Friday, April 18, 2008

The Continuing Saga of Taib Mahmud's Greed

How Sarawak's Timber Wealth Benefits a Few at the Expense of the Many

Extracts from David Brown's doctoral dissertation "Why Governments Fail to Capture Economic Rent: The Unofficial Appropriation of Rain Forest Rent by Rulers in Insular Southeast Asia Between 1970 and 1999" (374 pages) will be posted in Sarawak Headhunter from time to time, but those who want to download, read, keep and distribute the whole dissertation will find it here.

For how long more do Sarawakians want to put up with Taib, his family and cronies' blatant abuse?

Even Taib's bomoh earned much more than many normal businessmen or professionals, or was this passed back to Taib?

"What we learn is that the family of Indonesia's former President Suharto earned $5 million from a single timber concession in a single year. It also tells us that the bomoh for Sarawak's Chief Minister Taib, who may be thought of as a proxy, earned $4.8 million from a single concession in a single year. As to Sabah, Kitingan's lawyer appropriated $275,000 a year from his shareholding in a timber concession".

"Finally, and by far the most important, the story I uncovered is an important one: heads of state had appropriated money crucial to the economic development of the states they governed while destroying an irreplaceable biological treasure. The next three chapters tell this tragic story".

Table 4.4 Samling timber concessions in which family members, friends, proxies or political allies of Taib Mahmud are board members or shareholders.

Name of Samling-linked timber concession

Name of board member or shareholder

Position in or percentage of shares held in company

Relationship to current chief minister, source of information.

Adong; Baram Sawmill, 46,134 hectares; Dayalaba, 16,469 hectares; Kelapang; KTM Timor 71,657 hectares;

Majau Timber;

Pelutan, 55,912 hectares; Ravenscourt 136,659 hectares; Samling Plywood Miri, 160,954 hectares; Sertama; Syarikat Reloh;

Tinjar Logging

Yong Nyan Siong

Holder of a single share; Director;

Director and 40 percent shareholder; Director; Director; Director; Director; 30 percent shareholder; Director; Director; Director and 3 percent shareholder;

Director

Nominee on behalf of Sarawak’s current Minister of Finance, George Chan (12 August 1997 interview with James Chin).

Paong Timber,

61,892 hectares

Edmund Ang @ Edmund Lea Ang, Bertram Raymond Regie Adai, Narulhuda Binte Mohd Mortadza, and Mustapha Bin Ismail, Sriemar Sdn Bhd.

1 percent shareholder, 1 percent shareholder, 3 percent shareholder, 1 percent shareholder, 5 percent shareholder.

Bertram Raymond Regie Adai is the former Editor in Chief of the Sarawak Tribune (11 June 1997 interview with former Sarawak Assistant Minister of Finance Patau Ubis). He and three other shareholders, as well as the company Sriemar Sdn Bhd, all give the Chief Ministers palace guest house, Istana Tetemu, as their address (18 August 1997 interview with Raphael Pura).

Pelutan, 55,912 hectares; Sertama, size unknown

Ahmad bin Suut

20 percent shareholder; Director

Chief Minister Taib Mahmud's bomoh (traditional healer and spiritual medium) who owns between 15 and 17 luxury automobiles (4 June 1997 interview with a Sarawak state assemblyman).

Ravenscourt, 36,659 hectares

Abdul Hamid

bin Sepawi

Director and 24 percent shareholder

First cousin to the chief minister, and an important business figure in the chief minister's family (6 June 1997 interview with State Assemblyman Aidan Wing). Abdul Hamid is “holding part of the money” for the chief minister (11 June 1997 interview with former Sarawak Assistant Minister of Finance Patau Ubis).




Table 4.4 (continued) Samling timber concessions in which family members, friends, proxies or political allies of Chief Minister Taib Mahmud are board members or shareholders.

Name of Samling-linked timber concession

Name of board member or shareholder

Position in or % of shares held in company

Relationship to current Chief Minister, source of information.

Ravenscourt, 136,659 hectares

Wahab Dollah, Assistant Minister for Infrastructure Development (28 May 1997 interview with a Sarawak journalist).

Director

Known as "Giant Killer" because he defeated former Chief Minister Tun Rahman in the elections in the aftermath of the 1987 Ming Court affair. Dollah acted on the chief minister's behalf in an attempt to obtain editorial control in the Borneo Post, where he is now a shareholder. Together with the chief minister's first cousin, Hamid Sepawi, Dollah owns 25 percent of the parent company of the Utusan Sarawak newspaper. Dollah serves as political lieutenant of Taib by controlling political activities and seeing to material needs of eight PBB state assemblymen. He is a strong public proponent of continued Melanau leadership in Sarawak. Dollah is said to have been awarded eight timber concessions by Taib (Sayottaib 2001: sulit 6, dokumen 1-4), although my study identified only five. He makes profits from his timber concessions available to the PBB during election time (10 June 1997 interview with Kueh Yong Ann).

Seriku, 85,559 hectares; Sertama

Abang Abdul Karim Tun Abg. Hj. Openg

Director and 0.5 percent shareholder; Director

Older brother of one of the chief minister’s most important ministers, Abang Johari, Minister of Industry (28 May 1997 interview with a Sarawak journalist).

Seriku, 85,559 hectares

Abang Hj. Mohamed Bin Abang Sharkawi

Director, 0.5 percent shareholder

Former associate of Wahab Dollah. Former official of Sarawak Economic Development Corporation (7 June 1997 interview with State Assemblyman Aidan Wing). A “Taib nominee” (12 August 1997 interview with James Chin).

Wan Abdul Rahman Timber, 28,407 hectares.

Thomas Kana

Director, 3 percent shareholder

Former senior official with the SNAP party (12 August 1997 interview with James Chin). In the Sarawak state cabinet as a minister from about 1967-1969 (26 May 1997 interview with a reliable and informed academic). Former state assemblyman (4 June 1994 interview with state assemblyman Aidan Wing). Still active with the PBB (11 June 1997 interview with former Sarawak Assistant Minister of Finance Patau Ubis).



Besides using its privately held timber concessions to make the Taib family wealthy and keep it powerful, the Samling group also owns two publicly listed companies
[1] whose earnings are used to satisfy similar objectives. Lingui, the larger of the two, is highly penetrated by political elites. One of its subsidiaries, Tamex Timber, is directed by Mirzan Mahathir, a son of Malaysia’s current Prime Minister. According to documents on file with the Malaysia Registry of Companies, Mirzan owns 15 percent of Tamex Timber through his company Falmouth. Also on the board of directors of Tamex Timber is Yong Nyan Siong, a nominee of Sarawak’s current Minister of Finance, George Chan (12 August 1997 interview with James Chin).

Samling has become the timber group most favored by Chief Minister Taib. He has reportedly promised the group that their concessions will be renewed in exchange for their undertaking certain steps to help develop Miri, Sarawak’s second largest city after Kuching. Samling has begun this process by building Miri’s (comparatively) luxurious Holiday Inn. More importantly, Samling has agreed to invest between RM1-2 billion ($400-800 million) and RM6-7 billion ($2.4-2.8 billion) in the Miri Township urban renewal project. Once the Miri project is complete, Samling is committed to undertaking a similar urban renewal project in Bintulu (4 November 1996 interview with James Ritchie; 5 and 7 November 1996 interview with a well-placed and knowledgeable source in Sarawak). One may speculate that the Samling group's rise to the top timber concession holder in Malaysia is due in part to their agreement to absorb a substantial portion of the expenses associated with these two urban renewal projects in Sarawak.


Rimbunan Hijau

Sarawak's second largest timber conglomerate is the Rimbunan Hijau group. The group's relationship with Sarawak's heads of state highlights the extent to which most timber concessionaires in insular Southeast Asia are completely at the mercy of rulers. Rimbunan Hijau's head, Tiong Hiew King, understands the political economic balance of power in Sarawak. In the early 1970s he was jailed by then Chief Minister Tun Rahman on charges of being a communist (Lau 1995: chapter 20, page 2). After being released, Tiong went to great lengths to curry favor with Rahman, even making a special trip to Taiwan to serve as his golf umbrella-holder. In an awkwardly translated but amusing passage,[2] S.K. Lau recounts that:

Tiong King went to Taiwan to hold umbrella for [Chief Minister Tun Rahman] Yakub while the latter played golf. This did not matter. [Tiong] even asked Yet Ming Ek, the Bintulu richest man to be the caddie of Yakub. Perhaps Tiong felt so lonely if only he was alone with Yakub. So he had to bring Yet along. Later, it became a laughing stock for the local timber sector and golf players (Lau 1995: chapter 4, page 2).


Rahman continued to abuse his relationship with Tiong. The head of the Sarawak Alliance's largest and most powerful Chinese party, the SUPP, promised Tiong a federal senatorship in exchange for a substantial bribe. After the SUPP took the bribe, Rahman refused to deliver on the deal:

SUPP Secretary General Wong Soon Kai promised Tiong King appointed as Senator on the condition that he should donate RM1,200,000 [$480,000] to the party. He could pay a deposit of RM700,000 [$280,000] and pay the balance after he was appointed as Senator. However, the then State Governor, Rahman Yakub disliked him and withheld the Senator post for the time being. Tiong was very angry and he asked for a refund of the money paid. Soon, Rahman Yakub stepped down and Tiong King was successfully appointed Senator (Lau 1995: chapter 2, page 3).


Once Taib assumed power, Tiong moved to curry favor with the new chief minister, appointing Taib's brother, Dato Haji Mohamad Arip bin Mahmud, to the board of Tiong’s publicly listed company Jaya Tiasa. Tiong's Rimbunan Hijau conglomerate has also awarded over a dozen timber concession directorships and shareholdings to the families, proxies, friends, and political supporters of Chief Minister Taib, according to company records on file with the registry of companies. These are listed in Table 4.5.

Table 4.5 Rimbunan Hijau timber concessions in which family members, friends, proxies or political allies of Chief Minister Taib are board members or shareholders.

Name of Rimbunan Hijau-linked concession

Name and position of board member/ shareholder

Position in or percentage of shares held in company

Relationship to Chief Minister Taib Mahmud, source(s) of information

Bornion Timber, 79,898 hectares

Bok Kok Pheng, Wee Ai Choo

Directors

Nominees for SUPP, one of four parties that makes up the state’s ruling coalition (12 August 1997 interview with James Chin).

Cahaya Upaya, contracting subsidiary;

Mantan, 75,538 hectares

Abdul Hamid Haji Sepawi

Director and 50 percent shareholder ; Director

First cousin to the chief minister, and important business figure in the chief minister’s family (6 June 1997 interview with State Assemblyman Aidan Wing). Abdul Hamid is “holding part of the money” for the chief minister (11 June 1997 interview with former Sarawak Assistant Minister of Finance Patau Ubis).

Cahaya Upaya, contracting subsidiary

Mohamad Asfia Awang Nasar, from the lower Rejang River

Director and 50 percent shareholder

Deputy speaker of state assembly (28 May 1997 interview with a Sarawak journalist). Instrumental during Ming Court affair in eroding support of Tun Rahman faction. Informer to CM Taib on activities of Sarawak Alliance's PBDS and SNAP parties. Executive editor of Borneo Post, People's Mirror, Sarawak Tribune, and Utusan Sarawak. Enforcer of news blackouts on activities of Malay (Abang Johari) and Iban (Alfred Jabu) leaders (Sayottaib 2001: sulit 6, dokumen 5). “Taib nominee” (12 August 1997 interview with James Chin).

Curiah, 65,487 hectares

Sim Kui Hock, son of Sim Kheng Hong, former Deputy Chief Minister

Initial Director

Sim’s position on the board of this concession is a political payback on behalf of his now deceased father (28 May 1997 interview with a Sarawak journalist). At a pivotal moment in the Ming Court affair, Taib’s press conference of 10 March 1987, when he announced the plot against him, Sim’s father was one of two men who stood shoulder-to-shoulder with the embattled chief minister (Ritchie 1987: 22).

Dahasil, 9,314 hectares

Abang Carrol Bin Abg. Dris

Director and 24.5 percent shareholder

Relative of Aloysius Dris, a senior civil servant in Ministry of Tourism, and a figure close to the PBB (12 August 1997 interview with James Chin).

Fonlin, size unknown

Abang Haji Ali Bin Abang Sepawi

Director

Probably the brother (*Not correct) of Abdul Hamid bin Sepawi, a first cousin to the Chief Minister, and an important business figure in the chief minister’s family (6 June 1997 interview with State Assemblyman Aidan Wing). Abdul Hamid is “holding part of the money” for the chief minister (11 June 1997 interview with former Sarawak Assistant Minister of Finance Patau Ubis).





Table 4.5 (continued) Rimbunan Hijau timber concessions in which family members, friends, proxies or political allies of Chief Minister Taib are board members or shareholders.


Name of Rimbunan Hijau-linked concession

Name and position of board member or shareholder

Position in or percentage of shares held in company

Relationship to Chief Minister Taib Mahmud, source(s) of information

Mantan, 75,538 hectares; Maxiwealth,

96,685 hectares

Wahab bin Haji Dollah, Assistant Minister for Infrastructure Development (28 May 1997 interview with a Sarawak journalist).

Director; Board member

Known as "Giant Killer" because he defeated former Chief Minister Tun Rahman in the state assembly elections in the aftermath of the 1987 Ming Court affair. Dollah acted on the CM's behalf in an attempt to obtain editorial control of the Borneo Post, where he is now a shareholder. Together with the chief minister's first cousin, Hamid Sepawi, Dollah owns 25 percent of parent company of the Utusan Sarawak newspaper. He serves as political lieutenant of Taib, controlling the political activities of, and seeing to the material needs of, eight PBB state assemblymen. Dollah is a strong public proponent of continued Melanau leadership in Sarawak. He is said to have been awarded eight timber concessions by Taib (Sayottaib 2001: sulit 6, dokumen 1-4), although my study identifies only five. Dollah makes profits from timber concessions available to PBB during election time (10 June 1997 interview with Kueh Yong Ann).

Maxiwealth,

96,685 hectares

Sharkawi Haji Bohari

Board member

A former associate of Wahab Dollah. A former official of Sarawak Economic Development Corporation (7 June 1997 interview with State Assemblyman Aidan Wing). A “Taib nominee” (12 August 1997 interview with James Chin).

Sarawak Plywood, 105,000 hectares

Datuk Haji Bujang Mohd. Nor

Director, holder of five shares.

Former state secretary under Chief Minister Taib, from the early-to-middle 1980s (26 May 1997 interview with a reliable and informed academic). Former state financial secretary. Regarded as a potential candidate for the post of Governor. He is the former chair of Bakun Hydroelectric Electric Corporation (28 May 1997 interview with a Sarawak journalist). Current executive chairman of Harwood. His position on the board of Sarawak Plywood may be a golden handshake reward for having held one or more of the posts discussed above (12 August 1997 interview with James Chin).


Table 4.5 (continued) Rimbunan Hijau timber concessions in which family members, friends, proxies or political allies of Chief Minister Taib are board members or shareholders.

Name of Rimbunan Hijau-linked concession

Name and position of board member or shareholder

Position in or percentage of shares held in company

Relationship to Chief Minister Taib Mahmud, source(s) of information

Sarawak Plywood, 105,000 hectares

Mohd Amin bin Hj. Satem

Director

Formerly with Sarawak Economic Development Corporation (26 May 1997 interview with a reliable and informed academic). Older brother of Sarawak's current Minister for Social Development. Chairman of BIG, a company specializing in the manufacturing of industrial cases, redi-mix concrete, and quarrying. Chairman of the Sarawak Chamber of Commerce (28 May 1997 interview with a Sarawak journalist). An original director of CMS corporation, the single largest and most important financial entity in the state, and widely regarded as the personal financial vehicle chief minister of Sarawak (29 May 1997 interview with Dominique Ng). A "former PBB nominee" (12 August 1997 interview with James Chin).

Tijok-Nakan,

14,699 hectares

Abang Sulaiman bin Datuk Hakim Abang Hj Mohidin

Director

Brother of the chief minister (28 May 1997 interview with a Sarawak journalist).

*Actually brother of former Senate President, Tan Sri Abang Ahmad Urai


Tijok-Nakan,

14,699 hectares

Taibi bin Ali

Director

Relative of the chief minister (7 June 1997 interview with State Assemblyman Aidan Wing).

Tijok-Nakan,

14,699 hectares

Dayang Mastura Bte Datuk Hakim Abang Hj Mohidin

Director

Sister of the chief minister (28 May 1997 interview with a Sarawak journalist).

*Actually Sister of former Senate President, Tan Sri Abang Ahmad Urai


In addition to cultivating relationships with Sarawak’s past and present chief ministers, Tiong attempted to do the same with Malaysia’s Prime Minister Mahathir by going into business with two of his sons. In 1991, Tiong activated a dormant shell company, Opcom, in order to go into optical fiber and optical cable manufacturing. In March, 1992, the same month that Mukhriz Mahathir, one of the prime minister's sons, joined the board, the company was given "pioneer status" by Malaysia's Industrial Development Authority, entitling it to a five-year corporate tax holiday.


In October, 1992, Tiong split off 15 percent of his company Opcom to Creative Synergy, a company in which Mukhriz and a second Mahathir son, Mukhzani, were sole shareholders and directors. Other share allocations in Opcom went to several politicians in Mahathir's United Malays National Organization.

Problems emerged, however, when an effort to produce optic fiber using original technology did not succeed. Strains in the shareholder partnership developed over purchases of more than RM40 million ($12 million) in equipment. In December, 1994, Tiong and his brothers resigned from Opcom's board, ending the family's representation there (AWSJ 1994b).

After Tiong and his brothers withdrew from the partnership, Mukhriz Mahathir brought a lawsuit against Tiong. In order to try to smooth things over, Tiong asked the head of the Sarawak’s SUPP party, the same man who had bought Tiong his senatorship and an old medical school classmate of Dr. Mahathir’s, to intercede on Tiong’s behalf and to try to arrange a meeting for Tiong with Dr. Mahathir. However, Mahathir refused to meet with Tiong and instead, S.K. Lau alleges, sent federal Inland Revenue Service agents to raid Tiong’s corporate headquarters.


In 1990, in order to curry favor with Dr. Mahathir, Tiong King invited [Mahathir's] son to set up a factory by joint venture. One and a half years later, he withdrew from the partnership. He said that the PM's son was in [a] power struggle in the firm and he withdrew [from] the partnership for the sake of not offending Dr. Mahathir. However, Tiong King was defeated in the battle this time as he underestimated Dr. Mahathir's son. [Tiong] thought he could use the same tactic previously applied to other Malay partners. In fact, Dr. Mahathir's son is a smart businessman and he decided to give up the firm too. He wanted to take legal action against Tiong . . .Tiong was frightened and he immediately asked Wong Soon Kai to discuss [the matter] with Dr. Mahathir to settle the case amicably. . . . Wong Soon Kai had to ask his wife to telephone [the] PM's wife for
discussion. [The] PM's wife said that since [her] son had grown up, he knew how to look after his own business and that they as his parents did not want to interfere.

A few days before writing this book, a group of Business Criminal Investigation Team accompanied with thirty plus police came to [the] Rimbunan Hijau Building for searching and investigating of accounts in the office. They surrounded the whole building and nobody was allowed to enter the office premises. As learnt . . . Tiong King . . . had removed all the important documents from the office. Thus, there was not many relevant important accounts kept in the office. . . (Lau 1995: chapter 2, pages 3-4).


S.K. Lau goes on to explain that there "were not many relevant important accounts kept in the office" because these important documents had been removed by Tiong's personal secretary, Margaret Wong. Lau explains, in a humorous passage, how Wong removed Rimbunan Hijau's books from the company's headquarters beneath her skirt.
[3]

To sum up, the family members and political associates of Chief Minister Taib Mahmud continue unofficially to appropriate timber rent through managerial and equity representation in timber concessions licensed to the Rimbunan Hijau group. The family of Malaysia's Prime Minister was also for a time engaged in a similar relationship with Rimbunan Hijau.


[1] Both of these companies, Lingui and Glenealy Plantations, were at one time financially distressed and acquired through reverse takeovers. That is to say, the companies agreed to surrender control to Samling, in exchange for receiving a small portion of Samling's assets. By using the method of the reverse takeover, Samling was able to obtain two publicly listed platforms from which it could then raise shareholder equity, without having to undergo the process of discovery concerning its broader holdings.


[2] The material is quoted directly from an unpublished manuscript written by S.K. Lau, a former Sibu-based journalist. The manuscript reportedly first saw the light of day when Lau sent his computer to a repair shop, and the shop took the liberty of printing it off without Lau's permission. From there, the manuscript was informally xeroxed, and distributed widely throughout Sarawak. As a result of its explosive content, Lau was forced to flee to Australia where he is now said to reside, though others speculate he is dead. Although the manuscript’s title, Immortal - Tiger – Dog, is borrowed from a Chinese comedy of the same name, the title is also believed to carry a double meaning, reflecting the author's own view of himself as having gone from an 'immortal' associating freely with Sarawak's political and timber elite, to a 'tiger' penning uncomplimentary details about them in his secret manuscript, to a 'dog' when he was financially marginalized by the (unwitting) subjects of his manuscript (19 July 1997 interview with Chiew Chin Sing).

[3] "One year, one day, a batch of personnel from the Inland Revenue Department suddenly stormed into the Rimbunan Hijau office for investigation on taxation. That day, Tiong was away in a foreign country. Tiong’s most helpful assistant Margaret Wong who played an important role in Rimbunan Hijau office would stay calm and took away the computer diskettes to hide inside her skirt before going past those Inland Revenue personnel guarding at the entrance gate . . . [L]ike the other large [timber] enterprises, Rimbunan Hijau group of companies kept two copies of account book. One was a false one which was meant for the declaration of tax. Another one was the actual account of the company for self keeping. Margaret Wong is a spinster with slim build and ugly appearance. People would mistake her as a cleaning maid in Rimbunan Hijau office. This time she could manage to walk past the entrance gate guarded by the Inland Revenue Department personnel. It was because of her ugly appearance that no one would suspect there would be computer diskettes stored with the company’s account hiding in her skirt. After all, none would believe such a ugly woman was an important figure in the Rimbunan Hijau group. [I]f those computer diskettes were discovered, perhaps Rimbunan Hijau Group would face serious trouble. All evidence in connection with the evasion of tax would be exposed. The personnel concerned would then be charged in court. After this incident, this spinster [was even] more highly regarded by her boss. . . . Don’t belittle this spinster Wong. Apart from holding other posts, she is now a member of the board of directors of the Rimbunan Hijau group" (Lau 1995: chapter 3, pages 2-3).

3 comments:

Cornelius said...

Hello there, I have tried the link but could not obtain David Brown's doctoral dissertation "Why Governments Fail to Capture Economic Rent: The Unofficial Appropriation of Rain Forest Rent by Rulers in Insular Southeast Asia Between 1970 and 1999" (374 pages). The link is a Error 404 broken link. Is there any other way I could retrieve the document?

Al Tugauw said...

Sorry, my mistake. I have corrected the link and it should be working now. However, I think his site on Geocities has exceeded its download limit - must have become popular all of a sudden.

I tried looking for your email address but couldn't find it. Send me an email at altugauw@gmail.com and I will email it to you.

Tbsbidayuh said...

Sorry, this GeoCities site is currently unavailable.

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I got this one pula.