|In Malaysia, Sarawak Has a Cash Register on the Port|
From Asia Sentinel
|14 November 2007|
Chief Minister Abdul Taib Mahmud’s family continues to want its “commission” on timber shipped to Japan
For weeks, as many as a dozen Japanese-registered log carriers have been riding at anchor outside four Sarawak ports in Malaysia after being refused entry to pick up timber for the Japanese market. Several have left empty-handed while the owners negotiate with a company called Achi Jaya Shipping of Sarawak.
The decision to shut out the Japanese vessels is because Achi Jaya is demanding payment of “commissions” of US$2-3 per square meter of timber. The shippers are refusing to pay because Japanese tax authorities earlier ruled that the payments were kickbacks to the family of Sarawak Chief Minister Abdul Taib Mahmud.
Despite the publicity in Japan, Taib Mahmud is hanging tough. Sources say he is continuing to demand payment. When Japanese log carriers turned up at Sarawak ports, in October, they were told they would not be granted permission by Achi Jaya Shipping to pick up timber unless they continued to pay the kickbacks.
With strong ties to the governing Barisan Nasional in Kuala Lumpur and the ability to make local journalists toe the line, Taib has denied allegations of illegality and forced two of Malaysia’s government-linked newspapers to apologize for airing reports on the mess. Malaysiakini, the independent Internet-based publication, has also been threatened with a lawsuit but has refused to retract its story. When contacted by Asia Sentinel, a spokesman for Achi Jaya Shipping declined to comment.
The picture painted by Japanese tax authorities is fairly daunting. According to reports in Japan Times and Yomiuri Shimbun, the Tokyo Regional Taxation Bureau determined that the payments were rebates, not legitimate expenses, and it is likely to impose well over 400 million yen in back taxes and penalties against the shipping companies.
It is mandatory for all log carriers calling at Sarawak ports to register with the chief minister's family-linked company, Dewan Niaga Sarawak, as the sole agent for timber shipments out of the state and to appoint Achi Jaya as their ship-handling agent.
The payments – at least RM32 million (US$9.67 million) - previously were alleged to have been routed through a Hong Kong-based company called Regent Star, according to Japanese tax authorities. Some 90 percent of Regent Star allegedly was owned by Taib Mahmud’s brother Onn until the company was abruptly wound up in June after it became public that the tax authorities had gone after the ship-owners.
The tax authorities reportedly have ordered the Kansai Line to pay 50 million yen in back taxes and penalties for falsely reporting so-called intermediation fees totalling 130 million yen to Regent Star over a seven year period ending in December 2005, in its cost of loading logs in ports in Sarawak, in an effort to hide the payments.
So long as their owners refuse to pay the commissions, permission to pick up Sarawak logs and other timber products will be withheld, a shipping company executive told Asia Sentinel. Several large exporters have started making enquiries with other Malaysian-registered shipping lines in Sarawak but they too would have to go through Achi Jaya Shipping Agency as sub-agents.
The Japanese shipping cartel has made the payments since the early 1980s, reportedly on the order of the provincial government. Although the Japanese tax authorities’ limit on the time period investigated kept the amount to RM32 million, payments made over the last 20 years are said to amount to hundreds of millions of ringgit. Sarawak's log and timber exports since 1970 have been valued at more than US$25 billion, based on figures available at the Trade Statistics Department in Sarawak.
In the Taib Mahmud empire’s defense, the companies said these were legitimate expenses as they were commissions paid to Regent Star in Hong Kong on the directive of the Sarawak provincial government.
A timber industry source said the decision to shut out the Japanese-registered vessels is a blow for exports, especially those with long-term ties to large Japanese buying houses, particularly for plywood. So long as their owners refuse to pay, permission to pick up Sarawak logs and other timber products will be withheld, according to a shipping company executive.
Several large exporters have started making enquiries with other Malaysian-registered shipping lines in Sarawak but they, too, presumably will have to go through Achi Jaya Shipping Agency as sub agents.
Sarawak Headhunter's Comment: And what work is it that they say they do or have done to earn these fees or commissions which they are charging? Isn't this blatant corruption and piracy? And who's the pirate chief if not Mahalanun Taib Mahmud himself?