THE Port Klang Authority (PKA) is prepared for any legal action against it from Kuala Dimensi Sdn Bhd (KDSB) following the disclosure of an audit report by PricewaterhouseCoopers (PwC) on the Port Klang Free Zone project.

Its chairman Datuk Lee Hwa Beng told Malay Mail that PKA board of directors had appointed legal firm Skrine and Co about a month ago.

"We had anticipated that KDSB will sue PKA over the report, so we made preparations way before KDSB actually began filing the suit," he said.

KDSB group deputy chief  executive officer Datuk Faisal Abdullah told a Press conference that the company had filed the first in a series of suits against PKA and PwC yesterday.

He said KDSB took the action as PKA and its chairman made a statement on Tuesday that KDSB would
not be paid and PKA was ready to face litigation.

"He is inviting litigation by pushing our backs against the wall. Litigation is generally  unproductive but he
leaves us with no choice,"  he said.

"We are exercising our constitutional rights by going to court," he added. Faisal also said the suit was to protect the interests of investors or bond holders who had put faith in the project.

He said he had written to Lee, telling him categorically that the proceeds of the payments were not going to
KDSB's coffers but to bond holders.

"The bonds on the project have been floated on the bonds market subscribed by foreign and local financial institutions. My fear and concern is that the non-payment might probably undermine or lead to a collapse of the Malaysian Bonds Market. It is heartbreaking that he does not see this and does not realise how many projects in the country have been and are continuing to be financed in this manner," he said.

Faisal said prior to Tuesday, KDSB and its team of lawyers had hoped that sanity would prevail but "madness has prevailed".

He said other suits were ready for filing and the lawyers were just waiting for KDSB's directive. The suit, filed through law firm Cheang Ariff, outlined seven items deemed to contain allegations damaging to KDSB's reputation and trade.

He added the allegations made in the report carried the meaning or insinuation  among others that:

1. KDSB had grossly overcharged PKA for interest in relation to the purchase of land;
2. KDSB had or was likely to have received payments in excess of the true value of the works done as the turnkey developer of the project;
3. KDSB had overpriced  the value of its works;
4. KDSB was unscrupulous;
5. KDSB had overcharged the development of the project;
6. KDSB entered into agreements with PKA in connection with the development of the project with knowledge that the agreements were not lawfully or prudently executed; and
7. KDSB colluded with  Datuk Abdul Rahman Palil and/or Datuk Chor Chee Heung while they were in a position of conflict of interest to secure advantages and benefits for themselves that would otherwise not have
been available to it.

Faisal said KDSB sought aggravated or exemplary damages against PKA and  PwC to be specified by the
court.