Has BN won the battle but lost the war?

IPOH, May 8 – Was anything achieved yesterday? This is the question that many are asking about the chaos that erupted in the Perak State Assembly.

It was the first time that Malaysians had seen such a spectacle at a legislative sitting, and on top of that, one that lasted five hours.

The assemblymen spent barely any time in their seats as members from the opposing parties wrested microphones away from one another, shoved one another around and generally behaved boorishly.

“It was utterly disgraceful. We expected them to have a showdown: name-calling, protesting and shouting, perhaps. What happened today was a new low in Malaysian politics,” wrote The Star’s group chief editor, Datuk Wong Chun Wai, in his blog.

In the end, Barisan Nasional (BN) prevailed. It managed to get an Assembly Speaker of its choice installed, and the one appointed by opposition coalition Pakatan Rakyat (PR) removed. The coalition has refused to recognise the new Speaker, but it might not try to force the issue again at the assembly’s next sitting.

Having a Speaker on its side will help BN conduct the business of the House smoothly, but has it won the battle only to lose the war?

Many analysts seem to feel that this might well be the case. Although both sides played a role in triggering the fracas and were equally unruly, BN could be the bigger loser in terms of public perception.

This is because the police were used to secure control of the assembly.

Pictures of ousted PR Speaker V. Sivakumar being hauled out of his seat and dragged from the hall have already made the rounds.

They captured what many, no doubt, will perceive as an iconic moment.

“It is seen as BN demonstrating that it has naked power,” said historian and political analyst Neil Khor. He noted that any gain would be “a pyrrhic victory” – one not worth winning given the losses suffered – as BN would ‘have to face the electorate at some time”.

He told The Straits Times that if the matter was not resolved, it would become a national issue by the next general election, which could have a painful impact on BN.

Analyst Khoo Kay Peng wrote in his blog that the police and the State Secretariat appeared to be “colluding with the politicians to complete the power grab”.

“The Perak democratic crisis has shown that it is a failed state. A caring and responsible coalition would have anticipated that ruling without the majority support of the people could not be carried out smoothly,” he noted.

The Bar Council, too, condemned the police intervention, and called it a bleak day for democracy.

However, Perak Mentri Besar Zambry Abdul Kadir, a BN man, defended the decision to call in the police, saying that the situation had become unruly.

“They (PR assemblymen) left their seats and rudely attacked BN and independent representatives, and created a chaotic and uncontrolled situation,” he said.

He noted that the sergeant-at-arms who had tried to remove Sivakumar was injured when PR assemblymen moved in to stop him.

Umno Youth chief Khairy Jamaluddin criticised the opposition for its actions in “purportedly fighting for democracy”.

“Our national image has been jeopardised by assemblymen who prefer anarchy,” he wrote in his blog.

Perak has been in political limbo since February, when BN seized control of the state through defections in PR’s ranks – a move that the opposition has asked the High Court to rule as illegitimate. The ruling is expected on Monday.

Nevertheless, like many others, the Bar Council believes that even the court’s decision might not adequately reflect the will of the people and that the only solution to the impasse might be to hold a fresh state election, although few are betting that one will actually take place.

“BN may now have control of the assembly and the administration, but they have to win back the hearts of the people,” said Khor.

It will be a very rocky road ahead for Perak. – Straits Times

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May 8, 2009 · Filed Under General

Comments

5 Responses to “Has BN won the battle but lost the war?”

eawan on May 8th, 2009 11:21 am

Tang manah ga kenya awak ka meri tunjuk ajar ka kitai di Sarawak ditu..ngajar bala YB’s anang nyadi pak turut aja…nya baru demonstrating how loyal sida ka rakyat nan ka hak raykat ke udah ngundi sida nyadi YB..anang ngambi ka diri empu aja..
din on May 8th, 2009 4:30 pm

Amai jako nya…..

Enda sabar nganti state election tu…
kelingmenua on May 8th, 2009 5:20 pm

Macam berat sebelah aja:
Nadai penyukong BN kena tangkap mina penyukong penykal enggau YAB penyakal.

Muka runding enggau penemu kitai swak.
Dyaks on May 8th, 2009 5:53 pm

The PKFZ saga in brief
Written by Lam Jian Wyn, Thursday, 30 April 2009

The long-drawn Port Klang Free Zone (PKFZ) issue took another turn with The Edge Malaysia’s expose on the mammoth project, both in size and cost.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 9: Ong passes buck to PKA on PKFZ scandal

April 21: Further clarification on PKF

April 26: Ong slams business publication over PKFZ report

April 27: MoT not the cause for PKFZ report delay

April 28: Najib to hear out Tee Keat on PKFZ declassification

April 29: Tee Keat orders release of PKFZ report in a week

April 30: Govt dept to do away with burdensome practice

Finally — PKFZ report to be made public

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(SPDP) youth chief and chair of the Barisan Nasional’s Backbenchers club.
- current MP for Bintulu

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 Shahrir 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.

2004

In July, the PKA makes and initial payment of RM100 million to KDSB. The balance is payable on a deferred basis, stretching up to 2017.

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 Shahrir 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.

_______________________________________

PKFZ audit report: Damning disclosure

by R. Nadeswaran and Terence Fernandez, The Sun

The independent audit report on the Port Klang Free Zone (PKFZ) which is expected to be released this week is a damning disclosure of mismanagement, clandestine deals, conflicts of interest and a total disregard for transparency and accountability for a project which was supposed to cost RM1.845 billion but ended up at RM4.6 billion.

Sources told theSun that among the findings of PricewaterhouseCoopers (PWC) are that:

» No proper studies were undertaken before embarking on the project;

» Major decisions on the project were made without prior approval of the Port Klang Authority (PKA) board;

» The PKA chairman and general manager entered into agreements without seeking the advice of the relevant government authorities;

» There was a failure to exercise adequate governance and implement checks and balances in the implementation of the project.

PWC was commissioned by PKA to probe the troubled project a year ago following an expose by theSun in 2007.

The audit report also detailed a series of conflict of interest situations:

» Sementa assemblyman Datuk Abdul Rahman Palil was both the Pulau Lumut Development Co-operative (KPPL) chairman and a PKA director in 2002 when the land for PKFZ was sold by KPPL to PKA;

» Rashid Asari & Co, the legal firm retained by PKA, was also the same firm overseeing the inking of the sales and purchase agreement between KPPL and turnkey contractor Kuala Dimensi Sdn Bhd (KDSB). A point to note is that its senior partner, Datuk Abdul Rashid Asari, was the deputy chief of Umno’s Kapar division, where Tan Sri Onn Ismail is an exco member. Onn was the KPPL chairman and his son-in-law Faizal Abdullah, the then Kapar Umno division youth chief, is also the deputy CEO of Wijaya Baru Global Bhd (WBGB), the firm appointed by KDSB as the main subcontractor;

» Perunding BE Sdn Bhd, appointed by PKA as the independent quantity surveyor for PKFZ, was also a quantity surveyor for KDSB;

» PKA’s board of directors were not advised that the chairman of the PKA at one time was also the deputy chairman of WBGB;

» KDSB directors Omar Latip and Idris Mat Jani are also directors and shareholders of WBGB.

One contributory aspect to the PKFZ mess, the sources added, was that several Finance Ministry regulations on transparent accounting practices were not complied with and that the advice of the attorney-general (A-G) was not sought.

“The agreement between PKA and KDSB was not even vetted by the A-G,” said one source.

The A-G had suggested the government acquire the 404ha for the development of the free zone instead of purchasing it from KDSB at an inflated rate of RM25 per sq foot, although KDSB had purchased the land from KPPL for only RM3 per sq foot.

The source goes on to reveal KDSB’s questionable conduct by overcharging PKA in interests of up to RM300 million, while hidden costs amounting to RM100 million were not revealed to PKA, hence the purchase price of over RM1 billion.

“There was an absence of competitive open tenders with KDSB being awarded the contract to develop the free zone even before the master plan for PKFZ was completed,” said the source, adding that the audit report showed that contracts were entered into merely on estimation of the projected costs.

The report, it is said, also specifies that while the intention of setting up the free zone was to transform Port Klang into a regional trans-shipment hub, cost escalations, poor governance by PKA coupled with weak project management had undermined the viability of PKFZ as well as PKA’s financial obligations where its reserves of RM500 million have been all but wiped out.

“If all these bases were covered, then PKFZ would have been a goldmine,” said another source.

The audit report also paints a troubling picture of officials in the Transport Ministry, noting that so-called letters of support signed by a former minister for the issuance of the bonds could be construed as a guarantee and that PKA would have to meet its financial obligations under such an arrangement.

Instead of complying with the Treasury’s recommendations of issuing government bonds and developing the project in phases, thereby benefitting from lower coupon rates, PKA decided to develop the free zone in one go, having to pay double the rate, estimated at about 8%. Hence, there are concerns the project cost could balloon further.

It is learnt that the report also noted that PKFZ only enjoys an occupancy rate of 16% to 19%.

“However, one is confident that with the new team at the helm the project is salvageable,” said another source, attributing the disclosure of the PKFZ fiasco to efforts by Transport Minster Datuk Seri Ong Tee Keat and the “clean-up crew” of PKA chairman Datuk Lee Hwa Beng and PKFZ general manager Lim Thean Shiang, who took over from Datin Paduka O.C. Phang last year.

It is learnt that Lim briefed government backbenchers on the audit report yesterday.

An MP, when contacted, said the closed-door briefing was meant to keep them abreast of the issues before the audit becomes public.

Ironically, current Backbenchers’ Club chairman, Bintulu MP Datuk Seri Tiong King Sing holds a controlling stake in KDSB. Former Umno treasurer Datuk Abdul Azim Zabidi is also a director of KDSB.

The PKFZ fiasco: Chronology

2002
Kuala Dimensi Sdn Bhd (KDSB) and Port Klang Authority (PKA) sign deal on Nov 12 in which the former sells 999.5 acres in Pulau Indah to the latter for RM1.09 billion or RM25 psf. KDSB, which is 70% owned by Datuk Seri Tiong King Sing, had reportedly bought the land from Pulau Lumut Development Cooperative Bhd for only RM95 million or RM3 psf.

2003
PKA appoints KDSB to develop PKFZ to include office blocks, transshipment facilities light and medium industry facilities and warehouses. The total project cost, excluding land cost, is estimated at RM1.32 billion. KDSB in turn appoints Wijaya Baru Global Bhd as main sub-contractor. Both companies are controlled by Tiong.

2005
PKA and KDSB sign supplemental agreement for additional development works, including building a business class hotel. Total contract value is estimated at RM510.38 million, excluding variation order.

2007
July 18: Dubai-based Jebel Ali Free Zone (Jafza), which was to manage PKFZ, pulls out on July 18, citing “strategic purposes”.

Aug 13: theSun exposes correspondences between Jafza and PKFZ indicating the former quit due to red tape, bureaucracy, interference by politicians and those with vested interests, deliberate incorrect minuting of meetings, issues pertaining to the chain of command and even attempts at tax evasion by Malaysian negotiators.

Then Prime Minister Datuk Seri Abdullah Ahmad Badawi asks Transport Minister Datuk Seri Chan Kong Choy to explain why concerns by Jafza addressed to Chan were not entertained.

Aug 20: theSun reveals that the Transport Ministry had issued four “letters of support” between 2003 and 2006 which were used by turnkey contractor KDSB to raise bonds and get an AAA rating from the Malaysia Rating Corporation Bhd. The documents were, in fact, letters of guarantee which only the Treasury can issue.

Aug 28: Transport Minister Datuk Seri Chan Kong Choy denies allegations that PKFZ is a failure. He tells Parliament that since Nov 1, 2006, it had attracted 30 investors bringing in investments of RM725 million and 809 jobs.

Sept 6: PKA general manager Datin Paduka O.C. Phang and officials from the Transport Ministry appear before the Public Accounts Committee (PAC) but PAC chairman Datuk Shahrir Abdul Samad is not satisfied with answers pertaining to the project’s financing.

Oct 18: PAC visits PKFZ but again comes away with more questions than answers.

2008
March 25: Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim proposes that the state government take over PKFZ at book value of RM1.

May 5: Newly-appointed PKA chairman Datuk Lee Hwa Beng tells theSun that an independent audit has been commissioned for PKFZ.

June 6: Lim Thean Shiang takes over from O.C. Phang as PKA general manager and executive chairman of PKFZ.

2009
April 29: Following declassification of the independent audit report, Transport Minister Datuk Seri Ong Tee Keat orders that the PriceWaterhouseCoopers findings be made public in a week. He said he intends to submit the report to the Malaysian Anti-Corruption Commssion (MACC) and PAC.
Dayak Jihad Militant. on May 25th, 2009 8:36 pm

Berjihat untuk Keadilan Rakyat Perak.

-Kerajaan BN dan Sultan Perak akan buat apa saja yang boleh sesuka hati untuk kekal Memerintah dan Berkuasa. Peluang Pakatan Rakyat untuk merampas kuasa kembali daripada BN adalah sukar dan tiada jalan kecuali melalui Pilihan Raya 3 DUN Bebas yang keluar Parti PR atau bubar DUN Perak. Untuk tunggu Pilihan Raya Umum akan datang masih terlalu jauh/lama.
-Cara yang paling berkesan ataupun Kamikase/Mati Perang Jihad Politik ialah semua Wakil Pakatan Rakyat perlu/mesti meletak jawatan (Resign) kosongkan semua kerusi Wakil DUN PR Perak serta mert!. Kita tunggu dan lihat apa akan terjadi nanti dan seterusnya?. Apakah BN, Sultan Perak dan Rakyat akan berdiam diri dan tak ada jalan keluar dari masalah tersebut,jika semua Wakil Rakyat DUN Perak PR meletak jawatan beramai 2x ataupun Kosongkan kerusi DUN PR masing 2x.Supaya diadakan Pilihan Raya Umum Baru Negeri Perak.

-Berjihad untuk Keadilan Rakyat dan Rakyat pun sanggup mati dan berjuang untuk Kebenaran dan Keadilan semua kaum dan agama. Amin! Amin!