The Port Klang Authority (PKA) has called off today’s  board of directors meeting after a government order to make payments to the investors of the troubled multi-billion ringgit Port Klang Free Zone (PKFZ).

The PKA board meeting was to decide on to whether to fulfill its apparent obligations to bondholders who helped finance PKFZ turnkey contractor Kuala Dimensi Sdn Bhd (KDSB).

It is learnt that the board was of the view that the meeting to discuss the payment had been made redundant as the transport minister has overruled them.

According to Section 3 (4) of the Port Authorities Act 1963, the transport minister has the power to override the board’s decision.

The government yesterday ordered PKA to make its payment to special purpose vehicles as set out in the payment schedule.

In making the decision, the Transport Ministry said, the government had taken all relevant factors including the government's commitment to bondholders, and PKA's obligations under the agreements signed.

RM222 mil payment to KDSB

The board had earlier expressed reservations about the  RM222.58 million payment to KDSB's special purpose vehicle Free Zone Capital Bhd (FZCB), because of an ongoing suit.

Another RM150 million is owed to Special Port Vehicle Bhd on July 31, the same deadline as the FZCB's.

Last month, holders of papers issued by two special-purpose vehicles (SPV) - Transshipment Megahub Bhd (TMB) and Valid Ventures Bhd (VVB) - were paid RM230 million and RM120 million, respectively.

PKA is suing KDSB for allegedly overclaiming RM1.4 billion and was considering withholding payment because it was worried that it may not be able to recover funds from the latter.

According to a PKA source, the precaution was necessary because if the suit  favours PKA's, the board will be held liable in the event monies could not be recovered from KDSB.

However, the government has decided to order PKA to make the payment nevertheless.

ong tee keat pkfz klang visit 060508 12 The free trade zone, a commercial and industrial project south of the capital, was conceived as a RM1.82 billion venture constructed over 1,000 acres.

However ,costs are now expected to balloon to RM12.5 billion, making the affair one of the country's biggest financial scandals and a major embarrassment for the government.

Probes into the project's financial records since then have revealed instances of corruption, conflicts of interest as well as breaches of trust.