Published September 26, 2009

Port Klang Authority sues main contractor

It seeks total damages of RM1.64b as it tries to salvage some value from the development

By S JAYASANKARAN
IN KUALA LUMPUR

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THE Port Klang Authority (PKA), the owner of the scandal-plagued Port Klang Free Zone (PKFZ) project, yesterday filed a RM920 million (S$376 million) suit against three entities including the PKFZ, its main contractor Kuala Dimensi and BTA Architect.

This is the second suit filed by the port authority and brings the total damages it is seeking to a staggering RM1.64 billion. Last week, the port authority filed a RM720 million suit against Kuala Dimensi.

The suits indicate the authority's determination to use any means at its disposal to salvage some value from the development, whose costs could reach RM12 billion from its original RM2 billion.

Three weeks ago, it filed police reports alleging criminality against three individuals including the former general manager of the PKFZ and the owner of Kuala Dimensi.

The suits are also significant in that they come before the findings of a 'super' task force announced recently by Prime Minister Najib Razak to investigate the matter. Even so, two earlier reports - one by an international accounting firm and another by a group of eminent persons - found serious irregularities with the project.

A large part of the damages sought by the authority in its second suit consists of RM837 million worth of claims allegedly made by Kuala Dimensi for various works.

The authority is also seeking to rescind previous development agreements and a declaration that Kuala Dimensi is entitled to only reasonable compensation. Alternatively, it is asking for a declaration that all invoices and bills issued by Kuala Dimensi be made null and void.

The authority has so far paid Kuala Dimensi RM1.8 billion but still owes the developer over RM2.5 billion, which it cannot afford without government help.

The authority is also applying for a court order that work done by Kuala Dimensi be reassessed by an independent consultant. It is also seeking RM34 million in costs for remedial work and separate damages from the loss of use of 2.4ha of land that was turned into a hotel car park due to Kuala Dimensi's alleged failure to build an underground carpark.

BTA Architect, meanwhile, is being sued for damages relating to alleged fraud and negligent misrepresentation. Both Kuala Dimensi and BTA Architect are also being sued for damages arising from alleged conspiracy.

The agreements that the authority is disputing in this lawsuit were signed between February 2003 and November 2006.

Pressed by reporters, Lee Hwa Beng, the head of the authority, denied that the lawsuits' timing was aimed at enhancing the image of Transport Minister Ong Tee Keat.

Mr Ong, president of the Malaysian Chinese Association (MCA), is currently embroiled in a power struggle with his former deputy in the MCA, Chua Soi Lek.

'If I don't file the lawsuits, people will accuse me of not acting on behalf of PKA,' Mr Lee told reporters. 'PKA does not belong to me. It is a government agency and our funds come from the public and taxpayers.'