Thesun 2009-05-06 Page01 Damning Disclosure
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Member of Audit Bureau of Circulations (Malaysia)
300,000 COPIES DAILY 30 SEN for delivery to your doorstep
Award winning newspaper for public service reporting and opinion writing.
No. 4752 PP 2644/12/2009 (023092)
Wednesday May 6, 2009
TELLING IT AS IT IS
The MusicMan rules
44 killed in attack on wedding party DIYARBAKIR (Turkey): Masked gunmen armed with assault rifles and grenades attacked a wedding party in mainly Kurdish southeast Turkey, killing 44 people, including many women and children. The fate of the bride and the groom was unknown. The attack on Monday evening was one of the worst involving civilians in Turkey. Interior Minister Besir Atalay said eight people had been detained. Initial evidence showed the attack was a result of a blood feud between families and not the work of separatist Kurdistan Workers’ Party (PKK) guerillas. “The state prosecutor has been working all night, listening to the accounts of eyewitnesses. Eight people have been caught and detained, and their weapons confiscated. This can be understood as a blood feud between two families,” Atalay told a news conference. He said 44 had been killed in the attack, including 16 women and six children. Earlier, authorities had said 45 had died. Television broadcasters said there had been a blood feud between the two families in the small village in recent years. Atalay said those detained and those who had been killed shared the same last name, pointing to inter-clan violence. The deputy governor of the province of Mardin, Ahmet Ferhat Ozen, told Reuters by telephone the assailants stormed a house in Bilge village near Sultankoy, some 20km from Mardin, hurling grenades and opening fire on the wedding guests. “There were a few people, they broke into the house and started spraying the place with bullets, hitting both men and women. Their faces were covered with masks,” said a 20-year-old female eyewitness. She said there were some 200 people at the wedding party. The assailants escaped from the isolated region of Turkey on the border with Syria before soldiers surrounded the village and cut off road access. Pursuit of the attackers was being hindered by a sandstorm, authorities said. Local media said the families of both the bride and the groom included members of the Village Guard, a heavily armed state-backed militia set up to combat Kurdish separatist guerillas and provide intelligence in southeast Turkey. State-run news agency Anatolian reported the daughter of the village chief, called a muhtar, was being married when the attack, which lasted 15 minutes, occurred. “Evidence so far shows it was not the work of a terrorist group,” Atalay told reporters. – Reuters
» PTPTN may face RM46b deficit by 2020 pg4
www.sun2surf.com
» From Fergie reject to Barca colossus pg30
Sports
pg15
Damning disclosure PKFZ AUDIT REPORT REVEALS CONFLICTS OF INTEREST by R. Nadeswaran and Terence Fernandez [email protected]
ETALING JAYA: 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 Cooperative (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 t h e 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
P »
surveyor for PKFZ, was also a quantity surveyor for KDSB; PKA’s board of directors were not advised that the chairman of 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 attorneygeneral (A-G) was not sought. “The agreement between PKA and KDSB was not even vetted by the A-G,” said one source.
» »
» » »
»
»
»
Flashback: theSun expose on PKFZ in 2007
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 socalled 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 “cleanup 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.
» CHRONOLOGY OF THE PKFZ FIASCO Page 3
300,000 COPIES DAILY 30 SEN for delivery to your doorstep
Award winning newspaper for public service reporting and opinion writing.
No. 4752 PP 2644/12/2009 (023092)
Wednesday May 6, 2009
TELLING IT AS IT IS
The MusicMan rules
44 killed in attack on wedding party DIYARBAKIR (Turkey): Masked gunmen armed with assault rifles and grenades attacked a wedding party in mainly Kurdish southeast Turkey, killing 44 people, including many women and children. The fate of the bride and the groom was unknown. The attack on Monday evening was one of the worst involving civilians in Turkey. Interior Minister Besir Atalay said eight people had been detained. Initial evidence showed the attack was a result of a blood feud between families and not the work of separatist Kurdistan Workers’ Party (PKK) guerillas. “The state prosecutor has been working all night, listening to the accounts of eyewitnesses. Eight people have been caught and detained, and their weapons confiscated. This can be understood as a blood feud between two families,” Atalay told a news conference. He said 44 had been killed in the attack, including 16 women and six children. Earlier, authorities had said 45 had died. Television broadcasters said there had been a blood feud between the two families in the small village in recent years. Atalay said those detained and those who had been killed shared the same last name, pointing to inter-clan violence. The deputy governor of the province of Mardin, Ahmet Ferhat Ozen, told Reuters by telephone the assailants stormed a house in Bilge village near Sultankoy, some 20km from Mardin, hurling grenades and opening fire on the wedding guests. “There were a few people, they broke into the house and started spraying the place with bullets, hitting both men and women. Their faces were covered with masks,” said a 20-year-old female eyewitness. She said there were some 200 people at the wedding party. The assailants escaped from the isolated region of Turkey on the border with Syria before soldiers surrounded the village and cut off road access. Pursuit of the attackers was being hindered by a sandstorm, authorities said. Local media said the families of both the bride and the groom included members of the Village Guard, a heavily armed state-backed militia set up to combat Kurdish separatist guerillas and provide intelligence in southeast Turkey. State-run news agency Anatolian reported the daughter of the village chief, called a muhtar, was being married when the attack, which lasted 15 minutes, occurred. “Evidence so far shows it was not the work of a terrorist group,” Atalay told reporters. – Reuters
» PTPTN may face RM46b deficit by 2020 pg4
www.sun2surf.com
» From Fergie reject to Barca colossus pg30
Sports
pg15
Damning disclosure PKFZ AUDIT REPORT REVEALS CONFLICTS OF INTEREST by R. Nadeswaran and Terence Fernandez [email protected]
ETALING JAYA: 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 Cooperative (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 t h e 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
P »
surveyor for PKFZ, was also a quantity surveyor for KDSB; PKA’s board of directors were not advised that the chairman of 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 attorneygeneral (A-G) was not sought. “The agreement between PKA and KDSB was not even vetted by the A-G,” said one source.
» »
» » »
»
»
»
Flashback: theSun expose on PKFZ in 2007
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 socalled 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 “cleanup 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.
» CHRONOLOGY OF THE PKFZ FIASCO Page 3
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