Press Statement by Charles Santiago in Klang on Friday, 29^th May 2009:

PKFZ: Freeze the accounts and suspend those involved

1. We welcome the unveiling of the Pricewaterhouse Coopers (PwC) audit report into the Port Klang Free Zone (PKFZ) fiasco.

The contents of the report lends greater credibility to claims that have long been reported but swept aside by the government–that serious shortcomings, irregularities and abuses have from the very beginning plagued the public-funded project.

Among the facts confirmed by PwC is that PKFZ has been plagued by inflation of costs, weaknesses in the governance over and management of the project, improper and poor decision-making, and conflict of interests by PKFZ and other officials.

2. However, we question the manner in which the PwC report has been unveiled: Why is the report available only until June 10? Why restrict the number of hard copies available to only 15?!

It is also incredulous that PwC has not only stated that it is not obliged to respond to any queries from, and does not owe a duty of care to, any party other than PKA, but has also stipulated that readers are not authorised to use or rely on the report to arrive at any conclusion!

If PwC is so afraid of being identified with even the conclusions people reach on the basis of its own report, is PwC standing by its own auditors or not? Why is there no party willing to stand by the integrity of the document?

3. We welcome the decision to submit the document to the Malaysian Anti-Corruption Commission (MACC).

Will there be serious action taken against all of the persons responsible for the shortcomings, irregularities and abuses and/or benefited from them? If there is such action, to what extent and to what level will action be taken against the said persons?

4. We call on the government to freeze the bank accounts of all persons implicated in the fiasco – those in government positions should be immediately suspended – until the investigations by the MACC have been completed.

This may include – but should not be confined to – government and MCA and Umno figures, Members of Parliament, those who were Selangor executive councilors during the time under consideration, former or current Port Klang Authority (PKA) and PKFZ officials, developers, lawyers and consultants, as well as the various shareholders and directors.

5. Among the pressing questions for the government to answer pertains to the issue of the project costs: Assuming the project costs RM7.453 billion – and will balloon to RM12.453 billion by 2051 – where will the government find this kind of money?

Given the global and financial crisis that has hit Malaysia's shores and affected her workers, RM7 billion is already the total amount allocated in the government's first package to stimulate the national economy! RM12.453 is one-fifth of the second RM60 billion stimulus package!

How will this affect plans to address the crisis staring at us now?

6. In light of the many failures and breach of regulations brought to light by PwC, what do the domestic regulators have to say for themselves?

• The Department of the Auditor-General was instrumental in early on revealing the ballooning of costs of the PKFZ and the financial inviability of PKA to undertake the project. Could it not have done more? To what extent did it warn the government about the heavy price that taxpayers would pay when the PKFZ bubble explodes?

  Is the Department of the Auditor-General satisfied with merely crunching accounts numbers and stating these in its annual reports? How does the Department of today compare with the times during the likes of such vibrant, vigorous and vigilant auditors as the late Tan Sri Ahmad Noordin Zakaria? The RM2.5 billion BMF scandal that Ahmad Nordin investigated is nothing compared with the gargantuan RM12.5 billion we are faced with today.

• How far did the Attorney-General's Chambers go to ensure that legal procedures, provisions, practices and standards were adhered to? Were there no steps taken once it was determined that it was by-passed by PKA officials?

• Could the Bar Council not have played a role in probing the possible breach of legal ethics – such as the element of conflict of interest – by lawyers involved in the PKFZ project? What can be done regarding lawyers who are supposed to represent the interests of the state – and thus its citizens – and yet act contrary to them?

• When in 2006 Bursa Malaysia merely “reprimanded” the PKFZ developer when it failed to inform the Exchange or inform and obtain the consent of its shareholders about the disposal of the land, was that the furthest the Bursa could have gone?

• What did the Ministry of Finance do when it was determined that many Treasury regulations and procedural requirements had been trampled upon?

• Did Parliament's Public Accounts Committee play its role when probing the PKFZ? Why did the investigations end with the exit of Shahrir Abdul Samad as its former chairperson? Is the PAC truly serving as a watchdog of the public accounts or merely posturing as one?

• Reiterating the issue facing MACC: Its predecessor, the Anti-Corruption Agency (ACA), had also gone through the motions of “interviewing” PKFZ officials and carted files of documents away from PKA. Needless to say, nothing came out of that.

After 15 years since the first police reports were lodged on the PKFZ, should the MACC be taken seriously?

7. Scandalous as it is, the significance of PKFZ lies not only in the billions of ringgit of public funds involved, especially in such times as these when a global financial crisis of unprecedented scale is looms over us.

The long-term implications of this debacle are equally troubling given the crucial and critical role that should be played by the nation's regulatory agencies – such as the Department of the Auditor-General, the Attorney-General's Chambers, the Securities Commission. It is partly due to dismal failure to perform their job that this scandal has exploded in our hands.

The country's viability and prosperity lies in the hands of regulators such as those above. If they cannot be trusted to serve their roles as regulators, then what are they doing in the positions they occupy?

Among the main factors said to have caused the global financial and economic crisis is the failure of US regulators to monitor and control the increasingly risky and adventurist instruments and activities of financiers and bankers.

Given the failure – or unwillingness – of Malaysia's regulators and enforcers to do their job, it looks like we're headed towards a similar disaster.

* Charles Santiago, Selangor DAP Vice Chairman & MP for Klang