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When discussing the RM1.5 billion PGCC scandal along with the scandalous rezoning from “recreational” land to “new development”, we cannot afford to ignore what was going on in Batu Kawan, which is closely connected to the PGCC saga.

The PGCC and Batu Kawan deals reveal some highly questionable circumstances.

During a meeting between Chief Minister Lim Guan Eng and activists a couple of days ago, I suggested to the Chief Minister that the state government initiates an in-depth probe to uncover the business-political connections in the PGCC-Batu Kawan deals while thoroughly examining the re-zoning of the Batu Gantung land. For there is more to these deals than meets the eye.

It is important to recall that Abad Naluri did not actually own the Batu Kawan site in 2002 when it submitted its tender to the Penang Turf Club. After all, the principal or master agreement for the acquisition of the Batu Kawan land from the PDC was only entered into in 2004.

Now let’s look at this revealing chronology of events - including the changes in the political leadership in Putrajaya during the crucial 2002-2004 period:

2002

May 9 - Abad Naluri submits tender for Penang Turf Club’s relocation and sale of Batu Gantung land. The tender letter, signed by a politically well connected individual in the firm then, claims that Abad Naluri would build a new race-course for the Penang Turf Club at a 250-acre site at Batu Kawan, which it says has already been “approved” by the PDC. Who exactly signed the “approval letter”?

June - Mahathir annouces shock decision to quit. Umno issues statement confirming that Mahathir will be replaced by his deputy Abdullah Badawi towards the end of 2003.

Nov 25 - Turf Club EGM approves sale of Turf Club land in Batu Gantung and acquisition of Batu Kawan site.

2003

March 21 - Preliminary agreement said to have been entered into between the Turf Club and Abad Naluri. Under this agreement, Abad Naluri pays advances totalling RM10 million, presumably as “compensation” to Turf Club members.

Nov 1 - Abdullah Badawi formally takes over as PM from Mahathir.

2004

Jan 16 - Penang Development Corporation enters into a ‘master agreement’ to sell about eight parcels of land on the mainland in Batu Kawan, totalling over 1,000 acres, to one very “fortunate” company, Abad Naluri. One of these parcels, measuring 300 acres, is for the new racecourse site. The purchase consideration for this parcel is later said to be RM46 million.

On what basis was 1,000 acres of potential prime land allotted to one firm?

Mar 21 - Abdullah Badawi cements position as PM after leading BN to landslide victory in general election.

May 12 - Agreement entered into between Turf Club and Abad Naluri for the sale of the Turf Club land in Batu Gantung on the island at a low, low “recreational land” price of RM43 per sq ft. (Why would the Turf Club sell to a property developer at such a low “recreational land” price when it knows the latter is going to develop the land? Doesn’t make sense, unless…)

2005

July 5 - Layout plan for Batu Kawan race-course approved by MPSP even though terms of PDC’s actual S&P agreement with Abad Naluri not yet finalised.

2006

By Sept/Oct - Abad Naluri submits application for planning permission re PGCC on the Turf Club land.

Draft Penang Structure Plan indicates that rezoning almost a done deal - apparently and amazingly without any application from the developer.

Nov 12 - Abdullah Badawi officiates at the ground-breaking ceremony of the proposed second bridge site in Batu Kawan, which by a happy ‘coincidence’ happens to sit right next to the proposed Batu Kawan race-course site and close to Abad Naluri’s other parcels of land.

2007

June 28 - Conversion of Turf Club land from recreational land to “new development” is gazetted under the Penang Structure Plan, turning PGCC developer Abad Naluri into instant billionaire firm, after spending only RM10 million on the land!

Oct 17 - Prime Minister Abdullah launches PGCC project, flanked by then Chief Minister Koh Tsu Koon, Patrick Lim and the Abad Naluri chairman - even though acquisition of Turf Club land not yet completed and work on Batu Kawan race-course has barely begun.

Now, after all this, don’t you think that Guan Eng has strong grounds to look again at how the re-zoning of the Turf Club land to “new development” was carried out - and how over 1,000 acres of Batu Kawan land was allotted to Abad Naluri? I believe he shouldn’t worry about compensation claims from Abad Naluri as he stands on much stronger ground, considering the business-political connections behind the Turf Club-Abad Naluri-PDC deals and the highly questionable re-zoning.

Onward towards the Penang People’s Park!

The dream of a Penang People’s Park lives on.

But Penang Chief Minister Lim Guan Eng seems concerned that if he rezones the Penang Turf Club land back from “development” status to “recreational”, it could expose the state government to claims of compensation.

But he needn’t have to worry too much. For the Penang state government holds a trump card. It can take back the Batu Kawan land and, in doing so, foil any bid to develop the Penang Turf Club land by 2011.

In April 2008, the Penang Turf Club signed a supplementary agreement with Abad Naluri Sdn Bhd, extending by three years its original agreement signed in 2004 to March 2011. Under this agreement, the requirement for Abad Naluri to build a new racecourse in Batu Kawan is still there.

But there are concerns that new parties could be taking over the reins at Abad Naluri or Equine with other plans for property development on the Penang Turb Club land.

One way to preserve the Turf Club’s green lung for now is for the Penang state government to block the sale of the Batu Kawan land to Abad Naluri.

It can easily do this. The master agreement between the Penang Development Corporation and Abad Naluri for various parcels of land totalling more than 1,000 acres (wow, 1,000 acres to one company! very lucky one!), was signed in January 2004. Under this agreement, Abad Naluri was given four years to settle the purchase consideration. But until now, the actual sale and purchase agreement for the Batu Kawan racecourse parcel of 300 acres apparently has not yet even been signed, and the land has not been paid for - even though payment should have been made by January 2008. So the PDC can take back the Batu Kawan land, effectively making it impossible for Abad Naluri to build a new racecourse on the mainland for the Turf Club. If the PDC were to do this, Abad Naluri would be unable to fulfil its part of the agreement with the Turf Club.

Now, the background to how Abad Naluri was awarded the tender in 2002 for the relocation of the Turf Club gets very interesting. In 2002, four parties were said to be involved in the bidding for the Turf Club relocation plan, namely firms linked to two different tycoons in KL, another one in Penang and Abad Naluri. One of these parties is now said to be eyeing the Turf Club land again.

Abad Naluri’s tender is believed to have been submitted and signed in May 2002 by someone in the company then who was politically well-connected (try and guess who it was - it’s not Patrick Lim, who many believe was just a ‘front man’).

Abad Naluri is believed to have been awarded the tender because of its ability to build a new racecourse in Batu Kawan. The firm had claimed that it had a land bank of 250 acres in Batu Kawan which it could use to build the new racecourse and it had a “letter of approval” (from the PDC?) to support that claim.

But the funny thing is that the master agreement between PDC and Abad Naluri for the Batu Kawan land was only signed in January 2004. The agreement included the parcel of 300 acres for the Batu Kawan racecourse. So this means that when Abad Naluri submitted its tender, it had not yet entered into the master agreement with Batu Kawan. But that did not stop Abad Naluri from already claiming it had 250 acres to build the race-course. And the Penang Turf Club believed this - based on a letter of approval?

Blog reader dontplaypuks left this comment:

Knowing state governments, government departments and local councils, I will bet my bottom $ that proper procedures were not adhered to and that the decision was ultra vires their powers. e.g an EIA may not have been done or there was no quorum in the approval given by the State Govt. or a public inquiry that ought to have been held, was not.

Under those circumstances, if the conversion can be proven illegal or beyond the powers of the state, then the conversion can be reversed.

I am sure LGE, who now has the resources of a whole state and access to the best local lawyers, can get cracking on this, pronto!!

Another blog reader, rhino, says Penang desperately needs more recreational space:

We need the PEOPLES PARK!!! Ask LGE to take a walk in Botanical Gardens and Youth Park during the weekends. See for himself how utterly bad the situation is, and how desperate people are for that little space to exercise.

And, it is a tourist stop-over. Utterly shameful for Penang. Even weekdays go and see for yourself how badly a park is needed.

No more space for people to exercise!

Blog reader Andrew sent in this message: “I don’t care how Guan Eng does it; I am not interested in all the legal and business obstacles. We elected him to do something different - and we want the People’s Park!”

The PGCC project has been the biggest land scam in Penang, Penang Chief Minister Guan Eng said today, adding there were a couple of other large scams still under investigation.

He was responding to a statement by Teng Hock Nan yesterday (see full statement below). The previous Penang state government had converted the Turf Club land from open recreational area to “new development” under the Penang Structure Plan gazetted in June 2007.

Critics claim the state lost between RM120 million and RM400 million in conversion fees as the conversion was done before the PGCC project was approved while the state forfeited RM1.5 billion in potential revaluation surplus, which it would have earned had it purchased the land from the Penang Turf Club itself instead of allowing the land to be sold to Abad Naluri. A priceless green lung has also been put in danger of being turned into a congrete jungle instead of into a People’s Park.

Teng said yesterday the Municipal Council had not made any decision on the PGCC nor had the previous state government decided whether and how much premiums or charges to levy on Abad Naluri, the PGCC developer. “Therefore, since no decision has been made as yet, it is up to the new state government and the MPPP to make whatever decision that they think suitable with respect to the site and any development proposal, including whatever charges to be imposed.”

In response, Guan Eng said: “I want to ask Koh Tsu Koon what are the consequences of (re)rezoning the land.” He said he knew the consequences but he wanted Koh to tell him. “Show me you are on top of your job. You have been chief minister for 18 years. You tell me what are the consequences should we want to rezone it,” he challenged Koh. Guan Eng said all this with a smile.

“Koh Tsu Koon is in big trouble,” observed one journalist who was present.

Some believe that rezoning the land back to recreational status could leave the state open to claims for compensation. So the state might not want to do anything with the land at the moment and just leave things as they are - but that could open the land to other forms of property development later, dashing hopes that it could be turned into a People’s Park.

As one activist observed, Teng’s statement yesterday just reinforced the fact that nothing has been approved, but failed to answer why the previous state government rezoned the land without waiting for an application from the developer.

Guan Eng posed more pointed questions to Koh and Teng. When the change was made from tanah lapang dan rekreasi to pembangunan baru, how does this benefit the public interest, he asked. “Why and how did you change this?”

As for the previous administration holding public hearings to obtain the views of the public, Guan Eng said he would let the NGOs reply to this. He said as far as he knew, civil society groups were largely unaware of these public hearings.

The Penang Chief Minister added Koh and Teng had misled the Prime Minister when they got him to officiate at the launch of the PGCC last October, when the project had not yet been approved. “Why did you allow the PM to embarrass himself in launching an illegal project?”

One activist remarked that he finds it hard to believe that Abdullah was not aware of the background and status of the project. The PM had said back then he wanted all approvals to be expedited.

Another activist commented:

And here is Teng’s statement in full:

Statement by Dato’ Dr Teng Hock Nan
Former Penang State Exco Member in charge of Local Government

THE PROPOSED PGCC PROJECT:
PREVIOUS STATE GOVERNMENT DID NOT APPROVE AS YET
PRESENT GOVERNMENT CAN DECIDE AND IMPOSE LEVIES

It must be emphasised that the application for planning permission by the developer of the proposed Penang Global City Centre (PGCC) project has not yet been approved by the Penang Island Municipal Council (MPPP) under the previous state government as of 8 March 2008.

The previous state government has also not made any decision as yet on whether and how much premiums or charges were to be levied on the developer relating to the proposed PGCC project.

The formulation of the structure plan, which made provisions on zoning of development for the whole state, followed the proper provisions and procedure for structure plan under the Town and Country Planning Act. Public exhibitions and hearings were held in 2006 - 2007 on the draft structure plan which was finalised and gazetted in June 2007.

In this respect, the structure plan did not specify the type (residential or commercial or “mixed”) and the scale (density, plot ratio, etc) of “new development” zoned on that site.

The MPPP can still decide whether to reject or approve any development proposal, including the type and the scale. It is also up to the State Planning Committee chaired by the Chief Minister to provide guidance.

Therefore, since no decision has been made as yet, it is up to the new state government and the MPPP to make whatever decision that they think suitable with respect to the site and any development proposal, including whatever charges to be imposed.

Sat, 10/5/2008