DAP parliamentarian Tony Pua is puzzled over the government's action in issuing a guarantee of RM3.685 billion in bonds to Port Klang Free Zone (PKFZ) turnkey developer Kuala Dimensi Sdn Bhd.

NONE The Petaling Jaya Utara MP said today that the bonds issued to KDSB was "tantamount to an official bailout" of the company.

"The rakyat would ask why is the government giving an iron-clad assurance to settle KDSB's debt obligations, even if KDSB is subsequently proven to have failed to perform a satisfactory job on PKFZ and should not be paid in full?

"This only goes to show that at best, the government is completely clueless about its actions, or worse, it is sanctioning a bailout of KDSB which is owned by the BN Backbenchers Committee chairperson Tiong King Sing," Pua told reporters at the Parliament lobby.

Citing a report in Reuters , Pua said Prime Minister Najib Abdul Razak and Deputy Finance Minister Awang Adek Hussin had confirmed that the government's guarantee was issued to KDSB to fund the free zone project to allay investor concerns over the debt.

In the report, Najib had also assured the investor meeting in New York that the government would honour all PKFZ's obligations.

The Public Accounts Committee (PAC) report, which was revealed in Parliament last month, stated that the initial letters of government guarantee issued by the Transport Ministry and former Port Klang Authority (PKA) general manager OC Phang, were given without the knowledge of the Finance Ministry.

Following this, the PAC had advised the Malaysian Anti-Corruption Commission (MACC) and police to probe former transport minister Chan Kong Choy and Phang for criminal breach of trust.

The PKA is currently pressing charges against KDSB for excess claims amounting to RM1.4 billion with regards to the PKFZ project.

Govt' obligated to explain payment

Meanwhile, Pua said the government was obligated to explain the reason for assuring payments to KDSB's bondholder when PKA is suing the company for wrongful or excess payment.

port klang free zone pkfz audit PKA owes KDSB RM4.84 billion for the project which includes RM2.04 billion to acquire the land and construction work and an outstanding amount of RM2.8 billion.

According to Pua, KDSB had borrowed RM3.685 billion by issuing bonds to local and international investors.

He said it was arranged then that since PKA would owe the contract fees to KDSB and KDSB owes money to its bondholders, PKA would make payments directly to KDSB's bondholders.

"However, since the government via PKA is clearly disputing the RM1.4 billion to KDSB, PKA should not be making further payments to KDSB and by the agreements, to its bondholders until the disputed amount is resolved.

"We call upon the government to pay only for the service and work which have been satisfactorily completed and not a cent more for wrongful claims," he said.

"Any outstanding debt to bondholders as a result of payment shortfalls by the government must be settled by KDSB or its shareholders without involving a single cent of public funds," he added.