The Finance Ministry countermanded the cabinet’s decision to purchase the controversial Port Klang Free Zone (PKFZ) land from landowners Kuala Dimensi Sdn Bhd (KDSB), the High Court in Kuala Lumpur was told today.

The ministry, following an order by the Treasury, had instead instructed “a compulsory acquisition” at a price of RM10.16 psf compared to the RM25 psf, a cost at which the land was purchased to develop the mega transhipment hub in November 2002.

The Transport Ministry’s former deputy secretary-general for planning, Abdul Rahman Mohd Noor, told the court the Port Klang Authority (PKA), however, insisted on purchasing the 999.5 acres of land in Pulau Indah.

NONE “This meeting chaired by (the former) LPK (using the Malay acronym for PKA) chairperson Ting Chew Peh ( left ) (was also) attended by (PKA’s) chief executive officer OC Phang, (and they were) still talking about the purchase, notwithstanding (the Finance Ministry’s) decision to acquire the land?” asked deputy public prosecutor (DPP) Tun Abdul Majid Tun Hamzah, to which Abdul Rahman agreed.

The Finance Ministry’s order was revealed in a letter dated June 12, 2001 from then-Treasury secretary-general Shamsuddin Hitam addressed to the Transport Ministry’s secretary-general Zaharah Shaari.

Abdul Rahman, 61, explained that PKA and KDSB had come to an agreement on a revised proposal of 10 percent deposit, deferred payment period of 15 years and 7.5 percent interest rate, among others.

“The proposal combines a development package of RM350 million notwithstanding MOF’s (Finance Ministry) decision that the project should be awarded via an open tender and funded through government bonds,” he said.

He agreed that acquisition of the land was different from buying over the 999.5 acres of land, as it incurred a much lesser cost.

Tun Majid: So the (finance) ministry’s decisions is to cancel the proposal to purchase the land and (appoint) KDSB as the turnkey contractor?

Abdul Rahman: Yes... in my opinion this letter cancelled the cabinet’s decision to buy the land.

Tun Majid: And the turnkey contractor?

Abdul Rahman: To my understanding the land was to be acquired and the project development was to be given via an open tender and what was suggested by KDSB was not agreed to.    

He also said that he informed then-transport minister Ling Liong Sik that the Finance Ministry’s decision is not line with the cabinet’s decision as an “early warning”, as the latter needed to be informed when briefing the cabinet.

Abdul Rahman added that Ling agreed with the Finance Ministry’s order to acquire the land.  However, at the concurrent time PKA and KDSB were still discussing the land purchase.

‘A problem with the Selangor government’

                

At that juncture, he said the reason behind the Finance Ministry’s decision to acquire the land instead of purchasing it was because of a problem with the Selangor government, without elaborating.

He added that on Jan 23, 2002, the Transport Ministry was asked to present a working paper to the cabinet, but PKA beat them to it by proposing to buy over the 999.5 acres of land using their own funds.

The witness had revealed yesterday that PKA was financially weak even before embarking to develop the mega transhipment hub.

The prosecution has amended one principal and two optional charges against Ling in relation to the PKFZ project.

azlan Ling, 68, pleaded not guilty before High Court judge Justice Ahmadi Asnawi on Monday.

He faces an amended principal charge of deceiving the government by concealing an additional interest rate of 7.5 percent per annum to the cabinet for the purchase of 999.5 acres of land in Pulau Indah for the trans shipment hub project.

He was said to have committed the offence at the Prime Minister's Office in Putrajaya between Sept 25 and Nov 6, 2002.

The interest rate was based on a rate of RM25 per sq ft, which worked out to RM1,088,456,000.

Ling 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;
  • 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, an agency under the Finance Ministry, when he knew there was no such consent.
The hearing continues on Monday with Abdul Rahman’s testimony.

 

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  • Cheating the government by not revealing to the cabinet the facts relating to the interest rate;
  • 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, an agency under the Finance Ministry, when he knew there was no such consent.
The hearing continues on Monday with Abdul Rahman’s testimony.