PKFZ in Fairplay

The Public Accounts Committee (PAC) chaired by Dato Shahrir Samad will meet again on Tuesday 25th for another round of probing into the Port Klang Free Zone (PKFZ) scandal. Despite an almost complete blackout of all news on the subject by our newspapers, the international shipping weekly Fairplay, a more than a century old publication of the influential Lloyd's Register of London has again picked up this story of our national shame and featured it in a recent edition:

Newswatch
Fairplay International Shipping Weekly
06 Sep 2007

Klang a microcosm of Malaysia’s malaise
A scandalous land deal involving Port Klang Authority escapes public scrutiny. Jaya Prakash reports that the backlash is likely to affect coming elections.

AN EMBATTLED Port Klang Authority has escaped public scrutiny for cost overruns of more than $1Bn that have been incurred in operating a free-trade zone. The case appears to be a microcosm of a deeper malaise that runs through Malaysian business.

Port managers have spent several months battling media and public hostility over the controversial – some say scandalous – decision to acquire a land holding tagged at $7 per square foot from Malaysian company Kuala Dimensi. The same company had earlier bought the same plot at an unbelievably low price of $0.86/ft. Kuala Dimensi is headed by Azim Zabidi, who is a politician in Malaysia’s ruling United Malays National Organisation.

There have also been ethical issues involving high-ranking Port Klang Authority executives contracting work from companies in which they had pecuniary interests. This work was directed toward developing 500 warehouses in a 400ha of land in Pulau Indah. Any prospects for a full disclosure of the circumstances leading to the free-zone deal appear to have evaporated on 27 August, when Ramli Ngah Talib, speaker of Malaysia’s parliament, opposed an ‘urgent motion’ by Lim Kit Siang, leader of the country’s political opposition, for a debate on the free-zone issue. Lim spoke to Fairplay about the conflicts and stressed the importance of bringing “culprits to book”.

The free-zone issue is a test case of Prime Minister Abdullah Badawi’s 2003 pledge that the government would not bail out failing companies, declared Lim. He added that now that a bailout has indeed happened, the government’s move amounts to a “U-turn” of Badawi’s pledge. The debacle only scratches the surface of something deeper and more sinister, he continued. “It has to do with the entire system,” he warned, leaving few in any doubt that the issues go wider than just the managers at Port Klang Authority.

In 2003, the port authority was declared “financially insolvent” by the country’s auditor-general. Despite the finding, however, no investigations have ever been commissioned to get to the bottom of the Klang crisis.

In statements given to Fairplay, Transparency International Malaysia spoke of serious repercussions for Malaysia. TI-M president Tan Sri Ramon Navaratnam said: “The absence of investigation could raise serious concerns over the apparent lack of good governance. In Malaysia, we have a lively parliament with a significant opposition, and we hope the debate will continue and the electorate will follow the debate.” Navaratnam added that TI-M is prepared to help combat corruption alongside a newly commissioned Public Accounts Committee, which is to investigate Port Klang Free Zone.

Fairplay first reported on investigations into the free-zone issue in May, parallel to reports by Malaysia’s fiercely independent political portal Malaysiakini, among others. The effective closure of public debate will now push the discussion underground, which could prove costly for Badawi’s administration in an election year. He has already bailed out other failing corporations.

A letter to Malaysiakini last month slammed the transport ministry for denying any instance of fraud, irregularity or malpractice in Port Klang Free Zone. If allegations to the contrary are correct, the writer surmised, the only conclusion to be reached is that the port’s managers were simply incompetent and showed no organisational ability and hardly any knowledge about management.
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