KUALA LUMPUR - Malaysia Thursday charged a former port chief and two other figures over their roles in a multi-billion-dollar cost blowout at a free-trade zone that has become a major financial scandal.
The Port Klang Free Trade Zone, a commercial and industrial project south of the capital, was conceived as a 1.82 billion ringgit (S$746 million) venture constructed over 1,000 acres (405 hectares).
A report by the Port Klang Free Trade Zone's external auditors has indicated it would be loss-making until 2029 because of debt servicing costs, and would only break even in 2051.
Prosecutor Manoj Kurup said that O.C. Phang, the former head of the Port Klang Authority which runs the zone, had been charged at the Klang Sessions Court with three counts of criminal breach of trust.
She pleaded not guilty to the allegations over payments worth 254 million ringgit to the project's developer. She faces 20 years in jail if convicted.
Two other individuals, the chief executive of the developer and a consultant architect, also denied charges of cheating in relation to an amount of 122 million ringgit, the prosecutor said.
"They were charged for basically certifying work done when that work had not been done, and as a result of their certification the port authority paid out the money," he said.
The pair face up to 10 years in jail as well as a whipping if found guilty.
In November, a parliamentary committee into the affair recommended the anti-corruption authorities investigate Phang and former transport minister Chan Kong Choy.
The committee said they had issued letters to help secure loans for the project developer, owned by a powerful lawmaker in the ruling coalition, that placed the government as guarantor without authorisation.
Committee member Tony Pua said the developer ran out of money and received loans from the government and letters from Chan to guarantee a 3.6 billion ringgit bank loan.
The government is now liable to bear that amount owed by the developer to the banks, he said.
Prime Minister Najib Razak, who set up a high-level taskforce to look into the affair, has pledged his government would not hinder the investigations.
Najib came to power in April with a pledge to tackle corruption which is endemic in Malaysian politics and society, and a key factor behind the government's disastrous performance in 2008 elections.
