A graft investigation targeting officials at Malaysia's troubled port operator and other similar scandals could scare foreign investors away, a corruption watchdog warned today.

Ramon Navaratnam, president of the local chapter of Transparency International (TI), said too many of the so-called mega projects in Malaysia had been blighted by corruption and scandal.

Chairperson of Parliament's Public Accounts Committee Shahrir Samad said he planned to investigate officials at Port Klang - which has piled up over RM4.6 billion in debts - for possible corruption and mismanagement of funds.

"This is the last thing Malaysia needs especially since we are opening up Penang and Johor to more foreign investments," said Navaratnam.

"There has been just too many of these kind of cases and we at TI strongly believe that at one time or another, it will certainly harm the amount of foreign funds coming into the country."

The Port Klang Authority operates the 1,000-acre Port Klang Free Zone (PKFZ) shipping area that opened in Peninsular Malaysia last year.

It has racked up debts totalling 4.6 billion ringgit and the media has reported that the management is in disarray.

Dubai-based Jebel Ali Free Trade Zone Authority announced last month it was pulling out of a deal to manage the zone for "strategic reasons."

Bailout bad for business

There has been widespread speculation that the government of Prime Minister Abdullah Ahmad Badawi could bail out the port.

But Navaratnam countered: "This kind of bailout is just not good for the business environment."

Several government bailouts of prominent companies, including Bank Bumiputra and Perwaja Steel, damaged public confidence in the 1990s.

Opposition leader Lim Kit Siang urged the government not to give the port a bailout without full accountability.

"Malaysians are entitled to know why the disgraceful culture of impunity continues to be perpetuated with no one being responsible," he said in a statement today.

Abdullah was elected on an anti-corruption platform in March 2004, but opposition leaders say progress has been slow, with few meaningful reforms.

SPECIAL REPORT: Poser over mega 'ghost town'