Timber - How Do They Cheat?

Sarawak Headhunter will make this as simple as possible so that everyone can understand beyond a doubt how Taib, his family, henchmen and cronies involved in the timber business blatantly cheat (actually steal) and shortchange the state so that they themselves can obtain maximum benefit and profit without having to account for it or pay the royalties and taxes rightfully due to the state and federal governments.

There are a few basic ways to do it, all involving under-declarations or false declarations, with the connivance of the state authorities of course. In Sarawak the state authorities means Taib.

First is to under-declare the volume or tonnage sold/exported. Next is to under-declare the grade and the price combined with false declarations as to the actual species and actual buyers. This involves nothing more than having 2 different sets of shipping documents drawn up and that more or less completes the method of operation of all timber scams perpetrated by them. Very simple and straightforward.

Don't the authorities know about this? Of course they do - they are all involved and everyone gets his cut. How does Sarawak Headhunter know this? Just take a look at the official statistics on the Malaysian Timber Industry Board's (MTIB) website.

More valuable and expensive species are grouped together and supposedly sold as MLH or Mixed Light Hardwood, the cheapest timber, which sold for RM480 per m3 ex-logpond in Malaya in May 2008 compared to Dark Red Meranti at RM860 and Chengal at RM2,290. See the prices here.

But then, you may ask, why am I using Malayan prices?

The reason is very simple. Somehow, Sarawak timber has managed to do the impossible and priced itself even below Malayan MLH. How is this possible, unless they (the Sarawak timber companies) are cheating? In fact they have cheated so much that this is what has actually happened. Don't believe me? Where is the evidence of this? See the MTIB site here (Export of Logs by Sarawak, January-August 2008).

Sarawak exported 2,402,146 m3 of logs during this period with a total FOB value of RM1,080,000,115. No species are stated - are we to assume all are MLH? The average price per m3 is therefore RM450.

First of all, even if we accept that ALL Sarawak log exports are MLH, we would expect the FOB price to be higher than the logpond price because of transport costs.

Secondly, it is unbelievable that Sarawak does not export any higher-priced logs of more valuable species such as meranti. If there are any such higher-priced logs, definitely the average price would be higher than that for MLH.

Even if only 10% of the volume of the logs was priced at an average of RM1,000 per m3, this would bring the average price per m3 up to RM505 and make a difference of RM132 million in revenue. Do you think it is only RM132 million that they have not declared?

To capture the difference, they use a mechanism known as "transfer pricing", where they will invoice a related company (controlled by themselves) the lower price and sum, and this related company, usually residing outside of Malaysia in a friendly lower-tax or even tax-free country, will then invoice the actual buyer the real price and sum.

This is illegal of course and constitutes not only tax evasion but also money laundering. Taib himself is guilty of this plus abuse of power and position for personal gain as well.

You can figure out for yourself the scale of their deception and how much these greedy pigs have stolen out of Sarawak's timber resources over the years, that is on top of whatever else they have stolen from the government coffers through one-sided contracts, over-priced, wasteful and unnecessary projects plus the costs of their mismanagement, misgovernance and maladministration.

As an anonymous timberman says:

"I used to work with one of the 3 largest timber companies in Sarawak from 1996 to 2002.

The timber company, listed on Bursa Malaysia main board, keeps two sets of accounts. One set is for legitimate transactions and another for transactions whereby royalty is not paid.

You may know of a company called Sarawak Transport (not Sarawak Transport Company, the bus service). Sarawak Transport belonged to Cahaya Mata Sarawak. When it was formed, and for many years onwards, it did not own a single land, air or sea transport vehicle.

Instead, for every cubic meter of timber exported from Sarawak, a certain fee is paid to Sarawak Transport by the exporter.

Befriend an accountant in any of the largest timber companies in Sarawak. They can tell you the exact facts and figures.

Timberman"

So what say you MACC, Malaysian Stock Exchange, Police Commercial Crime Department, Inland Revenue Board and Bank Negara Anti-Money Laundering Department? Anybody? No evidence? No crime? Nothing?