Executive councillor Jagdeep Singh Deo, who is in charge of housing, said the previous government had proposed that shop-houses and government quarters be built by a private developer.

The land, located at the junction of Jalan Zainal Abidin and Jalan Burma, is at the centre of a controversy over the purchase of a RM2.8 million bungalow by chief minister Lim Guan Eng from a businesswoman linked to a company that bought the Taman Manggis land in 2010 for a hospital cum hotel project.

Jagdeep said today: “The land was not for a hardcore housing project. I have checked several documents and found a document about the previous BN government proposal. It was their latest decision.”

However, Penang Gerakan secretary Oh Tong Keong rubbished Jagdeep’s claim, saying that the mixed development was only a proposal and had remained so. “There was no decision. The land remained to build houses for the hardcore poor,” Oh said.

The DAP-led state government sold the land for RM11.5 million to Kuala Lumpur International Dental Centre Sdn Bhd. Two days ago, Penang Gerakan showed a photocopy of a memorandum dated July 2003 that stated that the previous government had agreed to build the Taman Manggis Phase 2 housing project for the hardcore poor in 2009.

However, Jagdeep said today that Gerakan should check their facts thoroughly first before releasing any statement about Taman Manggis.

The Penang Island City Council is believed to have given planning permission to KLIDC to build a 24-storey hotel and a private hospital.

However, further allegations have been made that KLIDC has held talks with another company to sell the land. Lim has denied such a sale had been proposed.