Transport Minister Kong Cho Ha’s rejection of the reappointment of a Port Klang Authority (PKA) independent director has raised questions as to whether this signals the dismantling of reform policies put in place by experts.

NONE It also sparked concerns that all the legal action taken by PKA board to recoup financial losses in the Port Klang Free Zone (PKFZ) project will grind to a halt if there are insufficient independent directors on the board.

After Ong Tee Keat (right) took over the Transport Ministry - which oversaw PKA in 2008 - he had the multi-billion ringgit PKFZ scandal investigated. He then took the advice of external professional bodies and implemented several reform mechanisms.

These included an internal whistle-blower policy; the requirement for contract bidders to sign an integrity pact; and most importantly, the appointment of three independent directors on the PKA board to ensure its integrity and competency.

The PKA ad-hoc committee on governance, one of the many committees initiated by Ong to improve governance, had recommended that one-third of the 10 board members should be independent directors.

Subsequently Ong appointed three independent directors, namely senior lawyer Ng Mann Cheong, then president of Malaysian Institute of Accountants Nik Mohd Hasyudein Yusuff and former PKA general manager M Rajasingam.

Nik resigned last year when the Securities Commission named him the executive chairperson of the Audit Oversight Board.

Rajasingam's term expired last November but Kong rejected the board's recommendation to reappoint him. This leaves Ng as the only independent director.

NONE Although the law empowers the minister to appoint PKA directors, Transparency International Malaysia president Paul Low (left) , who chaired the PKA ad-hoc committee on governance, said Kong's decision has defeated the purpose of having independent director.

"We (the committee) defined the independent director as someone recommended by the board without influence by the minister," said Low when contacted last week.

"I worry that, in future, there will be no independent director in PKA."

Low stressed that the purposes of appointing independent directors are to provide checks and balances and to bring in members with the relevant competency to help with the oversight of PKA.

He described Rajasingam as someone who is "highly competent and very knowledgeable in the affairs of the PKA and the operations of the ports".

During Rajasingam's tenure as general manager, the PKA had accumulated a cash surplus of about RM500 million.

Apart from the three independent directors, three directorships are traditionally reserved for political appointees from Umno, MCA and MIC respectively, and the remaining posts are filled by civil servants.

The chairmanship is reserved for a MCA politician, currently assemblyperson Lee Hwa Beng, whose term will expired on March 31.

Possible scenario

Low is particularly concerned that the reconstituted board may not pursue PKA's legal suits against PKFZ turnkey contractor Kuala Dimensi Sdn Bhd (KDSB) to recover taxpayers' money.

"(The directors) are all political appointees and civil servants (who get their) instructions from the minister," he said, pointing out that one independent director would be insufficient to influence the board's decisions.

"What I’m afraid of is that, one morning, we will wake up to find that all the cases have been withdrawn."

Kong had shocked the nation in saying that there was no need to re-examine the PKFZ scandal last year, when he took over the ministerial portfolio from Ong.

bagan pinang kong chor har 051009.jpg During his eight-month tenure as transport minister, it appeared that Kong (right) did not continue the momentum to push for the truth behind PKFZ scandal.

 

The high-powered 'super-task force' set up by Prime Minister Najib Abdul Razak in September 2009 to probe the scandal is yet to reveal its findings, even though it was only given six months to complete the task.

Following the investigations into the PKFZ scandal, PKA has filed suits against KDSB, former PKA general manager OC Phang as well as other companies and individuals, citing fraud in the project.

However the Shah Alam High Court struck out one of the suits against KDSB earlier this month.

This will ha NONE ve an impact on another criminal case - against former transport minister Dr Ling Liong Sik (in striped shirt) - as both cases refer to the same subject matter.

PKA has claimed that KDSB had double-charged the interest on the land purchase, while Ling was charged with withholding important information from the cabinet, resulting in approval of the land purchase with higher interest.

"A civil case is not binding on a criminal case, as the latter requires a higher burden of proof. Still, the court’s decision will have an effect on Ling's case, although it would be premature for me to say how," said PKA counsel Cindy Khaw when contacted recently.

The PKA board will meet on Thursday to decide whether it will appeal the court’s decision.