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Speech at RM10 salary-cut motion         
by Lim Kit Siang  
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(Dewan Rakyat, Tuesday): On the very first day of the current 45-day budget parliamentary session from August 27 to December 19, 2007, I had highlighted the scandal of the RM4.6 billion Port Klang Free Zone bailout in an emergency motion to adjourn the House under Standing Order 18(1) for a debate on an issue of urgent, definite public importance as there had been no proper accountability to Parliament whether by the Transport Minister or Finance Minister despite the various exposes in the public domain, such as

• Hanky-panky in the purchase of the 1,000 acres for the PKFZ, despite objections by the Finance Ministry and the Attorney-General’s Chambers.

• Mismanagement resulting in the pull-out of Jebel Ali Free Trade Zone (Jafza) from the project, which could become a “white elephant”.

• Questionable cost-overruns of the PKFZ, ballooning to RM4.63 billion from the original estimate of RM1.1 billion.

• The unlawful and unauthorized Transport Ministry issue of four “letters of support” which were used by the turnkey contractor - Kuala Dimensi Sdn Bhd (KDSB) - to raise RM4.6 billion bonds and get an AAA rating from the Malaysia Rating Corporation Bhd. for the PKFZ project.

• Why the government and the 26 million Malaysians must now bear responsibility for a RM4.6 billion PKFZ bailout despite earlier assurances that the PKFZ project would be feasible, self-financing and would not involve a single Ringgit of public funds.

• Why the Prime Minister is breaching his undertaking of no bailout of mega-billion-Ringgit “white elephant” projects – with the PKFZ bailout set to be the biggest financial scandal at the beginning of any Prime Minister.

However, my emergency motion on the first day of the current meeting of Parliament was rejected by the Speaker, Tan Sri Ramli Ngah as not urgent.

Since then, for the past three months, I had repeatedly sought to demand government accountability for the RM4.6 billion PKFZ bailout scandal but to no avail, as I came up against the wall of prevarication and evasion, with the ball kicked from one Ministry to another, namely the Transport Ministry, the Finance Ministry and the Prime Minister’s Department. Nobody wanted wanting to give a proper answer or accept accountability, with everyone either falsely claiming that it had already been answered or would be answered by another Ministry.

I had raised the RM4.6 billion PKFZ bailout scandal during the policy and committee stages of the debate on the 2007 Supplementary Estimates and the 2008 Budget but Parliament and the nation have still to get satisfactory answers.

When I raised the issue during the 2008 Budget committee stage debate on the Prime Minister’s Department, the Minister concerned, Datuk Seri Nazri Aziz said questions on the PKFZ scandal should rightly be answered by the Transport Minister.

When I again raised the issue three Mondays ago during the committee stage of the debate on the Finance Ministry, the Parliamentary Secretary to the Finance Ministry, Datuk Seri Dr. Hilmi Yahya said he would answer by way of written reply. I asked for the written answer to be given within a week. Hilmi was non-committal. More than two weeks have passed and I am still waiting. What has Hilmi got to hide about the RM4.6 billion PKFZ scandal?

It was precisely because of this record and background of prevarication and evasion of accountability that I strongly protested last week at a “government-on-the-run” when the Transport Minister, Datuk Seri Chan Kong Choy left for London to attend the 25th International Maritime Organization (IMO) Assembly, which would mean another escape-act by the Minister from parliamentary responsibility and accountability over the RM4.6 billion PKFZ bailout scandal as the Transport Ministry was scheduled to be debated last Thursday.

At least the protest achieved the effect of ensuring that the Transport Ministry committee stage debate is put off from last week till today to enable the Minister to be back from London to come to Parliament to assume responsibility and accountability for his Ministerial portfolios.

I hope this will be the end of prevarications and evasions and a government on-the-run on the RM4.6 billion PKFZ bailout scandal.

I had in fact simplified the many questions on the RM4.6 billion PKFZ scandal which cry out for answer to five major ones, viz:

1. Was it true that when the Port Klang Authority and the Transport Ministry insisted on buying the 1,000 acres of Pulau Indah land for PKFZ at RM25 PSF on a “willing buyer, willing seller” basis, in the face of strong objection by the Attorney-General’s Chambers and the Treasury which had recommended that the land be acquired at RM10 PSF, the Cabinet had given its approval subject to two conditions: (i) categorical assurance by the Transport Minister that the PKFZ proposal was feasible and self-financing and would not require any public funding; and (ii) that every RM100 million variation in the development costs of PKFZ would require prior Cabinet approval.

2. In the event, the first condition was breached when the PKFZ project ballooned from RM1.1 billion to RM4.6 billion requiring government intervention and bailout while the second condition was breached with the original PKFZ development costs of RM400 million ballooning to RM2.8 billion without any prior Cabinet approval ever been sought for every RM100 million increase in development costs.

3. The Transport Minister had unlawfully issued four Letters of Support to Kuala Dimensi Sdn. Bhd (KDSB), the PKFZ turnkey contractor – to raise RM4 billion bonds, which were regarded as government guarantees by the market. The Transport Minister had no such powers to issue financial guarantees committing the government, as it could only be issued by the Finance Minister and only after Cabinet approval. The first Letter of Support was issued by the former Transport Minister, Tun Dr. Ling Liong Sik on May 28, 2003, which was Liong Sik’s last day as Transport Minister while the other three were issued by Kong Choy.

4. Whether it wasn’t true that in recognition that the four unlawful “Letters of Support” of the Transport Minister had nonetheless given implicit government guarantee to the market that the Cabinet had in mid-year to give retrospective approval for the unlawful and unauthorized four Letters of Support by the Transport Ministers in the past four years creating RM4.6 billion liability for the government in the bailout of PKFZ.

5. Why no action had been taken against the Transport Minister, Liong Sik and Kong Choy, as well as the government officials responsible for the unlawful issue of the four “Letters of Support”. Kong Choy had said that he did not know that he had no power as Transport Minister to issue such Letters of Support. Was this acceptable explanation for getting the government embroiled in the RM4.6 billion PKFZ scandal?

I have raised these questions of accountability, integrity and good governance many times in the current meeting of Parliament, but I have not been able to get any clear-cut answers.

Why is it impossible for the Transport Minister to give a simple “yes or no” answer to these questions if he has nothing to hide in the RM4.6 billion PKFZ scandal?

The time has come not only for the Transport Minister but also for the Prime Minister to end the conspiracy of denial-cum-silence about the RM4.6 billion PKFZ bailout as the largest financial scandal at the start of any Prime Minister in Malaysia – even bigger than the RM2.5 billion Bumiputra Malaysia Finance (BMF) scandal which led off the Mahathir premiership more than two decades ago.

Tun Dr. Mahathir had said at the time that the RM2.5 billion BMF scandal was a “heinous crime without criminals”. Are we having another bigger “heinous crime without criminals” in the form of the RM4.6 billion PKFZ scandal under the Abdullah administration?

If the Mahathir premiership could appoint a three-man Ahmad Nordin public inquiry into the RM2.5 billion BMF scandal, why is Datuk Seri Abdullah Ahmad Badawi not prepared to “walk the talk” of his pledge to lead a clean, incorruptible, accountable, transparent, trustworthy and responsible administration by establishing a public inquiry into the RM4.6 billion PKFZ scandal?

During the debate on the 2008 Budget on 10th September 2007, I had whether in the RM4.6 billion PKFZ scandal, the Port Klang Authority (PKA) and the Transport Ministry were acting in the best interests of the country or in the interests of Kuala Dimensi Sdn. Bhd (KDSB) and a select group of individuals instead.

There had been a long and intense battle over the price that should be paid to KDSB for the 1,000 acres of land, which the company had acquired for RM95 million in 1999, or about RM3 PSF.

Ranged on one side were the Treasury and the Attorney-General’s Chambers who wanted the land to be acquired “for public purpose” under the Land Acquisition Act at RM10 PSF while the Transport Ministry and PKA wanted to buy the land at RM25 PSF on a “willing seller, willing buyer” basis.

There was no denial when I said in the debate that it was my understanding that t the Transport Ministry and PKA had made this “willing seller, willing buyer” commitment with KDSB. As far back as 2,000, totally without authority of the Treasury or the Cabinet!

The Attorney-General’s Chambers in particular had objected to the “willing seller, willing buyer” pitch by the Transport Ministry and PKA, as apart from the much lower price valuation under the Land Acquisition Act, the 1,000-acre land were not free from encumbrances with several charges and caveats, which would tantamount to a “misrepresentation” or even “fraudulent misrepresentation”.

However, the PKA and the Transport Ministry finally had their way to conclude the “willing-seller, willing-buyer” land deal at RM25 PSF after the then Transport Minister, Datuk Seri Dr. Ling Liong Sik gave the Cabinet the categorical assurance that the PKFZ project was feasible, self-financing and would not require any government funding.

Again there was no denial that Liong Sik had given this specific guarantee to the Cabinet.

Why should the taxpayers be now responsible for the RM4.6 billion PKFZ bailout after the PKA and the then Transport Minister had rejected the proposal of the Treasury and the Attorney-General’s Chambers that the land be acquired under the Land Acquisition Act at RM10 PSF.

If the Treasury and the Attorney-General’s Chambers advice had been accepted, and some RM370 million public funds used to acquire the 1,000 acres of Pulau Indah land for the PKFZ, the country would not be faced with the RM4.6 billion PKFZ bailout scandal today.

With the land price shooting up some 19 times to RM1.8 billion from what KDSB paid (RM95 million in 1999), who were the beneficiaries at such inflated price?

This is why there should be a public inquiry to find out who had been the beneficiaries of the RM4.6 billion PKFZ scandal - whether personalities from MCA, UMNO as well as the BN MP for Bintulu, Datuk Seri Tiong King Sing, who is kingpin of KDSB and who had even threatened to institute legal proceedings over government failure to allow PKA to honor its agreement to pay RM25 PSF for the 1,000 acre Pulau Indah land.

The four “letters of support” by Transport Minister for the RM4.6 billion bonds issued by KDSB through special purpose vehicles

The issue of four “letters of support” by the Transport Minister for the RM3.8 billion bonds issued by KDSB, which were regarded as government guarantees, resulting in 3A ratings by Malaysia Rating Corporation Berhad (MARC).

This is unlawful and gross abuse of power as only the Cabinet can authorize such government guarantee for bonds and which can only be issued by the Finance Ministry. The four letters of support had never been authorized by the Cabinet.

The first letter of support was issued by the former Transport Minister, Datuk Seri Ling Liong Sik and the three others by Chan Kong Choy.

I had challenge any Cabinet Minister to deny that it was precisely because the government accepts that the Transport Minister’s “letters of support” were tantamount to government guarantees for KDSB’s RM4.6 billion bonds that the Cabinet has recently given retrospective approval to the unauthorized government guarantees to the KDSB bonds based on the four letters of support of the Transport Minister.

As a result, the Cabinet also approved the RM4.6 billion bailout of the PKFZ scandal.

On this question, the government has studiously avoided engagement.

The even more question is why no punitive action had been taken against the Transport Minister concerned who had unlawfully issued letters of support for KDSB’s RM4.6 billion bonds, which have forced the Cabinet to give them retrospective approval and the RM4.6 billion PKFZ bailout.

Was there an independent audit as to how the RM4.6 billion PKFZ scandal could have occurred, resulting in the Malaysian taxpayers having to bear its costs while a handful of cronies would have waxed rich with a windfall of millions, tens and hundreds of millions of Ringgit?

The first letter of support for the first issue of RM1.31 billion bonds by KDSB was issued by the former Transport Minister, Datuk Seri Ling Liong Sik on May 28, 2003 which was his last day as Transport Minister before going on a month’s leave and resignation.

Was the signing of the unlawful letter of support fror KDSB’s first issue of RM1.31 billion bonds Ling’s last act as Transport Minister? This raises grave questions about propriety and integrity of Ling in his last day in office as Transport Minister which must be thoroughly investigated.

Why has Liong Sik not been investigated and charged in court for gross abuse of power in his last day as Transport Minister, starting the process resulting in the RM4.6 billion PKFZ bailout scandal?

The same question applies to Kong Choy. Is it acceptable that he did not know as Transport Minister that he did not have the power to issue such Letters of Support, which could only be made by the Finance Minister and after approval by Cabinet?

There is no better answer than the one given by one poster on my blog, Jeffrey, as follows:

No, it is not acceptable. A Minister cannot plead ignorance regarding what he is authorized or not authorized to do as an excuse – and yet claim he is not half past six.

It is ironical that if a bank officer exceeds his authority in a loan approval by a few hundred thousand Ringgit he can be prosecuted under Banking and Financial Institutional Act for jeopardizing public funds but where a minister exceeded his authority committing public funds measured in terms of billions of Ringgit he is not only not held accountable but the government ratified his unauthorized acts.

There is another reason why it is completely unacceptable for Kong Choy to plead ignorance, for he was the Deputy Finance Minister for close to four years from Dec. 1999 to June 2003, before he was elevated as Transport Minister.

It is for this reason that I had said before that Chan should seriously consider resigning as Transport Minister to accept responsibility for issuing three unlawful Letters of Support, resulting in the RM4.6 billion PKFZ bailout scandal.

I am moving a RM10 cut motion not only because of the RM4.6 billion PKFZ scandal, Chan’s role as Transport Minister but also for the long record of prevarication and evasion of accountability and responsibility.
 

(27/11/2007)