Interest of 7.5 per cent consistent with jpph valuation, says accountant

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KUALA LUMPUR: The High Court here today was told that the interest charge of 7.5 per cent in the sales and purchase agreement (SPA) between Kuala Dimensi Sdn Bhd (KDSB) and Port Klang Authority (PKA) regarding the Port Klang Free Zone (PKFZ) project, was consistent with the valuation concept, as described by the Valuation and Property Services Department (JPPH).

Accountant Mok Chew Yin, who was testifying in the trial of former transport minister Tun Dr Ling Liong Sik, also said that based on his calculations, the RM25 as stated in the SPA did not include the interest of six per cent or 7.5 per cent.

“The interest of six per cent (as stated in JPPH letters dated Sept 29, 2000 and Oct 9, 2000) or 7.5 per cent (stated in the SPA) has to be charged over the repayment tenure, and it is over and above the ‘rate of land value’ or purchase price’ of the land in order to derive the ‘special value’ of RM21 psf,” he
said.

He said that based on JPPH valuation letters, the cash price of the land was RM20.75 psf (rounded to RM21 psf) and that was a ‘special value’ that took into consideration certain basic development cost to be incurred by the vendor.

“If the purchase price is payable on deferred payment terms, the ‘rate of the land value’ may be higher than RM21 psf. Based on the financial terms in JPPH’s valuation letter dated Sept 29, 2000 (first year deposit of five per cent, coupon rate (or interest rate) of six per cent, no interest for first year, interest payment only for the third and fourth year, annual repayment for balance (including interest starting in year five), the ‘rate of the land value’ using a discount rate of 8.25 per cent will be increased to RM25 psf, if the repayment term is 10 years, and RM25.82 psf if the repayment term is 15 years,” he said.

Mok, an executive director at BDO Consulting, said the cash price of the total repayment amounts (RM1.808 billion) as stated in the SPA was equivalent to a cash price of RM20.77 psf, based on the discount rate of 8.25 per cent.

“This is consistent with the ‘special value’ of RM21 psf, as stated in the JPPH’s letter dated Oct 29, 2000. As clearly stated in that letter, the price would be higher if payment is made over a long period of time.

“I concluded that the RM25 psf or RM25.82 psf as stated in the two JPPH’s letters in SPA, do not and cannot include the interest charged,” he said.

Dr Ling, who was transport minister for 17 years from 1986, is charged with cheating the government by not disclosing to the Cabinet, an additional interest rate of 7.5 per cent per annum on the purchase price of the land for the PKFZ project, which had been fixed at RM1,088,456,000 by the JPPH, based on RM25 psf, inclusive of the coupon/interest rates.

He also faces two alternative (amended) charges of cheating and intentionally not disclosing to the Cabinet that the 7.5 per cent per annum was an additional interest rate on the land price.

He is alleged to have committed the offences at the fourth floor of the Prime Minister’s Office, Perdana Putra building in Putrajaya, between Sept 25 and Nov 6, 2002.

The hearing before Judge Datuk Ahmadi Asnawi continues Thursday. — Bernama