A month before the sales and purchase agreement for the Port Klang Free Zone (PKFZ) land deal was signed, the Finance Ministry had expressed reservations about the impending transaction.

Revealing this in the Kuala Lumpur High Court today, P Chandrasekaran, 56, a former principal assistant secretary in the ministry's maritime division, referred to a note dated Oct 29, 2002.

It was from the Transport Ministry to the cabinet summarising the PKFZ project and stating that the Finance Ministry had highlighted “many encumbrances” on Oct 23.

NONE He was testifying in the corruption trial of former transport minister Dr Ling Liong Sik.

Ling’s lawyer Wong Kian Kheong then asked if the summary had been prepared with the aim of persuading the cabinet to give its nod to the purchase of the 999.5-acre plot, instead of acquiring it compulsorily.

“No, the purpose was to inform and explain the confusion (to the cabinet),” replied Chandrasekaran.

“The Finance Ministry (pointed out the) encumbrances and the possibility of fraudulent misrepresentation by KDSB (landowner, Kuala Dimensi Sdn Bhd).

port klang free zone pkfz audit Prior to the purchase of the land the Treasury, among others, had proposed to acquire the plot to develop the mega-transhipment hub under the Land Acquisition Act 1960 at RM10.16psf instead of RM25psf.

The Transport Ministry in its summary denied any alleged ‘fraudulent misrepresentation’ and said that developer Port Klang Authority (PKA) would finance the project on its own. The land would be ‘free from encumbrances’ if the repayment period was set at 15 years.

In finalising the land deal, PKA and KDSB agreed on a revised proposal of 10 percent deposit, deferred payment period of 15 years, and 7.5 percent interest rate, among others.

Last month, the prosecution had established that PKA had bypassed procedures in inking the PKFZ land deal on Nov 12, 2009 even before the cabinet had given official approval.

Valuers ‘did not insist’ on RM25psf

Chandrasekaran also said the Valuation and Property Services Department (JPPH) did not protest about the RM25psf valuation despite having fixed the value at RM21psf.

Referring to minutes of a meeting on Jan 26 that Ling had attended with Chandrasekaran and representatives of JPPH, among others, Wong asked: “Do you agree that JPPH did not object to RM25psf based on (its) valuation?”

ong tee keat pkfz klang visit 060508 12 Chandrasekeran said “Yes”, and agreed that the government valuers had not objected to the interest rate of 7.5 percent either.

“Until December 2004, did you receive any complaints or objections from JPPH or Finance Ministry on the RM25psf or 7.5 percent interest?” asked Wong.

The witness said “No”.

Three JPPH witnesses had testified earlier that the deferred payment period acknowledged by the department was 10 years, not 15 years, and that the interest agreed by both PKA and KDSB was six percent, not 7.5 percent.

Ling faces a charge of deceiving the government by concealing the interest rate of 7.5 percent per annum. He is said to have committed the offence at the Prime Minister's Office in Putrajaya between Sept 25 and Nov 6, 2002.

He is accused of having committed deception with the knowledge it could cause wrongful losses to the government and despite being bound by a fiduciary duty to protect the government.

Ling also faces two optional charges:

  • Cheating the government by not revealing to the cabinet the facts relating to the interest rate; and

  • Cheating the cabinet into believing that the facts relating to the purchase of the land at the rate of RM25 psf and interest rate at 7.5 percent were approved and agreed to by the JPPH, when he knew there was no such consent.