Yet another poser in Penang's PGCC project

The troubled Penang Global City Centre (PGCC) was dealt another blow today following a police report lodged by members of the Penang Turf Club - the site of the controversial RM25 billion project.

The report alleged that the Penang state government lost an estimated RM200 million in revenue when it took upon itself to re-zone the turf club land to ‘mixed development’ for the PGCC project.

In so doing, then chief minister Dr Koh Tsu Koon had helped PGCC developer Abad Naluri Sdn Bhd in not having to pay the hefty premium fee for the land conversion.

“What kind of deal is this when the state does not want to make money from its land? Why did Koh help Abad (Naluri) save the money? Isn’t this against state interests?” quizzed Tan Kok Ping, one of the complainants.

Tan and 12 other ordinary members of the turf club also alleged that the PTC committee could have abused its powers in its dealing with Abad Naluri.

Led by Tan, the police report alleged that the committee had extended its agreement with Abad Naluri inked in 2004 with a supplementary agreement four years later without obtaining the prior approval of the members.

“Despite several requests (from members), the committee of the PTC refused to provide copies of the supplementary agreement signed and other relevant documents between the club and the developer.

“Members are concerned that the 2004 agreement should be terminated due to breaches of non-fulfilment of the conditions but the club committee took it on their own to revive and extend it without obtaining the prior approval of the members,” he said.

Tan is requesting relevant authorities to investigate into the affairs of the club to “ensure it does not act in violation of the law and whether there is any criminal offence committed such as breach of trust, breach of fiduciary duty and abuse of power”.

Largest private sector project

The PGCC, located in the heart of the Georgetown, has been billed as the country’s largest private sector development project. It is also the single-biggest component of the Northern Corridor Economic Region development plan, launched last August.

The developer, Abad Naluri, is an associate company of Equine Capital Bhd controlled by businessman Patrick Lim, who is known to be a close friend of Prime Minister Abdullah Ahmad Badawi. Equine Capital holds 25 percent of Abad Naluri.

In recent weeks, a number of key shareholders have sold their stakes in Equine following news that the PGCC project would be shelved. The company was also hit by two resignations from its board of directors.

Mirroring its Kuala Lumpur counterpart, the PGCC boasts of two five-star hotels, a performing arts centre, retail complex, two office towers, residential properties, world-class convention centre, observatory tower, parking space, monorail transportation and public arena.

That original agreement between the PTC and Abad Naluri, signed in 2003, was for the sale of some 260 acres of the club’s land for RM488 million in order to develop the PGCC.

Abad Naluri only paid RM10 mil

Abad Naluri was expected to raise that sum and carry the financing for several years before the PGCC project starts contributing.

From the RM488 million, RM375 million was designated to build a new racecourse in Batu Kawan in the mainland after relocating from its existing course in the island's Batu Gantung Road while the remaining RM113 million will be paid to PTC in cash.

However, this agreement had allegedly lapse and Abad has paid only RM10 million in advances to PTC so far.

Correspondence between a PTC member and the committee on April 16 also revealed that Abad Naluri has yet to pay Penang Development Corporation - the state’s development agency - the RM46 million purchase consideration for the new 300-acre Batu Kawan racecourse.

Meanwhile, a supplementary agreement - which is currently in contention - was signed between the PTC president and two members on April 1 this year, granted Abad Naluri a renewable extension of three years in fulfilling their contractual terms.

Tan, when contacted, expressed his dissatisfaction on how this agreement was inked without informing the trustees of the club as well as some 580 ordinary members of the well-established horse racing and equestrian club.

“I’m lodging the police report now because we didn’t know earlier. I got my lawyer to contact the club to get hold of the agreements but they kept refusing me.

“We are all members of the club and we are entitled to see the agreements and documents pertaining to the sale of the club,” he asserted.

State gov’t lost RM200 million

Tan is also concerned with the loss of revenue for the club and state when the Penang government re-zoned the PTC land for ‘mixed development’ pursuant to the Penang Structure Plan, which was gazetted on June 28 last year.

“With the reclassification of the land use, the value of the land has increased many folds, yet the committee members decided to extend the 2004 agreement in that supplementary agreement.

“It was signed without taking into account the enhances value of the land and the interest of the PTC is seriously compromised,” he explained.

According to Tan, the low price of the PGCC land was a ‘steal’ for Abad Naluri because on a per square feet (psf) basis, the holding cost for the land was only about RM43 psf.

With the increase in land price after the structural plan came into effect, Abad Naluri did not have to pay a hefty premium to get the land converted for mixed-development purposes.

“The conversion premium was not applied for by PTC and this move by (former Penang CM) Dr Koh Tsu Koon saved Abad Naluri (under the pretext of owners of PTC) approximately RM200 million in premium fee for land conversion.

New CM: Project cannot proceed

Another poser to the deal arose when new Penang CM Lim Guan Eng announced that the PGCC project cannot proceed because it has yet to be approved by local government agencies.

According to Lim, not a single approval letter has been given to the developer by government authorities, whether the Penang Municipal Council or the land office.

He alluded that Prime Minister Abdullah Ahmad Badawi had given the wrong impression to the public that approval had been given when he launched the project with great fanfare last year.

In view of the situation, said Lim, the developer cannot start any work at the site or sell the project until the developers comply with the law.

PTC assistant general manager and secretary Leow Khin Ming when contacted declined to comment on the matter until he sees the police report.

“I think it is premature to comment on it at this moment. We will comment accordingly when we have seen the police report,” he told Malaysiakini .