KUALA LUMPUR (Sept 25): Former Transport Minister Tun Dr Ling Liong Sik told the High Court on Tuesday that he did not know the purpose of the Letter of Support concerning the Port Klang Free Zone (PKFZ) which he signed during his last day in cabinet on May 28, 2003.

Ling, who was testifying in his cheating trial, claimed that he did not know the letters would be used to not only raise bonds to rescue PKFZ’s landowner Kuala Dimensi Sdn Bhd (KDSB) but also to obtain AAA ratings for subsequent bond issues.

This five-point support letter for the PKFZ project was addressed to the two special purpose vehicles (SPV) - Malaysian International Merchant Bankers Berhad and Pacific Trustees Berhad - the financiers that would arrange and be facility agents of the bonds.

The prosecution have argued that the support letter was influential to raise bonds to rescue KDSB, which was also the turnkey contractor of the controversial project, which was in debt to the tune of RM380 million.

“I remember signing the Letter of Support but for what purpose I am not very sure,” said Ling when he was crossed examined by lead deputy public prosecutor Datuk Tun Majid Tun Hamzah.

The Letter of Support confirmed that the purchase of the 1,000 acre land in Pulau Indah was approved by the government and free from encumbrances. This letter was also later used not only to raise the bonds but also to obtain AAA ratings for the subsequent bond issues.

The 1,000 acre land in Pulau Indah was saddled with caveats and encumbrances as KDSB had previously sold several lots, which prevented the transfer of the land to the Port Klang Authority.

Ling, who was testifying before Judge Justice Ahmad Asnawi on Tuesday, said he did not know the function of the two special purpose vehicles and thought they were “normal banks”. He was also unclear about what bond transactions or what AAA ratings were.

Tun Majid suggested to Ling that he was fully aware the letter of support was used to raise bonds for KDSB to clear its RM380 million debt and free the land from encumbrances.

“My (then) secretary-general Datuk Zaharaah Shaari said that this is as far as I can go as anything else would be infringing the territory of the Finance Ministry. I looked at it and told myself that it is a harmless letter so I signed it,” he said.

Tun Majid asked if Ling did not question what the letter was about. To this, Ling said: “Because they were addressing the letters to banks, I thought this was a letter of facts so I signed it. It was a support letter (but) the substance of it was just a statement of facts…

“I signed it on my last day in the cabinet…very good feng shui,” he said.

Ling, 69, who is also former MCA president, is accused of deceiving the government by not revealing to the Cabinet an additional interest rate of 7.5% annually in the RM1.088bil (at RM25psf) purchase of the land for the PKFZ project at the Prime Minister’s Office in Putrajaya between Sept 25, 2002 and Nov 6, 2002.

The two charges under Section 417 and 418 of the Penal code carry a maximum seven and five years’ jail sentences respective, or fine or both.

He also claimed trial to two alternative charges of cheating, which carries a lighter penalty.

The trial continues on Wednesday when the defence lawyers will cross-examine Ling.