PCCC president Hong Eam Wah said the group was merely concerned about how the deal was carried out without proper checks in place.
“While the deal is off, there are so many questions yet to be answered,” he told reporters at a press conference here.
Hong claimed that Penang Development Corporation (PDC), in its statement calling off the deal, continued to defend the agreement that it had with Umech Construction Sdn Bhd as one that was “feasible”.
He said based on credit rating reports, the company was not financially capable of taking on a large project such as an industrial park.
He added that the publicly available report showed the company had a debt of RM39.9 million and a gearing ratio of 215%, which suggests that the company has significant debt in relation to its equity.
A gearing ratio above 100% indicates that the company has more debt than equity, which means it has leveraged its operations by borrowing money.
Hong said another unanswered issue was how the land sale was with Umech Construction, but was then transferred to Umech Land Sdn Bhd. He also asked how the land was given a 99-year lease, which went against the 60-year lease normally granted for industrial land.
“What is most surprising is that apart from not having an open tender, there was no professional valuation report. Without these safeguards and filters, how can we ensure that the interests of PDC and the people of Penang can be protected to the fullest?
“PDC has already built nine industrial parks over the decades. The question is, why can’t you build another on your own?” he asked.
Hong said all these issues point to a lack of due diligence and called for a reshuffle of the top management at PDC.
The 226ha land deal was called off by PDC yesterday, citing a non-disclosure in the change of a controlling stakeholder in Umech Land to a developer. However, it defended its earlier decision to sell it to Umech.
Earlier this month, PCCC raised the issue about the sale of the plot of land near Batu Kawan at below market value to Umech Construction.
It also found the directly negotiated deal to be unacceptable. It alleged that a property developer had taken control of Umech and offered to lease out parcels of the land at high rates.
It was also reported that on Sept 27, Sunway Bhd announced that Umech Land inked a joint development agreement with PDC to co-develop a 558.96-acre (226.20ha) land in Batu Kawan into an industrial park with a gross development value of around RM3.5 billion.