A former minister testified in the cheating trial of former transport minister Dr Ling Liong Sik today that he wasn’t cheated by Ling on the Port Klang Free Zone’s land deal during his tenure as a cabinet member.

NONE Former human resources minister Fong Chan Onn defended Ling ( right ), saying the land price of RM25 per square foot (psf) didn’t include interest.

“If we were to assume the land price of RM25psf was inclusive of interest, a deferred payment of 10 years and set at RM21psf cash value, the interest rate will be only RM4psf  or 19 percent for 10 years’ time.

“This equals to 1.9 percent of 40 sen per year. In my observation, this is way below the market norm, it’s too low and impossible,” Fong said in reply to defence counsel Wong Kian Kheong.

“When you served as a minister, were you deceived by my client (Ling) in the PKFZ (land) purchase?” asked Wong.

Fong told Justice Ahmadi Asnawi that he wasn’t deceived by Ling.

azlan Fong was dean with the Economic Faculty of Universiti Malaya in the 70s before becoming actively involved in politics. He served as a minister from 1999 to 2008 and has been a parliamentarian since 1990.

The fifth defence witness also explained at length an official valuation letter for  the PKFZ land price issued by JPPH to the Transport Ministry in September 2000, which was relied on by the prosecution on the cheating charge as proof.

Fong emphasised that RM25psf inclusive of interest was not possible, given the special value or cash price set at RM21.

He also argued that the RM21psf mentioned can be arrived at through the discounted cash flow (DCF) method with a target rate of 8.25 percent.

Fong’s argument was based on his expertise in the DCF method which he taught as a professor in Universiti Malaya, and also his engagement by various government agencies to conduct feasibility studies for the Kuantan Port, Senai Airport and Johor Port.

‘DCF method is very common’

“We relied on the DCF method to evaluate the viability of these investments,” he said.

Fong explained that JPPH in its valuation letter had agreed the vendor issued a bond with a six percent coupon rate, while buyers expect a yield of 8.25 percent, meaning to pay RM25psf for the RM21psf in bond.

Asked if the method used in the official valuation was common, Fong took out his smartphone and answered, this is very common, even an application download can compute the method.

Ling is charged with deceiving the cabinet into approving the purchase of 999.5 acres of land for the PKFZ project, without informing the cabinet that RM25psf was exclusive of interest, which had allegedly resulted in losses for the government.

He was charged on July 29, 2010, under Section 418 of the Penal Code, which carries a penalty of up to seven years in prison, or a fine or both upon conviction. He faces two alternative charges.

During the cross-examining, deputy public prosecutor Manoj Kurup showed various cabinet documents in an attempt to get the witness to agree that the only price ever approved for the land by the government was RM1.08 billion or RM 25psf.

However, Fong maintained that the price of RM25psf was the base price, and that the total price after repayment would be folked out by the Treasury.

The trial will resume on Monday, with Faisal Abdullah,the deputy CEO of PKFZ turnkey contractor Kuala Dimensi Sdn Bhd, in the witness box.

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