above the “rate of land value” of RM25psf in order to arrive at the special value of RM21psf determined by JPPH.
“This price of RM25psf simply represents an amount determined by JPPH in working out the deferred payment plan.
“If the price has been maintained at RM21 based on the special value of RM21 and the payment of the balance purchase price is deferred, the interest rate charged would have to be significantly higher than 7.5% in order to get a net present value of RM21 for the given discount rate of 8.25% as determined by JPPH,” he said.
His analysis, said Sajjad, was also consistent with the transcripts of the oral testimony by former JPPH deputy director-general Datuk Mani Usilappan and another expert from the defence, accountant cum executive director of BDO Chartered Accountants, Mok Chew Yin.
He, however, disagree with the oral testimony of former JPPH director-general Datuk Sahari Mahadi that the RM25psf had included the total amount of interest for the 10 or 15-year period.
Asked by the defence if he agreed with Sahari’s testimony that the RM4 represented the total interest on RM21 for 15 years, Sajjad said he could not, adding that the increase of RM4 was to reflect the difference between the 6% coupon rate and the 8.25% discount rate, and nothing to do with interest.
The hearing resumes from June 19 to 21.