The members require more time to consider in detail the lengthy report by the Task Force but in the meantime have taken the following decisions.
The board has decided that the Quality Surveyors in the Task force continue to re-measure the value of the works performed by Kuala Dimensi Sdn Bhd (KDSB) in order to establish the real sum owing to the main developer. Presently, they have already identified a difference of at least RM93mil between the claims made by KDSB and their measurements. We believe there will be further differences in the re-measurement exercise.
We also deliberated on the instances of possible serious irregular claims, negligence, wrongdoings, and other irregularities identified, as well as the issue of the unenforceability of certain agreements on parts thereof. They include:
1. Evidence that the main developer had possibly made seriously irregular claims under the development Agreements, in particular, for the electrical infrastructure of the 33kv system worth RM55.8mil which have yet to be carried out on site, 33kv supply works and the civil infrastructure to PMU works worth RM83mil as TNB has rejected the proposal for KDSB to undertake the 33kv infrastructure and supply works.
2. In respect of claims for preliminaries of at least RM231mil under the Developmental Agreements, KDSB has not provided any documents to support the cost incurred as preliminaries.
KDSB should prove that each item in the breakdown of preliminaries was necessary and properly incurred before it is entitled to make a claim for it.
KDSB has also made claims for items which they are not contractually entitled to, for instance, claim for procurement of a performance bond and payment for insurance premiums, both totalling RM5mil.
3. In respect of KDSB’s claim for the variation works of RM62mil under ADW and NADW, there appears to be no basis for these claims and KDSB should justify this.
4. There appears to be an over-claim for the hotel works, wherein KDSB had claimed RM69.6mil compared to QS4’s valuation of RM44.7mil.
5. In respect of claims for professional fees, under development Agreement 3 (DA3), KDSB is only entitled to the actual fee and expenses incurred.
KDSB has not produced any invoices and payment vouchers for RM121.6mil of the fees allegedly incurred. In any event, the sum claimed by KDSB appears to be on the high side given the nature of the project.
6. KDSB may not be entitled to claim the sum of RM254.9mil as a claim for extra under DA3 because the purported revised works fall within the original scope of the envisaged under LA1 and not DA3 under which it claimed.
The board is very concerned that the amount in dispute totals hundreds of millions.
The board is considering the commencement of appropriate legal action against various parties.
Since there may be instances of irregular claims and taxpayers money involved the Board has authorised me to make a police report at the Klang police station tomorrow morning at 11am so that appropriate investigations are undertaken.
We will make further announcements from time to time.
1. My interest in this posting is purely academic: to expose students to the services of quantity surveyors, parties and issues that they could be dealing with.
2. Audit report on the PKFZ was made public on 28th May 2009 (see for example The Star 28th May 2009).
3. See also Bernama reports (http://www.bernama.com/bernama/v5/newsbusiness.php?id=431766 10th August 2009:
Kuala Dimensi Sdn Bhd, the turnkey developer of Port Klang Free Zone (PKFZ), is appealing to the public at large not to come to any conclusion on the PKFZ issue. This is in view of the company not being given the opportunity to rebut or defend any findings by the Special Task Force set up to investigate the legal and financial aspects of the project. Its deputy chief executive officer, Datuk Faizal Abdullah said Monday, during the two months when the task force was commissioned, Kuala Dimensi was never once called upon to rebut or defend any findings made by the task force. These reports and findings were made unilaterally, he said in a statement. Denying possible fraud, negligence, wrongdoings and irregularities identified, he said the allegations were unjust on their part without taking into consideration Kuala Dimensi's good reputation built over the years... Wassalam.
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