The investigation report prepared last year had been sent to the MACC Legal and Prosecution Division for further action. Lee handed over the audit report on the PKFZ to the MACC following the controversy on its viability and the cost of developing the project which had escalated to RM4.6 billion.
The audit report on PKFZ by PricewaterhouseCoopers (PwC) This report is confidential to Port Klang Authority (PKA) but was pasted in its entirety on the Port Klang Authority (PKA) website yesterday. The cost of the project had risen to RM7.453 billion, including interest costs, compared with its original price tag of RM1.957 billion.
The audit report entitled "Position Review of Port Klang Free Zone Project and Port Klang Free Zone Sdn Bhd" noted that the cost of the project, excluding interest, was at RM3.522 billion. Investigation into the 405-hectare PKFZ trans-shipment hub was initiated after it was revealed that its development cost jumped from below RM2.5 billion to RM4.6 billion.
The strategic intent of the Project was to transform ort Klang into a national load centre and regional transshipment hub. However significant project coasts, weak governance and weak project management have severely undermined the viability of the Project. It is imperative that Port Klang Authority (PKA) takes immediate actions to restructure the MOF soft loan of RM4.632 billion to avoid a potential default in 2012..............
......Cashflow projections prepared by PKA management show that PKA would be in a cumulative cash deficit position between 2012 and 2041, after paying two instalments to MOF. Should PKA fail to meet the Ministry of Finance (MOF) soft loan instalments as scheduled and if these instalments are deferred to match its projected cashflow, it would incur additional interest cost of approximately RM5 billion. This would further increase the outlay of the project to RM12.453 billion.
* There could be potential conflicts of interest arising from the involvement of parties who had prior association with either the land or KDSB.
* The land was acquired at special value which exceeded market value.
* KDBS may have overcharged PKA for interest by between RM51 million and RM309 million in connection with the purchase of the land.
* The RM1 billion development contract was awarded to KDSB before a projek masterplan was finalised.
Any constructive criticism and comment that would contribute to fair, frank and informed discussion on this posting to help achieve our national objective will be most appreciated. We need to have more open exchange of ideas on this sensitive but important subject in the context of the national vision and security.