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Tuesday, September 19, 2017

Hwa Beng: PKA could not afford to build PKFZ in single phase



Port Klang Authority (PKA) should not have agreed to develop the 1,000-acre Port Klang Free Zone (PKFZ) in a "single phase" in 2004 due to its weak financial standing.
PKA former chairperson Lee Hwa Beng said this when he testified in a civil suit brought by PKA against its former general manager OC Phang at the Shah Alam High Court for breaching her fiduciary duty.
Lee argued that even if PKA was able to rent out its RM1 billion properties, including land, buildings, and hotels upon completion, the rental collected would not be able to cover the cost of construction.


"The rental collected will not be able to pay off," he said in a proceeding before Justice M Gunalan.
It was later proven that some of the properties could not be rented out, Lee added.
"But at that time, nobody (in the PKA board) bothered to look into (this from the financial perspective). Nobody objected," he said when cross-examined by Phang's counsel Matthew Thomas Phillip.
Lee also questioned the decision by the PKA and Transport Ministry which agreed to turn the original multi-phase project to a single phase.
The decision was made after the government got interested in building a mega transshipment hub in the model of Jebel Ali in Dubai.
According to PKA's original plan which was approved by the cabinet in 2002, developer Kuala Dimensi Sdn Bhd would first build 400 acres of land in the first phase, costing about RM400 million.


Referring to a letter penned by the then transport minister Chan Kong Choy in 2004, Matthew said the ministry had ensured PKA's financial capability of developing the project in a single phase.

"(If I chaired PKA then), I would not rely on Transport Ministry (on the financial matter), but the Finance Ministry," argued Lee, who helmed PKA between 2008 and 2011.
In his testimony, he agreed with the defence counsel that the then PKA board which made the collective decision on PKFZ should be sued instead of Phang.
Lee said he made the recommendation to take action against the entire board but the PKA disagreed with it.
[More to follow]

-Mkini

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