Saturday, July 3, 2010

PKA WILL pay KDSB the RM772 million and IRB taxes too !!

Further to my blog on 29 Jun  about possible payment to be make to KDSB by PKA, the ex Transport Minister Ong Tee Keat had on 1 Jul come out strongly to condemn the decision to pay. As deliberated in my blog, the present MCA Minister Dr Chua Soi Lek and Najib had since been QUIET about this issue. The STAR newspaper ( owned by MCA ) had not even reported on Ong Tee Keat's condemnation. So figure out yourself why we still need the alternative media to keep us all updated on the other side of the picture.
Excerpt :
Ong Tee Keat said :
These private bonds were secured against repayments from the various principal agreements between KDSB and PKA. The bondholders are prima facie not privy to these agreements.
"So, this is not a case where we can simply draw an analogy with taking a housing loan from the bank before buying a house from the developer," wrote Ong, referring to the argument made by Deputy Transport Minister Abdul Rahim Bakri on Tuesday.

In the case of PKFZ, Ong said that since the contractor raised the bond, it follows that the responsibility to pay the bondholders lay with KDSB and not the government.

"And if default on payment occurs, the proper remedy should be obtained against KDSB," he said.

Gov't not bound
Secondly, Ong argued that the letters of support issued by the Transport Ministry in the early 2000s were not government guarantees.

"Since this is a private KDSB bond, the issue of sovereign rating does not arise and PKA is under no direct legal obligation to pay the bondholders. The four letters of support are not guarantees per se.
"We must bear in mind that the Hansard reported a deputy minister of finance stating in Parliament that they are not guarantees. Further, there is a question of whether section 14 of the Financial Procedures Act 1957 has been complied with," said Ong
"The obligation under the said support letters are simply to ensure that PKA will have funds to meet its obligations, but does not constitute an undertaking by the government to pay PKA's debts to a third party."

Ong's final argument to withhold payment was because PKA and KDSB were currently embroiled in several law suits and making payments now could jeopardise PKA's cases.
Among others, PKA is suing KDSB for over-claiming and fraud.

He said that it "makes sense" to withhold payments until KDSB's lawful dues are determined by the courts, and bondholders should accept this as an investment risk.
"From PKA's standpoint, stopping payment to the contractor for monies that they are not legally entitled to due to fraud and irregularities is definitely preferable to recovering monies already paid.
"We should avoid the risk of monies paid but unable to be physically recovered subsequently, when the courts rule in your favour," he said.

Ong reiterated his previous claims that the PKFZ scandal was one of the main reasons for the BN's poor performance during the 2008 general election. The rakyat issued a clear signal that the government must exercise prudence in handling public funds.

As a parting shot, Ong reminded the government that those responsible for the PKFZ scandal have yet to be brought to justice.
"I shudder to think of the people and whistleblowers constantly drawing the short straw, whilst the other parties to the debacle are paid by taxpayers in full, with interest, and continue to roam freely."

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