UPDATED

KUALA LUMPUR, Nov 4 — The Public Accounts Committee has recommended that former Transport Minister Datuk Seri Chan Kong Choy and former Port Klang Authority (PKA) general manager Datin Paduka O.C. Phang must be investigated for criminal breach of trust in the Port Klang Free Trade (PKFZ) scandal.

It also recommended investigations into the role of other government officials serving in PKA when the project was being developed.

The PAC found both Chan and Phang to have breached the Financial Procedure Act 1957 by issuing three letters of support and three letters of undertaking without the approval of the Finance Ministry.

The PKA had already sued Phang on Oct 8 for breach of duties in connection with the scandal-plagued PKFZ project.

“The committee was informed by the Attorney-General that three support letters were issued by former Transport Minister Datuk Seri Chan Kong Choy and the three letters of undertaking issued by the general manager of PKA implicitly was a form of a guarantee from the government to ensure that there will be allocations for PKA to be able to meet its obligations under the development agreement.

“Therefore, a thorough investigation must be conducted by the Malaysian Anti-Corruption Commission (MACC) and police into this matter under section 14 (1) of the Financial Procedure Act 1957. It can also be convicted with criminal breach of trust under section 409 together with section 409B of the Penal Code,” the PAC said in its report to Parliament.

The committee also reported that the bonds were not issued through the proper channels and the funds allocated were not fully utilised for the project.

The report recommended that the Finance Ministry review the bonds so that they could be redeemed to avoid increasing the debt due to the high bond rate of 7.5 per cent imposed by PKFZ developer Kuala Dimensi Sdn Bhd (KDSB) compared to the normal four per cent issued by the government.

The report pointed out that the letter of undertaking issued by Phang went against the government decision which had decided that the PKFZ should be self financed by PKA when the project was approved.

The PAC also noted that Phang and Chan had failed to inform the Cabinet in a “timely manner” of PKA’s inability to finance the project although this matter has been raised in reports of the Auditor-General’s financial statements from 2003 to 2007.

Meanwhile, Prime Minister Datuk Seri Najib Razak said there would be no cover-up in the PKFZ probe, adding that the special task force set up recently will take into account the PAC report.