COMMENT | Government agency "A" commissioned and appointed "B" as the turnkey contractor for its project "C". Using the contract as leverage, "B" sought a loan from "D" who was reluctant to do the needful without any guarantee. "A"’s employer "E" was headed by "F" and later "G" and they supported the application in the form of letters.
"B" did not settle the loan and "D" sought out "A" who had nothing to do with it. But "E" paid up and treated the payment as a loan to "A", who more or less ended up as a slave, earning money to pay "E" for the next 29 years.
This was no ordinary loan of a couple of thousands from the big, strong and friendly bank “jaga” on a “sepuluh dua” basis. Neither was it from the friendly Ah Long or the chettiar using a property as collateral. It involved billions, if not millions – all taxpayers’ money.
Still don’t get it? You will when the blanks are filled. "A" is the Port Klang Authority (PKA); "B" is KDSB Sdn Bhd and "C" is the Port Klang Free Zone (PKFZ). With "D" being the financial institutions and "E" being the government of Malaysia, the skeletal arrangement beckons. With "F" and "G" being former Transport Ministers Ling Liong Sik and Chan Kong Choy, the whole picture falls into place.
The original cost for setting up the free trade zone was RM1.845 billion, but this swelled to RM4.6 billion when the project was completed five years later. A total of RM3.77 billion was raised for the PKFZ project, which included land and development costs. No one bothered about the rising costs – not even the directors of PKA. It was later established that there were huge instances of double-billing.
The chief accountant of PKA resigned in disgust after refusing to sign such wanton waste of public funds. PKA was never involved in the loan negotiations because they never needed the money. At that time, there was a healthy reserve of RM450 million in its coffers. The financial institutions provided the money direct to KDSB with little or no reference to PKA, the ministry or the government to enable completion of PKFZ. Today, PKA is saddled with a RM3.8 billion "loan" of which it never saw a sen.
All the bonds and commercial papers/medium commercial papers/medium term (CP/MTN) were assigned "triple-A" ratings by Malaysian Rating Corp Bhd due to government backing for the PKA to undertake the project. In addition, letters of support (not letters of guarantee) were issued by the government to the lead arrangers of the bond issue.
PKA earns about RM260 million annually. With its administrative costs of RM80 million, maintenance costs of RM6 million and the RM222 million annual loan repayment, it will have a deficit of about RM40 million every year – for the next 29 years...