Wednesday, August 26, 2009

RM1.4 billion Excess Claims by Kuala Dimensi!

Self-explanatory press statement just issued by Dato' Lee Hwa Beng, Chairman of Port Klang Authority (PKA) on this report to the Malaysian Anti-Corruption Commission (MACC) today, with regards to excess claims, fraudulent or otherwise, or RM1.4 billion(!) by Kuala Dimensi Sdn Bhd from PKA. The DAP will support all moves taken by PKA to recover these monies from the Developer, Kuala Dimensi.

1. As instructed by the Port Kelang Authority (“PKA”), I lodged a report on behalf of PKA with the Malaysian Anti-Corruption Commission (“MACC”) on Wednesday 26 August 2009 against the following companies and individuals:
  1. Kuala Dimensi Sdn Bhd (“KDSB”) and its directors, servants and/or agents being the turnkey contractor for the PKFZ Project;
  2. Datin Paduka O.C. Phang (“OC Phang”), the former General Manager of PKA;
  3. Dato’ Seri Tiong King Sing (“Tiong King Sing”), the President and Chief Executive Officer (“CEO”) of KDSB; and
  4. BTA Architect and/or Bernard Tan Seng Swee as the Consultant appointed for the development works in the PKFZ Project.
2.1 PKA requests MACC to investigate OC Phang, and the relationship between KDSB, its President/CEO Datuk Seri Tiong King Sing, BTA, Bernard Tan and OC Phang. Based on the instances set out below, we have strong reason to believe that there is a possible conspiracy
between these 5 parties.

2.2 PKA has decided that interest charged under LA1 amounting to RM720 million ought not to have been imposed because the purchase price of the land was based on special value of RM25 p.s.f. which had included the interest element for the deferred payment scheme.

2.3 In relation to OC Phang, there are instances of wrongdoing carried out by OC Phang which were to the detriment of PKA and which had apparently benefited KDSB. These instances of wrongdoing include,
  1. Failure to consider whether PKA had the ability to self-finance the purchase of the Land. PKA was notified by the Auditor General as early as 27 May 2004 that the former was not in the position to self-finance the Project. However, OC Phang failed to alert the Government of this and to take immediate steps to alleviate its financial predicament. To compound the problem, PKA continued to enter into significant and expensive development contracts with KDSB (i.e. ADW1 on 30 November 2005 and NADW on 26 April 2006) thus escalating further its financial liabilities. OC Phang knew of the financial position of PKA but proceeded to enter into those two agreements which total RM1.055 billion;

  2. Failure to consider that the special value of RM25 p.s.f. had included interest instead of RM25 p.s.f. on a deferred basis with further/additional interest of 7.5%;

  3. Refusal to heed the advice of her officers and other professionals, to appoint quantity surveyors for DA3, ADW1 and NADW, delaying the appointment of the quantity surveyors and thereafter limiting and restricting their role;

  4. Insistence that Perunding BE Sdn Bhd be appointed as the sole quantity surveyor with the knowledge that Perunding BE Sdn Bhd was in a position of conflict of interest for having been engaged by KDSB and/or its subcontractor for the same Project;

  5. Generally in making unilateral decisions without the approval of the members of PKA.
2.4 KDSB, along with BTA Architect working in concert with it, had issued Notices of Payment to PKA which are false, erroneous or defective and which PKA believes were intended to mislead PKA. These Notices of Payment are fraudulent as the notices claimed payment for works which in reality had not been carried out. Tiong King Sing, being the President/CEO of KDSB, would have known that these Notices of Payment were issued wrongfully. The details of these Notices of Payment and other instances of irregularities totaling around RM657 million are the subject of police report lodged on 11 August 2009 at the Klang Police Station, the details of which are set out below,
  1. KDSB has made claims for the sum of RM5,016,000.00 in respect of procurement of Performance Bond and Insurance Premiums which KDSB is not entitled to claim;

  2. KDSB’s wrongful claim for the sum of RM254,850,000.00 for monsoon drain works and water supply works which KDSB is not entitled to claim under DA3;

  3. Based on JKR Standard Form of Agreement For Consultancy Services Between Contractor And Consultants For Design & Build Contract, KDSB may have over-claimed the sum of RM76,056,101.08 in professional fees;

  4. KDSB had made claims for the sum of RM55,767,000.00 for physical construction of the electrical infrastructure for 33kv system works which have yet to commence;

  5. There appears to be an over-claim for the hotel works in the sum of RM24,934,244.14;

  6. KDSB’s claim for variation works for the sum of RM62,189,000.00, which arguably, KDSB is not entitled to claim as the procedural requirement under the ADW has not been complied with; and

  7. KDSB’s claim for the sum of RM83,000,000.00 for 33kv supply to Precinct 2 and 8 and the civil and infrastructure work to PMU which have yet to be carried out.

  8. Remeasurement by JUBC Sdn Bhd by of the Office Blocks and Light Industries Units which showed a cost difference of RM93,000,000.00.

  9. Contributions not made to authorities by KDSB for the basic infrastructure works as required under LA1, in the sum of RM2,249,742.29.
PKA will use every legal means possible to challenge the disputed claims amounting to about RM1.4 billion.
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