Public interest should have been considered, says Ong

Saturday July 31, 2010

PETALING JAYA: Public interest should have been considered in the decision to make Port Klang Authority (PKA) pay Kuala Dimensi Sdn Bhd’s (KDSB) special purpose vehicle Free Zone Capital Bhd, a former minister said.
Datuk Seri Ong Tee Keat said his hopes turned to despair when he found out that his successor Transport Minister Datuk Seri Kong Cho Ha might exercise his ministerial prerogative to make out the payment.
“While I recognise that this is a privilege of the minister, the exercise of this right must be tempered with sound reasoning and, more importantly, considered with the people’s interest at heart,” he said in his blog http://www.ongteekeat.net yesterday.
On Wednesday, a statement from the Transport Ministry said the Government had decided that PKA should make payments to special purpose vehicles as set out in its payment schedule.
The statement added that all relevant factors were taken into consideration when making the decision to pay, including the Govern­ment’s commitment to bondholders and the obligations of PKA under the agreements signed.
The special purpose vehicles – Transship­ment Megahub Bhd, Valid Ventures Bhd, Special Port Vehicle Bhd and Free Zone Capital Bhd – were involved in turnkey developer KDSB’s effort to raise funds from the bond market to finance the Port Klang Free Zone (PKFZ).
In his blog, Ong said justifying payment by giving the reason “pay according to what has been decided much earlier, according to the schedule that was set a long time ago” was a foolhardy move.
He added that any decision on payment must also consider several other factors, including:
> The existence of new facts – the “missing link” in the PriceWaterhouse Coopers Advisory Services report, of letters revealing that KDSB had given undertakings or guarantees that it would cover any shortfall in repayments towards the bonds should PKA fail to do so.
> The above supported the contention that the “letters of support” provided by Ong’s predecessors at the Transport Ministry were not guarantees, and effectively released the pressure on the Government to pay the bonds.
Ong said there was at least RM1.4bil in disputed claims for all principal agreements between KDSB and PKA, of which more than RM2bil was payable as scheduled until 2017.
“Sweeping the dirt under the carpet will not make the problem go away. I hope the current minister and PKA have enough gumption to carry out the pledge to continue with the PKFZ probe,” he wrote in his blog.
PKA, which directly oversees PKFZ, has sued KDSB for RM1.4bil over cost overruns.
The project cost, initially estimated at RM2.5bil, had ballooned to RM4.6bil.

thestar.com.my