No.

Summary

Paragraph in PKFZ Report

Authority to Enter into Agreements

1

The proposal to purchase the Land was approved by the Cabinet. However, subsequent development proposals were not tabled to the Cabinet for approval.

Para 4.5

2.

Port Klang Authority (PKA) failed to alert the Cabinet in a timely manner on its inability to finance the Project from its internal funds.

Para 4.8

3.

The Board did not exercise oversight and adequate governance over the implementation of the Project

Para 4.10

4.

Advice of the Attorney General was not sought and certain Ministry of Finance (MOF) regulations were not complied with.

Para 4.18

5.

There could be potential conflicts of interest arising from the involvement of parties who had prior association with either the Land or Kuala Dimensi Sdn. Bhd. (KDSB).

Para 4.19

Financial Implications of the Agreements

6.

Interest on MOF soft loan will increase the Project outlay from RM4.947 billion to RM7.453 billion. Unless the MOF soft loan is restructured, total outlay for the Project will increase to RM12.453 billion.

Para 4.24

7.

PKA could have reduced its funding costs had it complied with MOF’s recommendation to issue government-guaranteed bonds and developed the Project in phases.

Para 4.28

8,

The Land was acquired at special value which exceeded market value.

Para 4.33

9.

KDSB may have overcharged PKA for interest by between RM51 million and RM309 million in connection with the purchase of the Land.

Para 4.41

10.

Development Agreement 3 (DA3) was not a ‘fixed sum’ contract and did not stipulate a rate for professional fees claimable by KDSB.

Para 4.42

11.

PKA incurred claims of RM95.256 million for general preliminaries cost not expressly specified in the DA.

Para 4.46

12.

The final account for DA3 did not include any deduction for value of work not done on three infrastructure components in the Land purchase agreements.

Para 4.51

Project Management and Status

13.

The RM1 billion development contract was awarded to KDSB before a project masterplan was finalized.

Para 4.57

14.

PKA may not have received value for money due to its heavy reliance on KDSB as the turnkey developer.

Para 4.61

15.

Project management and control over the Project was weak.

Para 4.63

16.

Project status as at 31 December 2008 – only the Light Industrial Units (LIU) have been issued with Certificate of Fitness (CF); defect liability period was expired and certain defects remain to be rectified.

Para 4.64

Ability to Meet Financial Obligations

17.

PKA has projected that it will be in a cumulative cash deficit position in 2012 and will not be able to repay the MOF soft loan instalments from that time on.

Para 4.74

18.

Letters of support issued by Ministry of Transport (MOT) could be construed as a guarantee that PKA would meet its obligations on a full and timely basis.

Para 4.78

19.

The Project’s actual occupancy of 14% is low and it is not generating sufficient revenue to cover its operating expenses.

Para 4.81

Financial Position of PKFZ Sdn. Bhd. (PKFZSB)

20.

PKFZ Sdn. Bhd. (PKFZSB) has incurred losses since its incorporation and has negative shareholder’s funds as at 30 September 2008.

Para 4.87