At the same time, a deputy minister reiterated the government’s “commitment” to honour all debt obligations on bonds issued by KDSB, the turnkey contractor of the controversial RM4.6 billion Port Klang Free Zone (PKFZ) project.
Speaking at parliament lobby yesterday, Deputy Transport Minister Datuk Abdul Rahim Bakri said defaulting on the debt obligations would jeopardise investor confidence in Malaysian bonds.
Separately, speaking to reporters after chairing a special board meeting to discuss the payment due to the bondholders today and the letter from IRB, PKA chairman Datuk Lee Hwa Beng said the port authority, after seeking legal opinion, would ask IRB to revoke the appointment of PKA as agent for KDSB’s backdated taxes.
“Because we (PKA) have agreed to the assignment of all debts due to KDSB to special purpose vehicles (SPVs), that means there is no more amount due to KDSB.
“The previous PKA management had consented to the assignment of all debts to the SPVs,” said Lee, agreeing to the argument put forth by the bond trustee, OSK Trustees Bhd, that there was a misapprehension on IRB’s part.
The Edge Financial Daily yesterday reported that payments to the PKFZ bondholders were in jeopardy after the IRB directed PKA to remit RM328.4 million allegedly owed by KDSB in backdated taxes.
According to documents obtained, OSK Trustees has said if PKA retained the payment and channelled it to the IRB, it would constitute an event of default.
Lee said yesterday PKA would make payments to the bondholders upon the revocation of the letter of appointment by IRB.
Asked if PKA would still be liable to pay to the IRB in the event the letter was not revoked, Lee said: “We will pay only (to the bondholders) after they revoke.”
Although PKA was responsible to both the IRB and the bondholders at this juncture, Lee said the port authority would only pay out one sum.
“We will never pay both. We don’t have the money. It is not one, two million,” he added.
On the tight deadline (by today) to fulfil the debt obligations to the bondholders, Lee said there would not be an immediate default given that there would be a grace period to make the payment.
Lee reiterated PKA’s commitment to the bondholders and not to KDSB due to the absolute legal assignment. He said the PKA board would convene another special meeting in the event the IRB refused to revoke the letter.
Meanwhile, when contacted, KDSB CEO Datuk Faisal Abdullah said the amount the IRB had asked for was “absurd”.
“We don’t owe that much. The figure is absurd. It doesn’t make sense,” he said, adding that the company had repeatedly sent letters to the IRB to dispute the amount.
He added that KDSB did not agree with the tax amount and was ready to go to court to settle it.
Faisal revealed that the accounts in dispute were from 1997 and 1998. “It is now 13 years later. Why didn’t they ask from day one?” he said, alleging that KDSB appeared to have been “victimised”.
“We are just the contractor for PKFZ and we have delivered. PKFZ didn’t do well because of its own marketing,” said Faisal. PKA and KDSB are involved in a series of lawsuits that range from alleged overcharging to overbilling.
This article appeared in The Edge Financial Daily, June 30, 2010.
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