Task force: Irregularities of RM500m to RM1bil in PKFZ

(Malaysian Mirror) – The special task force on the Port Klang Free Zone has identified discrepancies believed to be in the region of RM500m to RM1bil, following their probe into the legal and financial aspects of the  PKFZ.


Port Klang Authority chairman Lee Hwa Beng said the board is ‘very concerned’ that the amount in dispute totaled ‘hundreds of millions’ and is considering legal action against various parties.



“Since there may be instances of irregular claims and taxpayers’ money involved, the board has authorised me to make a police report,” he told reporters here Monday, after a meeting with the special task force. Present was Transport Minister Ong Tee Keat.


pkfz-lee.jpgLee said he will make the report at the Klang police station at 11am Tuesday.


Probe started two months ago

The task force, which was formed on June 11, started its probe following the release of a report on the PKFZ by auditing firm PricewaterhouseCoopers Advisory Services (PwCAS).



The task force has since submitted their own findings to the PKA, which said port authority members needed more time to consider in detail the panel’s lengthy report.



In the meantime, said Lee, the PKA board  had taken several decisions, including letting the quantity surveyors in the task force to ‘re-measure’ the works of  PKFZ turnkey developer Kuala Dimensi Sdn Bhd (KDSB), in order to establish the real sum owing to it.



Lee said there was a difference of at least RM93mil between claims made by KDSB and measurements made by the quantity surveyors in the task force.



“We believe there will be further differences in the re-measurement exercise,” he said.



“Our lawyers will be dealing with KDSB CEO Tiong King Sing and his deputy Faisal Abdullah,” he added.


Serious claims, negligence and wrongdoings


Lee said the meeting also discussed other possible serious claims, negligence, wrongdoings and irregularities as well as the issue of ‘unenforceability’ of certain agreements or parts of certain agreements.

He said there was evidence that the developer had made serious irregular claims under the development agreements, such as,

–          An electrical infrastructure of a 33kv system worth RM55.8mil, which has yet to be carried out, and

–          A 33kv supply works and civil infrastructure works worth RM83mil, for which Tenaga Nasional Bhd (TNB) had rejected KDSB’s proposal.

“In respects of claims for preliminaries of at least RM231mil under the development agreements, KDSB had not provided any documents to support the cost incurred as ‘preliminaries’.

Necessary and proper

“KDSB should prove that that each item in the breakdown of ‘preliminaries’ was necessary and properly incurred before it is entitled to make its claims.

“KDSB had also made claims for items they are not contractually entitled to; for instance,  their claim for the procurement of a performance bond and payment for insurance premiums; both totaling RM5mil.”Lee also drew attention to the following findings of the task force:


–  There appears to be no basis in respect of KDSB’s claim of RM62mil under additional development works (ADW) and new additional development works (NADW)

–  There appears to be an over-claim for the hotel works, for which KDSB had claimed RM69.6mil, compared to the quantity surveyors’ valuation of RM44.7mil.

–  In respect of claims for professional fees under development agreement III  (DA3) , KDSB is only entitled to the actual fee and expenses incurred. KDSB had not produced any invoices and payment vouchers for RM121.6mil of the fees allegedly incurred.



 In any event, the sum claimed by KDSB appears to be on the high side, given the value and nature of the project.


–  KDSB may not be entitled to claim the sum of RM254.9mil as am extra claim under DA3 because the purported revised works fall within the original scope of the works envisaged under land agreement I (LA1) and not DA3 under which it is claimed.

Concerned on issues brought to PKA

Thanking the task force for completing its findings within two months, Ong said he viewed with concern the various issues that had been identified and brought to the PKA’s attention.

pkfz-ong.jpg“My ministry is aware that the public demands transparency and accountability from the PKA.

“My instruction to the PKA is to do what is necessary and right in the exercise of their duties on the findings and recommendations of the task force’s report.

“If appropriate, the necessary legal action should be taken,” he added.

Asked if there would be any action taken against PKA directors based on previous reports of negligence, Ong replied: “This is just the first part.”

When pressed if there would be more legal action, Ong replied: “Yes. I said this is the first part."