PAC Something strange in the bonds issued by KDSB

KUALA LUMPUR (Aug 20, 2009): The Public Accounts Committee (PAC) said today it had found something "strange" in the bond issued by Port Klang Free Zone (PKFZ) turnkey developer Kuala Dimensi Sdn Bhd (KDSB).



Speaking to reporters after a briefing by Port Klang Authority (PKA) chairman Datuk Lee Hwa Beng, PAC chairman Datuk Seri Azmi Khalid noted that the bond was issued by KDSB, a private company that had entered into a contract with the government to develop PKFZ.

He said the government could still claim the money back from KDSB should it be found not fulfilling some of its obligations and also as a result of alleged irregularities involving the company to the extent of between RM500 million and RM1 billion.

However, the government still had to pay RM660 million annually to the bond holders whether or not the developer had delivered 100% of the work. This is the sum earlier mentioned by Tee Keat that has to be released to Kuala Dimensi .

"If there is an overclaim, the government can claim the money back from KDSB, but the government still has to pay for the bond because the money has been taken by the developer through the bond," Azmi said.
"This is the part which we feel is strange, that should be decided by a court of law should there be a legal suit."

Azmi explained that the government must pay the bond holders, who were domestic and foreign investors, because by failing to honour the payment, Malaysia's bond rating would be affected.
"We raise bonds all over the world and the government does not want Malaysia to be affected internationally as the government can still settle the dispute with KDSB," he said.

He felt that government bonds should ideally be issued by government agencies, unlike the KDSB bond, which was recommended by the government through the four letters of support issued by former transport ministers, which some parties argued were letters guarantee.

"There is a difference of about half a billion ringgit in interest when the bond was raised by KDSB and this is where we are looking at," Azmi said.
"It is not concluded yet and I do not want to say anything more."
Azmi also said PAC would support whatever action taken by the PKA over the PKFZ scandal but the action would be up to the authorities to decide.
He said the PKFZ special task force report was not given to the the PAC members because it was confidential to the PKA board.

The PAC members would be briefed by a KDSB representative next week and former PKA chairman and PKFZ executive chairman Datin Paduka O.C. Phang within the next two weeks.

"We hope to visit the PKFZ again as quite a number of tenants have moved in and we would like to see it first-hand to have a better perception," he said.
Azmi said the committee planned to finish the inquiry by early September.
Earlier, Lee briefed the committee for two hours on the report by the PKFZ task force.

I am very sure there's no need to explain these issues . They are clearly spelled out . Anyone reading these will come to understand the implication of the strangeness in the bonds issued by Port Klang Free Zone (PKFZ) turnkey developer Kuala Dimensi Sdn Bhd (KDSB).

Here's what the previous Transport Minister Chan has to say about PKFZ in 2004 .









Speech by Chan Kong Choy Congratulating PKFZ in 2004

http://www.scribd.com/doc/260746/Speech-by-Chan-Kong-Choy-Congratulating-PKFZ-in-2004