1. Possible Solutions
1.1. Enforcement of laws & regulation
1.1.1. Follow the rules set by the Cabinet approval of the lone authority that lays with the MOF.
1.2. Proper supervision
1.2.1. Supervision should be made by the PKFZ board instead putting too much trust to the PKFZ directors in making decision.
1.3. Avoiding conflict of interest
1.3.1. Background checking is necessary for the relation that made with the parties that involved in every transaction to overcome conflict of interest in the business.
1.4. Transparency & procedure
1.4.1. Before signing a loan contract, the business and government should clarify to the public why they are entitled to take the loan.
1.5. Duty of Board of Directors
1.5.1. Tasks and duties of the board of directors: The board of directors must ensure the strength of the company's management and ensure that everyone involved with the company is aware of the company's operations.
1.6. Strength governance
1.6.1. PKFZ should implied legal action to settle the problems without political interference and avoid taking or receiving bribes.
2. Recommendations
2.1. Protect individuals who report corrupt and unethical activities.
2.2. Introduction of Whistle Blowing Act 2010 (WBA)
2.2.1. MOT personnel were assigned to PKA to receive complaints from all parties
2.2.2. An online link was available on the PKA website.
2.2.2.1. Report Types
2.2.2.1.1. Mismanagement
2.2.2.1.2. Corruption
2.2.2.1.3. Conflicts-of-interest
2.2.2.1.4. Abuse of power
2.2.2.1.5. Procurement irregularitites
2.2.2.1.6. Sexual harassment
2.2.2.2. No action would be taken against unfounded reports but deliberate false reports would be punished.
3. Key Issues
3.1. Scandal Breaks
3.1.1. Political meddling and cumbersome bureaucracy (2006)
3.1.1.1. Transparency was non-existent and the Malaysian political and economic landscape has too many vested interests seeking involvement and control in this project.
3.1.2. Political interference in major projects (2007)
3.1.2.1. Severe repercussions of poor corporate governance on the confidence of foreign investors.
3.1.3. The convoluted workings of crony capitalism in the PKFZ project (2008)
3.1.3.1. The annual Audit General Report noted that the initial project cost of RM1.845 billion had ballooned to RM4.947 billion, or RM3.5 billion in overruns.
3.1.4. The abuse and wastage of public funds (2009)
3.1.4.1. Compounded by accusations of fraud and exploitation of power by senior politicians.
3.2. PriceWaterhouseCoopers (PwC) Audit Report
3.2.1. No appropriate studies from the beginning of the project .
3.2.2. No proper project management and control by the government .
3.2.3. PKA’s management was inefficient and lacking in business knowledge.
3.2.4. Project cost escalations, poor governance by PKA.
3.2.4.1. Weak project management had undermined the project’s viability.
3.3. Purchase of Land
3.3.1. Did not qualify for “public purpose”.
3.3.1.1. Although valuing it between RM10.16 to RM13.50 per square foot (Lee and Lee, 2012). The Selangor State Government objected, arguing it did not qualify for “public purpose” under Section 3(1) of the Land Acquisition Act 1960.
3.3.2. Political maneuverings
3.3.2.1. Wanted the sale to be done at a commercial price, not at a discounted cost.
3.3.3. Unethical problem.
3.3.3.1. The service of the land purchase agreement through deferred payment terms reflect questionable and unethical conduct by KDSB and poor oversight by PKA.
3.4. Letters of Guarantee
3.4.1. Abuse of Power.
3.4.1.1. Both MOT Ministers had breached MOF regulations.
3.4.1.1.1. Issued four Letters of Guarantee for KDSB to raise RM4 billion bonds for the project. With these Letters of Support, the project bonds were rated an investment grade AAA.
3.4.2. Implication of Issuance Letter
3.4.2.1. PKA Managing Director has been implicated in issuing a letter of undertaking to OSK Securities Berhad.
3.5. Cost Overruns
3.5.1. Escalation in project cots.
3.5.1.1. The project cost had escalated to RM4.947 billion, an overrun of RM3.5 billion.
3.5.2. Cumulative Cash Flow Deficit
3.5.2.1. The cash flow for the PKFZ had being deficit for the next 42 years, until 2041.
3.6. Regulatory Action
3.6.1. Financial Scandal and Poor Governance
3.6.2. Accused of Lying to the Cabinet
3.6.2.1. There is an unlawfully issuing four letters of support to KDSB.
3.6.3. Failure to do A Disclosure
3.6.3.1. There is no disclose on the interest imposed on 404.4ha of Pulau Indah land purchase.
4. Group 1 Members
4.1. Najihah Husna Binti Ariffin
4.2. Hu Yingyue
4.3. Wan Nursyafiqah Binti Sha'arul Afandi
4.4. Deng Xinyan
4.5. Qiao Xiaoshuang
4.6. Muhammad Syahmi Bin Mohamad Noor
4.7. Low Siew Ying
5. Authority given to Port Klang Authority (PKA) that supervised by statutory body Ministry of Trade and Industry (MOT)
6. Background
6.1. Cronyism appointment successor.
6.1.1. Direct Control of the project exercised by the ruling party leadership (MCA) since MOT position was well reserved.
6.1.2. Reserving position in ministry level lead to political cronies and allies
6.1.3. Port Klang Authority(PKA) Board of Director Chairman always been saved for senior politician
6.1.4. PKA appointed favorable company/person KDSB that fully owned by Tiong King Sing as project's developer
6.1.5. All prominent position in KDSB is run by favorable person of various closed political members
6.2. Project appointed without fair process
6.2.1. Appointed of Kuala Dimensi Sdn Bhd (KDSB) as Project Turnkey developer
6.2.2. KDSB as major developer filled with politician utilize their position to award tender without due process to the various linked favorable vendors.
6.2.3. One of the vendor intimidate the Ministry by letter to regard a project's right to gain possession jeopardized MOF policies on Transparent accounting practices
7. PKFZ
7.1. PKFZ is a 1,000 acre regional industrial park located in Port Klang
7.2. Project aimed to develop National Multimodal Transshipment seaport
7.3. May provide facilities for International Cargo distribution and various perks to trade and industry for Malaysia
8. Key Person Responsible
8.1. Chairman of PKA’s Board of Director
8.1.1. Political appointment from Government Ruling Party as PKA Board of Director that responsible in hiring Abdul Rahman Palil influential Selangor political leader as Port Klang Authority (PKA) Director
8.2. Abdul Rahman Palil
8.2.1. As PKA Director favorably appointed Kuala Dimensi Sdn Bhd (KDSB) as project developer which the company that closely linked to several UMNO and MCA officials.
8.3. Tiong King Sing
8.3.1. Seemingly profiting the most from the project using KDSB as developer company in PKFZ project. Utilizing wealth and networking with politician such as CM of Sarawak to develop close access to senior politician in Peninsular Malaysia resulted in lucrative contracts in PKFZ project
8.4. Azim Zabidi
8.4.1. Political Appointment to run KDSB under Tiong King Sing.Awarded project without open tender and fair process.
8.5. Datin Paduka OC Phang
8.5.1. Phang recommended Syarikat Perunding BE Sdn Bhd (one of the companies from QS4 Consortium) to the Ministry of Finance (MOF). When it was rejected, Phang, through a letter pressured MOT Minister Chan Kong Choy to influence MOF Minister Abdullah Ahmad Badawi to appoint Syarikat Perunding BE Sdn Bhd.