PKFZ scandal: Chan bypassed cabinet

(The Sun) Former transport minister Datuk Seri Chan Kong Choy is said to have bypassed the cabinet and sought approvals for projects related to the Port Klang Free Zone (PKFZ) directly from the prime minister.

This breached a directive by the cabinet secretary. Besides, he is alleged to have also ignored Treasury guidelines by not getting advice from the Ministry of Finance before approving variation works to contracts entered into by the Port Klang Authority (PKA).

Cabinet ministers, who will receive the report prepared by the Special Task Force on PKFZ tomorrow, will be informed of how their former cabinet colleague had kept them in the dark regarding approval of the project which eventually led to colossal losses.

The task force report also accuses Chan, who did not seek re-election at the last general election, of not seeking advice from the Attorney-General’s chambers on eight key agreements that PKA entered into with PKFZ turnkey developer Kuala Dimensi Sdn Bhd (KDSB).

The report, which will be tabled at the cabinet by Prime Minister Datuk Seri Najib Abdul Razak, also details how Chan had relied on a one-page letter from then project managers Jebel Ali Free Zone International (Jafzi) to seek the prime minister's consent to appoint KDSB as the turnkey developer and to develop the project in one phase.

He is also alleged to have failed to wait for the master plan from Jafzi and to seek Jafzi’s advice before deciding to enter into the development agreement.

Treasury guidelines state that approval from the Finance Ministry must be obtained with regards to any variation orders for sums exceeding RM20 million. It also requires that additional works must be implemented via an open tender process.

Sources tell theSun that the report also states that PKA general manager Datin Paduka O.C. Phang entered into agreements for additional works without any proper documentation which shows the government approved that the project, which was originally meant to be self-financing, would become government-financed.

Apparently she had relied on a letter with the words “saya setuju” (I agree) from the prime minister, given by Chan to proceed with the agreements.

The report also states that the Transport Ministry and PKA ignored the Finance Ministry’s financial structure by acquiring the land compulsorily.

The Finance Ministry had suggested that the government pay for land and lease to PKA, with the development cost funded by government-guaranteed bonds issued by PKA, subject to certain conditions including that the award of development contracts be done by open tender.

This would have cost the government RM1.2 billion. Instead, the Transport Ministry and PKA bought the land directly from KDSB on deferred payments for RM1.808 billion. (The land was bought in 2001 when Tun Dr Ling Liong Sik was the transport minister).