PKFZ SCANDAL 2006, November 1: The Port Klang Free Trade Zone (PKFZ) started operations. 2007: Parliament'sPublic Accounts Committeemet the then general manager ofPort Klang Authority(PKA),Datin Paduka O.C. Phang, to seek an explanation of the financial procedures surrounding the PKFZ project and how the money was spent as it involved public funds. 2008, May 6:PricewaterhouseCooperswas appointed to conduct an independent overall audit on PKFZ accounts. 2009: May 20: TheMalaysian Anti-Corruption Commission(MACC) started its investigations into the PKFZ controversy. May 28:PricewaterhouseCoopers's report was made public. Four politicians were named in the report: Deputy Finance MinisterDatuk Chor Chee Heung,SementaassemblymanDatuk Abdul Rahman Palil,Backbenchers ClubpresidentDatuk Seri Tiong King SingandFederal TerritoryUMNOtreasurerDatuk Seri Azim Zabidi.[1]PricewaterhouseCoopers also estimated that, based on current projections of revenue and costs, including interests, the project could eventually cost up to RM12.45 billion.[2] August 10: The report of the special task force set up by Transport MinisterDatuk Seri Ong Tee Keatwas made public. It found that hundred of millions of ringgit in claims byKuala Dimensiwas either overcharged, unsubstantiated, or even possible fraudulent.[1] August 11: ThePort Klang Authority(PKA) chairmanDatuk Lee Hwa Benglodged a police report againstKuala DimensiandBTA Architectover the PKFZ project. August 13: MACC formed a 30-member task force to investigate alleged corrupt practices in the awarding and construction of PKFZ. August 15:Backbenchers ClubpresidentDatuk Seri Tiong King Singwas quizzed by theMalaysian Anti-Corruption Commission(MACC) officers over the PKFZ scandal. September 9: TheCabinetset up a task force to look into two aspects in connection with the PKFZ: (1) whether the project was carried out in line with good government; and (2) its future direction. October 8: ThePort Klang Authority(PKA) sued its former general manager,Datin Paduka O.C. Phangfor breach of duty during her tenure. November 4: ThePublic Accounts Committee(PAC) report called for Transport MinisterTan Sri Chan Kong ChoyandPort Klang Authority's (PKA) former general manager,Datin Paduka O.C. Phang, to be investigated for alleged criminal breach of trust (CBT) over the PKFZ project. December 10:Datin Paduka O.C. Phang, together withKuala Dimensi Sdn Bhdchief operating officerStephen Abokand architectBernard Tan Seng SweeofBTA Architect, were arrested by police in connection with the PKFZ scandal. December 11: FormerPort Klang Authority(PKA) general managerDatin Paduka O.C. Phang, together withKuala Dimensi Sdn Bhdchief operating officerStephen Abokand architectBernard Tan Seng Sweeof BTA Architect, became the first people to be charged for offences linked to the financial fiasco of the Port Klang Free Zone.[3]They were charged with criminal breach of trust (CBT) and cheating amounting to about RM380 million. 2010, July 29:Tun Dr. Ling Liong Sikwas charged for knowingly deceiving theCabinet of Malaysiato approve a land purchase forPKFZ, which resulted in wrongful losses for the government.[4] 2011, February 28:Chan Kong Choywas charged with 3 counts of cheating over the scandal-hitPKFZtransshipment hub project and faces up to 5 years jail for each count. He was charged with deceiving former prime ministerTun Abdullah Ahmad Badawiover renovation work at thePKFZsite between2004and2006, a sum amounting to RM1.9 billion.[5]Chan, the Transport Minister, had issued letters of guarantee, leading to the PKFZ's current financial troubles as it was unable to service the loans, due to poor business. It was the Abdullah administration that had to retroactively endorse the letters of guarantee issued by Chan, who legally cannot issue such letters.[5]Chan was free on an RM1 million bail

PKFZ issuesPOTENTIAL CONFLICT OF INTERESTOng Tee Kiat setting up special task forcePKA lodges police report over billing discrepanciesReport lodge by Datuk Lee Hwa Beng against developer KDSB and BTA architect.PKA through lawyer filed suit against PhangPhang failed to exercise due care,diligence and skill in discharge her dutiesOn 10 december 2009, OC Phang and two others charged with criminal breach of trustInternational perspectives towards fraud caseMost serious frauds will have an international element, whether in the substantive action or in asset recovery.They fall into the categories of risk that can undermine public trust and damage a companys reputation for integrity, one of the categories is other misconduct such as conflict of interest.Corporate entities of all sizes across the world are susceptible to accounting scandals and frauds.National perspectives towards fraud caseEnhance integrity in various levels of the Malaysian society to prevent fraud from becoming a practice in management.The launching of the National Integrity Plan (NIP) and the establishment of the Integrity Institute of Malaysia (11M).Port Klang Free Zone (PKFZ) case conclusionPKFZs controversy:1) price paid for the land of the project.2) massive cost overrun.3) management issue.Fraud by senior management may be involved when companies have severe financial problems.Real purpose of the setting up PKFZ: To attract new investments into the country, but the controversy was happened due to the conflict of interest among the senior management.2007: PKFZ issue was investigated by the Public Accounts Committee (PAC), but it was delayed due to lack of information.PAC restart the investigation when more information was made available from PwC and the 2008-Auditor Generals Report.Many person were involved in this case.Initially, government had appointed PKA to develop the project through self-financing, but PKA unable to do so because of its financial condition insufficient to fulfil its obligation to develop PKFZ.The breaches leads to billion of dollars losses and resulted the government facing huge financial losses due to the failure of PKFZ development.FRAUDNATIONAL PERSPECTIVEValue-of-money audit should follow 3Ps - Pemborosan (extravagance), Pembaziran (wastefulness) and Penyelewengan (fraud) instead of using e 3Es - Economy, Efficiency and Effectiveness.Bribery or corrupt practices have increased due to tough economic times and increased competition.INTERNATIONAL PERSPECTIVEMain common elements that constitute an offence of fraud are dishonesty, deceit, deception and intent1.Societyaffect tax payers: contribute revenues for the government.implications:- lowered societies trust towards the government- act against the government2.Governmentmanage development of the country.make right decision.implications:- suffer huge amount of losses.-reduce trustworthiness towards administrative members.