TIONG: If there was a delay in handing over the project, they should have terminated our contract or sent us warnings for the delay

KUALA LUMPUR: Mired in controversy, Kuala Dimensi Sdn Bhd (KDSB) CEO Datuk Seri Tiong King Sing has bluntly refused to settle outstanding loans to bondholers in the Port Klang Free Zone (PKFZ).

"Why should I settle outstanding loans? We have completed what was required of us and handed over the project to the port authorities.

It is not my fault if they didn’t move on,” he told The Malay Mail at the Parliament lobby yesterday.

“We are contractors and if there was a delay in handing over the project, they should have terminated our contract or sent us warnings for the delay.”

PJ Utara Member of Parliament Tony Pua was the latest to question why the government had given a guarantee to settle KDSB’s debt obligations when there was a possibility that KDSB might be proven to have failed in performing a satisfactory job on PKFZ and therefore, should not be paid in full.

Pua had raised the issue after Deputy Finance Minister Awang Adek Hussin had said that the government would guarantee about US$1 billion (RM3.4 billion) in bonds issued to fund a free zone project.

He was also referring to foreign media reports quoting Prime Minister Datuk Seri Najib Razak as saying that the Malaysian government has guaranteed around US$1 billion (RM3.65 billion) in bonds issued to fund the project.

Najib, who was in New York recently, was quoted as telling an investor briefing that the government would honour all PKFZ obligations.

A recent audit report on the port project, for which costs have surged to RM10 billion from the original RM1.8 billion, showed that the initial letters of guarantee from the government had been issued without the knowledge of the Finance Ministry.

On claims that the government should not pay KDSB or its bondholders while waiting for the RM1.4 billion dispute to be settled in court, Tiong, who is the MP for Bintulu, said:

“That’s good, but who is going to pay the interest? Delay means interest and KDSB cannot be made to pay.”

On August 26, 2009, the Port Klang Authority (PKA) had sued KDSB for wrongful or excess claims amounting to RM1.4 billion.

This amount include excess interest calculations of RM720 million, wrongful claims for RM255 million for monsoon drain works and water supply works, excess claims of RM93 million for Office Blocks and Light Industries Units, and RM83 million for electricity supply and other works which have yet to be carried out.

PKA has to date paid RM2.04 billion for the purchase of the land and the construction works carried out. There is an outstanding amount of RM2.80 billion to be paid out of a total of RM4.84  billion for the project payable to KDSB.

KDSB, in turn, has borrowed RM3.685 billion by issuing bonds to both local and international investors.

The Opposition had argued that if the court decides Kuala Dimensi had made wrongful or excessive claims, then the outstanding loans due to the bondholders must be settled by the owners, since they borrowed the money, not the Malaysian government.

The PKFZ project has been dogged by allegations of corruption and mismanagement. In the last week, four people have been charged for criminal breach of trust in connection with the project. More are expected to be hauled up to court.