The Port Klang Authority (PKA) has reversed an earlier decision to withhold a RM660 million payment due to contractor Kuala Dimensi Sdn Bhd for the Port Klang Free Zone (PKFZ) project.

lee hwa beng pkfz pc 210509 02 In a statement issued today, PKA chairperson Lee Hwa Beng (left) said that the about turn was due to instructions from the Treasury and in consideration of appeals by the bondholders trustees.

"PKA has also received instructions from the Treasury that the board should be mindful of the implications that might affect the confidence of investors, local or foreign, in the Malaysian private debt securities market," said Lee.

PKA decided to withhold the payment, due June 30, as its special task force to probe the PKFZ debacle is currently pending, despite legal threats by Kuala Dimensi.

The sum was to be paid to four companies created by Kuala Dimensi - Special Port Vehicle Bhd, Transhipment Megahub Bhd, Valid Ventures Bhd and Free Zone Capital Bhd - in four installments throughout June and July.

On the appeal by the trustees, Lee said the letter dated July 3 described the background of the issuances of private debt securities comprising Bonds and Commercial Papers (CP) as well as Medium Term Notes (MTN) by the four special purpose companies.

"It also spelt out the consequences of non-payment and the possibility of the trustees acting upon the directions of the bondholders and CP/MTN holders to enforce the security charge," he said.

"The (PKA) board has, after taking into consideration the appeal from the trustees and the stand of the Finance Ministry, decided to release the repayment amounts due," he added.

Paid half today

Contacted for clarifications later, Lee said that the board has made RM360 million payment to Kuala Dimensi this morning and has until the end of the month to pay the balance.

ong tee keat pkfz klang visit 060508 12 Kuala Dimensi is the turnkey contractor for the troubled PKFZ project and according to the audit report on the project by Pricewaterhouse Coopers (PwC), has already been paid RM1 billion thus far.

The PwC report, commissioned by Transport Minister Ong Tee Keat, has led to revelations implicating two former transport ministers and many other politicians who once sat on the PKA board or control Kuala Dimensi for financial irregularities.

The audit report by PricewaterhouseCoopers on the PKFZ project found that the development cost for the project may balloon up to RM12.5 billion from an initial cost of less than RM2 billion.

Todate, no one has been charged of any wrong doings.