Malaysia PM pledges no cover up in port scandal

By Royce Cheah

KUALA LUMPUR, Nov 4 (Reuters) - Malaysia's government said on Wednesday it would prosecute any wrongdoing in a state-backed multi-billion dollar port project that has been dogged by accusations of mismanagement and cronyism.

Prime Minister Najib Razak said the government would look at a report by a parliamentary committee urging it to investigate a former transport minister and other officials in connection with the port scandal.

The report by the Public Accounts Committee came as Najib is under scrutiny over whether he will deliver on pledges to root out corruption in government and his own party to boost investment and its appeal to voters. [ID:nSP423259]

"We will consider the report and I have said that we won't cover up any weakness or wrongdoing or whatever else that violates the law," Najib told reporters in parliament.

What started off as a 1.8 billion ringgit ($524.9 million) free trade zone at Malaysia's largest port, Port Klang, has ballooned into a more than 10 billion ringgit project following an acrimonious pullout by the project's Dubai-based partner.

The Port Klang Free Trade Zone, which started as a joint venture between the port near the capital of Kuala Lumpur and Dubai's Jebel Ali Free Trade Zone, had aimed to boost investment, but ended up drawing accusations of cronyism against the government.

The site covers 1,000 acres (405 hectares) and is located approximately an hour by road from the capital.

The report said former transport minister Chan Kong Choy should be investigated by the Malaysian Anti-Corruption Commission and police for criminal breach of trust.

It said Chan had issued letters of support for bonds worth 3.7 billion ringgit issued by the Port Klang Free Zone without the government's approval. The government is liable for those debts.

Critics said the failure of the government to prosecute any serving ministers or senior government members since it inaugurated the Malaysian Anti-Corruption Commission earlier this year showed it was not serious about tackling corruption.

Malaysia has fallen in corruption rankings to 47th place in 2008 from 29th in 2004, according to watchdog Transparency International.

Foreign investors have also shied away from the country preferring instead to look to faster-growing neighbouring Indonesia, something Najib has promised to address by liberalising sectors of the economy. [ID:nKLR343775]

Years of cronyism in the National Front coalition and in Najib's party, the United Malays National Organisation, caused voters to hand the government that has ruled Malaysia for 52 years its biggest ever defeat in elections last year.

Despite Najib's pledges to clean up, many remain sceptical.

"If this is just a public relations ploy to show that the authorities are doing something .... then it won't take too long for people to see through it," independent political analyst Khoo Kay Peng said.

(Additional reporting by Razak Ahmad; Editing by Sugita Katyal)