Ex-minister mired in Malaysian financial scandal

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Published: November 4, 2009

KUALA LUMPUR, Malaysia (AP) — One of Malaysia's former transport ministers and a top port executive may have both committed fraud, contributing to a series of missteps that plunged a government-backed industrial project into a billion-dollar debt, a parliamentary watchdog said Wednesday.

The findings of a high-profile investigation by Parliament's Public Accounts Committee provides a major push for the government to act against key figures in one of the country's biggest financial scandals, which had increased concerns of corruption and a lack of transparency in state-linked projects.

The government approved a loan in 2007 to rescue the country's main port authority from debts exceeding $1 billion after it incurred massive cost overruns to develop the Port Klang Free Zone, a 1,000-acre (400-hectare) industrial and trading hub that opened in 2006.

The Public Accounts Committee, which oversees government expenditure, recommended Wednesday that the police and the government's anti-corruption agency investigate ex-Transport Minister Chan Kong Choy and former Port Klang Authority General Manager O.C. Phang for possible criminal breach of trust involving the scandal.

The committee said Chan and Phang issued key letters to carry out the project without the Finance Ministry's approval. It also recommended investigations into other government officials involved in the project for allegedly failing to perform their responsibilities diligently.

Chan, who retired after serving as transport minister between 2003 and 2008, and Phang could not immediately be reached for comment. Chan has previously denied any wrongdoing, while Phang refused to publicly comment since being interviewed by the committee earlier this year.

Prime Minister Najib Razak pledged Monday there would be no cover-up in the probe, adding that a government task force that is also looking into the scandal would take note of the committee's report.

Opposition leaders have criticized the government for not prosecuting anyone in the scandal, which further eroded public confidence in big state projects following other bailouts of prominent companies in the 1980s and 1990s.

Private auditors warned earlier this year the port project could sink into worse financial woes because it might face problems repaying the government's loan installments, which would result in additional interest and send the project's bill soaring to 12.5 billion ringgit ($3.5 billion).

Scores of companies involved in manufacturing, trading and logistics have set up shop at the Port Klang zone near Malaysia's key western harbor. It is targeted mainly at investors from the Middle East, China, Japan and India.