Editor's note (June 21, 2011 7.35PM): The prosecution had made a protest the following day in court over inaccuracies found on paragraph eight. It was argued that the witness did not use the word "rare" in describing the scraping of a performance bond by PKNS for contractors.

A correction has been made. The change, however, did not affect the original report. Malaysiakini regrets the error.

The Selangor Development Corporation (PKNS) had once scrapped the 'performance bond' requirement for Proniaga Sdn Bhd, a company owned by Ditamas Sdn Bhd director Shamsuddin Hayroni, the Shah Alam High Court was told today.

NONE This was after Shamsuddin ( left ) lodged an appeal that was supported by a recommendation by then menteri besar Dr Mohd Khir Toyo, testified former PKNS general manager Harun Salim.

The performance bond for a residential development project in Bandar Baru Bangi was replaced with a director's guarantee, for which Shamsuddin had earlier testified that he personally put up RM2 million in cash.

Most PKNS contracts require the contractor to put up a performance bond as a guarantee that they will complete the project.

The prosecution tendered a handwritten addendum to the appeal letter as evidence. In it, Khir referred to Ditamas as a "bumiputera company" with "a good track record", and recommended that the bond requirement be dropped.

Under questioning by DPP Masri Mohd Daud and during cross-examination by lead defence counsel M Athimulan, Harun insisted that the process had followed procedures and that no special consideration had been given to Shamsuddin.

All decisions with regard to PKNS projects are decided by the Project Privatisation Committee, said Harun.

But questioned by the judge, Justice Mohtaruddin Baki, Harun said it was a "usual practice" for PKNS to impose a performance bond stipulation.

Harun was testifying in Khir's corruption trial which entered its eighth day today.

'Khir consulted'

Under further cross-examination by Athimulan after the lunch break, Harun denied that the RM2 million from Shamsuddin was for the director's guarantee, saying it was the initial 10 percent of a RM20 million profit-sharing agreement with PKNS, which was part and parcel of the contract agreement.

Harun also said that, even if Khir as PKNS chairperson had disagreed with the appeal, it would still have been forwarded to the Project Privatisation Committee.

He agreed with Athimulan that as general manager, he can act on his own on some matters relating to PKNS projects, independent of the committee.

"It depends on the matter that arises," he added.

Re-examined by Masri, he admitted that Shamsuddin had spoken with Khir on the appeal, but insisted that it was only for 'consultation' and 'discussion' purposes in the then-MB's capacity as PKNS chairperson.

He said he could not remember if the matter was ever brought up to the Project Privatisation Committee.

But he did recall that he had discussed the matter with his deputy and agreed to substitute the bond with a director's guarantee.

Harun also agreed that, according to the minutes of the committee meetings tendered as evidence, a working paper was to be formulated and submitted to Khir, and later to the committee.

But he could not confirm if the working paper was eventually tendered to either.

Asked by Masri why was there a clause instructing him to refer to and execute the recommendations of the report, Harun insisted that the report was also just for 'discussion' purposes.

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