We provide you with a simplified version of the case, along with a list of who's who and a timeline that explains the dealings.
Here are some current articles to help you catch up on the issue:
April 21: Further clarification on PKF
April 27: MoT not the cause for PKFZ report delay
The principal characters in the PKFZ fiasco:
| Characters | Involvement |
| Port Klang Authority (PKA) | - Bought 999.5 acres of land from Kuala Dimensi Sdn Bhd (KDSB) for RM1.09 billion. - Chairperson OC Phang and the board have been criticised for approving the PKFZ project. |
| Datuk Lee Hwa Beng | - Chairperson of the Port Klang Authority (PKA). - Appointed in May 2008. |
| Datuk Seri Tiong King Sing
| - Director, major shareholder of Wijaya Baru Global Bhd. Wijaya in turn owns: o Kuala Dimensi Sdn Bhd (KDSB), which set up/owns: - Transshipment Megahub Sdn Bhd · Set up to develop the PKFZ - Valid Ventures Bhd · set up to issue bonds worth RM510 million and up to RM85 million commercial papers/medium commercial papers/medium term (CP/MTN) to finance the additional development works in the PKFZ. - Free-Zone Capital Bhd · Set up to issue bonds worth RM410 million and up to RM 70 million CP/MTN. o Great Profile Sdn Bhd - Sarawak Progressive Democratic Party youth chief and chair of the Barisan Nasional’s Backbenchers club. |
| Datuk Azim Zabidi
| - Chair of KDSB. - Former Umno treasurer. |
| Tan Sri Chan Kong Choy
| - Former transport minister. - Project was carried out during his time in office. |
| Datuk Seri Ong Tee Keat | - Current transport minister. - He has promised to issue a statement explaining how the cost overrun expanded from RM1.845 billion to RM4.6 billion. |
| Special Port Vehicle Bhd
| - Set up by the Securities Commission to accept future receivables from the PKA. - KDSB enters into a sale of assets agreement and absolute legal assignment with SPV for the issuance of RM 1.31 billion asset-backed serial bonds in 2003 to facilitate land acquisition. |
| Jebel Ali Free Zone International
| - A Dubai-based company appointed by the PKA to manage the PKFZ. - Suddenly terminated its 15-year contract to manage the PKFZ, bringing the issue to the forefront once again. |
| Datuk Shahril Abdul Samad | - Headed the Parliament’s Accounts Committee (PAC) which inquired into the cost overrun in setting up the PKFZ. |
PKFZ timeline
(Reproduced from The Edge Malaysia Weekly April 27 – May 3)
2002
The saga of the Pork Klang Free Zone (PKFZ) starts with the inking of the sale and purchase agreement between Kuala Dimensi Sdn Bhd (KDSB) and the Port Klang Authority (PKA) on November 12, 2002.
KDSB, a company that is 70% owned by Datuk Seri Tiong King Sing, sells 999.5 acres of land in Pulau Indah, Selangor, to the PKA for RM1.09 billion or RM 25 psf. Tiong is a director and substantial shareholder of Wijaya Baru Global Bhd, which is the holding company of KDSB.
Great Profile Sdn Bhd, which is a wholly-owned subsidiary of of Wijaya, owns 753.1 acres of the land. Great Profile’s share of the proceeds totals RM820.1 million.
The PKA is to pay KDSB the balance of the purchase price of RM 979.61 million over 15 years in deferred payments.
It is reported that KDSB had acquired the land from Pulau Lumut Development Cooperative Bhd for only RM 95 million of RM 3 per square feet.
The Attorney-General gives the view that the land could have been acquired for a “public purpose” under the Land Acquisition Act at RM 10 per square feet rather than RM 25 per square feet.
Instead, the ministry of transport and the PKA undertake the land purchase on a “willing buyer, willing seller” basis.
2003
The Securities Commission approves the issuance of bonds by a bankruptcy remote special purpose vehicle, Special Port Vehicle Bhd (SPV), to acquire future receivables from the PKA.
To facilitate the payment of the land acquisitions, KDSB enters into a sale of assets agreement and absolute legal assignment with SPV for the issuance of RM 1.31 billion asset-backed serial bonds on July 21.
Great Profile receives RM820.1 million of this amount.
Under the development agreement dated February 27, 2003, and supplement agreements dated May 26, 2003, and March 27, 2004, KDSB is appointed by the PKA to develop the PKFZ to include office blocks, transshipment facilities, light and medium industry facilities and warehouses. KDSB in turn appoints Wijaya as the main subcontractor. Both companies are controlled and owned by Tiong.
The total project cost, not including land acquisition, is estimated at RM 1.32 billion.
For the development of the PKFZ, a special purposes company, Transshipment Megahub Bhd (TMB) is set up by KDSB.
TMB issues RM1.095 billion fixed-rate serial bonds and up to RM360 million commercial papers/medium commercial papers/medium term (CP/MTN) notes to finance the development of the PKFZ.
The payment comprises interest accrued on balance payable to KDSB at 7.5% per annum, professional fees and any variation orders that may be assigned to the bondholders and CP/MTN holders.
2005
On November 30, a supplemental agreement is executed between the PKA and KDSB. This time it is for additional development works encompassing junction improvements and construction of electrical infrastructure and a business class hotel.
Valid Ventures Bhd (VVB), another wholly-owned company of KDSB, is set up to issue bonds worth RM510 million and up to RM85 million CP/MTN to finance the additional development works in the PKFZ.
The total contract value is estimated at RM510.38 million, excluding the variation order.
However, the total payment from the PKA is estimated to be RM 677.1 million, which includes professional fees, variation order and interest accrued on works done.
Payments from the PKA is on a deferred basis, amounting to RM150 million per annum from 2007 to 2009, RM120 million in 2010 and the last payment in 2011. The payment comprises interest accrued on balance payable to KDSB at 5% per annum.
2006
KDSB sets up another wholly-owned subsidiary, Free-Zone Capital Bhd (FCZB), for the purpose of issuing bonds worth RM410 million and up to RM 70 million CP/MTN.
The proceeds are to finance additional development works at the PKFZ, comprising concrete trenching for electric cables, electrical works for 33KV power supply to designated precincts, civil infrastructure works to the main intake station, direct access pad from the project site to Westport and a link road from the site’s main access roads to Westport.
The project is estimated to cost RM335.8 million, excluding the variation order and professional fees. The issuance of CP/MTN up to RM70 million was meant to finance the variation order and the corresponding professional fees for the additional development works.
A total of RM3.77 billion is raised for the PKFZ project, which includes land and development costs. All the bonds and CP/MTN are assigned triple “A” by Malaysian Rating Corp Bhd due to government backing for the PKA to undertake the project.
In addition, letters of support are issued by the government to the lead arrangers of the bond issue.
2007
In June, the PKA makes payments to SPV and TMB of RM 130 million and RM 230 million respectively.
However, the PKFZ is dragged into the limelight after the management company of the PKFZ – Jebel Ali Free Zone International (Jafzi) – suddenly decides to terminate the 15-year contract to manage the free trade zone effective from July 18, 2007. Until October 2007, the project’s viability continues to be a public issue, culminating in a meeting between the PKA and Parliament’s Public Accounts Committee (PAC) that lasts for two hours.
The PAC, headed by Datuk Shahril Abdul Samad, questions the huge cost overrun for setting up the regional industrial park. The original cost for setting up the free zone was RM1.845 billion, but this swells to RM 4.6 billion when the project is completed four years later.
The ministry of transport in a press release puts the blame on Jafzi or mismanagement.
It is learnt that the initial plan for the PKFZ is to develop in two phases, covering 500 acres at the cost of RM400 million. However, the entire project was developed in a single phase. Project development cost alone came upt to about RM2.84 billion.
The government gives a soft loan totaling RM4.6 billion to the PKFZ. This, coupled with the cost and terms of the project, raises a public outcry.
In November, Tan Sri Chan Kong Choy, then transport minister, dismisses suggestions that the RM4.6 million soft loan is a bailout, saying that it would be paid back as the lifespan of the free trade zone is about 50 to 60 years.
2008
PricewaterhouseCoopers (PwC) is appointed the external auditor to help uncover the reason for the RM 4.6 billion soft loan.
Datuk Seri Ong Tee Keat takes over as transport minister. He promises to issue a statement explaining how the cost overrun has ballooned from RM1.845 billion to RM 4.6 billion.
2009
On April 10, Ong announces that PwC has completed the audit but it is now up to the PKA to release the report. An official of his ministry later explains that there is a snag in getting certain documents declassified, which involves another agency, not the ministry of transport.