How The Election Commission Cheats & Misleads About Election Offences

The Election Offences Act 1954

"An Act to prevent electoral offences and corrupt and illegal practices at elections..."

(Notes by Sarawak Headhunter in red)

This is an important piece of legislation that understood, interpreted and enforced correctly could have a significant impact on the outcome of elections by reducing or eliminating electoral offences as well as corrupt and illegal practices at elections (especially by the ruling UMNO/BN regime), thereby levelling the playing field.

Over the years the Malaysian Elections Commission has conspired with the ruling regime to selectively misinterpret and enforce the provisions of the Act in its favour and to maintain it in power.

Among the more serious abuses include gerrymandering and disproportionate representation, which go to the heart of the electoral system, yet no party has taken the EC and UMNO/BN to court to have these abuses rectified, probably because the courts have also been subverted by UMNO/BN.

It is therefore essential for all parties to know exactly what the Act is all about and what its more important parts say so that voters may be educated and can make informed decisions important for their and the nation's future:

PART II
ELECTORAL OFFENCES

Offences by any person

3. (1) Any person who—

(a) knowingly makes any false statement on or in connection with any application to be placed on any register of electors;

Such a false statement may include giving a wrong address, declaring oneself to be a citizen when one is not, for example.

(b) forges or fraudulently defaces or fraudulently destroys any nomination paper, or delivers to a returning officer any nomination paper knowing the same to be forged;

(c) forges or counterfeits or fraudulently defaces or fraudulently destroys any ballot paper or the official mark on any ballot paper;

Used to stuff ballot boxes with invalid and fraudulent "votes". Normally this can only happen with the connivance of the EC and out of sight of observers, especially if the ballots would need to be transported to a counting centre. There is normally a short period when no one except EC officers are allowed in the polling stations after polling has closed and before counting begins. This is the time hwen such dirty work is done.

(d) without due authority supplies any ballot paper to any person;

Used for "phantom" voters.

(e) sells or offers to sell any ballot paper to any person or purchases or offers to purchase any ballot paper from any person;

(f) not being a person entitled to be in possession of any ballot paper which has been marked with any authorized mark has any such ballot paper in his possession;

A "phantom" voter or UMNO/BN ruling party person in charge of bribing voters at any particular locality.

(g) puts into any ballot box anything other than the ballot paper which he is authorized by law to put in;

(h) without due authority takes out of the polling station any ballot paper or is found in possession of any ballot paper outside a polling station;

One of the methods used by the ruling party to pay voters who pretend to vote, then bring out the blank ballot paper, passes it to a ruling party representative who then pays them, marks the blank ballot in favour of BN, passes it to the next voter who then puts it in the ballot box and brings out his blank ballot paper, and the process carries on. The EC in the meantime pretends that no such thing is going on.  

(i) without due authority destroys, takes, opens, or otherwise interferes with any ballot box, ballot paper or packet of ballot papers in use or intended to be used for the purposes of an election;

Usually occurs after polling is closed and before the counting begins at the same station, when the polling/counting station is off limits to all except EC officials. Also occurs when ballot boxes are transported by helicopter, road or speedboat from the polling stations to a distant counting station.
 

(j) without due authority prints any ballot paper or what purports to be or is capable of being used as a ballot paper at an election;

Usually done by the EC itself and therefore not easy to catch.

(k) for the purposes of an election, manufactures, constructs, imports, has in his possession, supplies or uses, or causes to be manufactured, constructed, imported, supplied or used, any appliance, device or mechanism by which a ballot paper may be extracted, affected or manipulated after having been deposited in a ballot box during the polling at any election;

(l) votes at any election when he is not entitled to vote thereat;

A "phantom" voter, in certain areas such as Sabah usually an "illegal" citizen given a Malaysian identity card with the connivance of and in collusion with the National Registration Department, the Immigration Department, Ministry of Home Affairs, the Elections Commission and other relevant authorities, both State and Federal.
 

(m) prints any advertisement, handbill, placard or poster which refers to an election and contains a reproduction of a ballot paper, or of what purports to be a ballot paper, to be used or likely to be used at such election;

NOT allowed of course, contrary to what the EC has said recently. What is allowed is stated in the proviso below and applies during the campaign period. 

It must be noted that an electoral offence does not necessarily have to take place within the campaign period only, but can also take place in the run-up to an election, such as now, for example.

(n) obstructs or prevents a voter who is otherwise entitled to vote from voting at an election; or

Usually happens in rural areas, where it is easier to intimidate voters. Whole villages or longhouses are cordoned off, usually by gangsters in the pay of the ruling party, even during the campaign period.  Making likely opposition voters too drunk to wake up until after polling is closed or bringing them for a joy-ride to the nearest town with some pocket money while polling is going on are other favourite tricks of the BN ruling party. 

(o) votes in an election at more than one polling station in the same constituency or a different constituency,

Such "phantom" voters are usually transported around various polling stations by the ruling party in buses or vans.

shall be liable, on conviction, to imprisonment for a term not exceeding two years or to a fine not exceeding five thousand ringgit or to both such imprisonment and fine and, subject to any provision to the contrary in any written law relating to any election, shall until the expiration of five years from such conviction, be incapable of being registered or listed as an elector or of voting at any election or of being elected at any election, and if at that date he has been elected at any election, his seat shall be
vacated from the date of such conviction:

Provided that nothing in paragraph (m) shall be deemed to prohibit, during the campaign period, the printing in any such advertisement, handbill, placard or poster of the name or symbol of one candidate only, together with a reproduction of a cross or other mark indicating approval of any such name or symbol.

Offences by election officers

4. Any officer, clerk, interpreter or other person having any duty to perform pursuant to any written law relating to any election who—

(a) makes, in any record, return or other document which he is required to keep or make under such written law, any entry which he knows or has reasonable cause to believe to be false, or does not believe to be true;

(b) permits any person whom he knows or has reasonable cause to believe not to be a blind person or an incapacitated person to vote in the manner provided for blind persons or incapacitated persons;

(c) refuses to permit any person whom he knows or has reasonable cause to believe to be a blind person or an incapacitated person to vote in the manner provided for blind persons or incapacitated persons;

(d) wilfully prevents any person from voting at the polling station at which he knows or has reasonable cause to believe such person is entitled to vote;

(e) wilfully rejects or refuses to count any ballot paper which he knows or has reasonable cause to believe is validly cast for any candidate in accordance with the provisions of such written law;

(f) wilfully counts any ballot paper as being cast for any candidate, which he knows or has reasonable cause to believe was not validly cast for such candidate; or

(g) is without reasonable cause guilty of any act or omission in breach of his official duty,

Again these offences are not easy to catch, especially when they are (illegally) sanctioned and committed by the EC itself, which will come up with all kinds of spurious reasons for whatever they do or do not do.

...

Offence of promoting feelings of ill-will or hostility

4A. (1) Any person who, before, during or after an election, directly or indirectly, by himself or by any other person on his behalf, does any act or makes any statement with a view or with a tendency to promote feelings of ill-will, discontent or hostility between persons of the same race or different races or of the same class or different classes of the population of Malaysia in order to induce any elector or voter to vote or refrain from voting at an election or to procure or endeavour to procure the election of any person shall be liable, on conviction, to imprisonment for a term not exceeding five years or to a fine not exceeding ten thousand ringgit or to both such imprisonment and fine.

Going by this offence, which is usually committed by the government and ruling-party controlled main stream media acting on their behalf, most ruling party candidates including their top leadership would be disqualified from standing in elections.

PART III
CORRUPT PRACTICES

Personation

7. Every person who at an election applies for a ballot paper in the name of some other person, whether that name be that of a person living or dead, or of a fictitious person or who, having voted once at any such election, applies at the same election for a ballot paper in his own name, shall be guilty of the offence of personation.

As evidenced at the Sabah RCI hearing, one of the modus operandi used by UMNO/BN in collusion with the NRD and the EC, to get illegal citizens/voters to vote on behalf of registered voters who either have not or have not yet turned up to vote.

Treating 

8. Every person who, corruptly, by himself or by any other person, either before, during or after an election, directly or indirectly gives or provides or causes to be given or provided, or is accessory to the giving or providing, or pays or engages to pay wholly or in part, the expense of giving or providing any food, drink, refreshment or provision, or any money or ticket or other means or device to enable the procuring of any food, drink, refreshment or provision, to or for any person for the purpose of corruptly influencing that person or any other person to give or refrain from giving his vote at such election or on account of any such person or any other person having voted or refrained from voting or being about to vote or refrain from voting at such election, and every elector or voter who corruptly accepts or takes any such food, drink, or refreshment or provision or any such money or ticket or who adopts such other means or device to enable the procuring of such food, drink, refreshment or provision shall be guilty of the offence of treating.


A frequently flaunted provision of the election offences law, normally conducted in full view of the EC and other relevant authorities, none of who bother to the extent that such abuse has become accepted practice, usually even demanded by voters. 

Undue influence
 

9. (1) Every person who, before, during or after an election, directly or indirectly, by himself or by any other person on his behalf, makes use of or threatens to make use of any force, violence, or restraint, or inflicts or threatens to inflict, by himself or by any other person, any temporal or spiritual injury, damage, harm, or loss upon or against any person in order to induce or compel such person to vote or refrain from voting, or on account of such person having voted or refrained from voting, at any election, or who by abduction, duress, or any fraudulent device or contrivance impedes or prevents the free exercise of the franchise of any elector or voter, or thereby compels, induces, or prevails upon any elector or voter either to give or refrain from giving his vote at any election, or who directly or indirectly interferes or attempts to interfere with the free exercise by any person of any electoral right shall be guilty of the offence of undue influence.

Another provision of election offences law fequently abused, even and especially in the mainstream media controlled by UMNO/BN, without any action being taken by the EC or any other relecvant authorities.

(2) A person shall be deemed to interfere with the free exercise of the electoral right of a person within the meaning of this section who induces or attempts to induce such person to believe that he, or any person in whom he is interested, will become or will be rendered an object of divine displeasure or spiritual censure.

Commonplace.

Bribery

10. The following persons shall be deemed guilty of the offence of bribery:

(a) every person who, before, during or after an election, directly or indirectly, by himself or by any other person on his behalf, gives, lends, or agrees to give or lend, or offers, promises, or promises to procure or to endeavour to procure, any money or valuable consideration to or for any elector or voter, or to or for any person on behalf of any elector or voter or to or for any other person, in order to induce any elector or voter to vote or refrain from voting, or corruptly does any such act as aforesaid on account of such elector or voter having voted or refrained from voting at any election;

Commonplace. Evidence abounds about this practice, especially by the UMNO/BN ruling regime in giving all kinds of handouts and allocations or promises thereof under the pretext of government assistance or projects for the people. The EC and other relevant authorities see nothing wrong with such illegal practices that usually coincide with elections.

(b) every person who, before, during or after an election, directly or indirectly, by himself or by any other person on his behalf, gives or procures, or agrees to give or procure, or offers, promises, or promises to procure or to endeavour to procure, any office, place or employment to or for any elector or voter, or to or for any person on behalf of any elector or voter, or to or for any other person, in order to induce such elector or voter to vote or refrain from voting, or corruptly does any such act as aforesaid on account of any elector or voter having voted or refrained from voting at any election;
 

(c) every person who, before, during or after an election, directly or indirectly, by himself or by any other person on his behalf, makes any such gift, loan, offer, promise, procurement, or agreement as aforesaid to or for any person in order to induce such person to procure or endeavour to procure the election of any person, or the vote of any elector or voter at any election;
 

(d) every person who, either before or during an election, upon or in consequence of any such gift, loan, offer, promise, procurement or agreement, procures or engages, promises or endeavours to procure, the election of any person, or the vote of any elector or voter at an election;
 

(e) every person who, either before or during an election, advances or pays or causes to be paid any money to, or to the use of, any other person with the intent that such money or any part thereof shall be expended in bribery at any election or who knowingly pays or causes to be paid any money to any person in discharge or repayment of any money wholly or in part expended in bribery at any such election;

(f) every elector or voter who, before or during any election directly or indirectly, by himself or by any other person on his behalf, receives, agrees, or contracts for any money, gift, loan, or valuable consideration, office, place or employment, for himself or for any other person, for voting or agreeing to vote or for refraining or agreeing to refrain from voting at any such election;

(g) every person who, after any election, directly or indirectly, by himself or by any other person on his behalf, receives any money or valuable consideration on account of any person having voted or refrained from voting or having induced any other person to vote or to refrain from voting at any such election;

(h) every person who, after an election, directly or indirectly, by himself or by any other person on his
behalf, on account of and as payment for voting or for having voted or for agreeing or having agreed to vote for any candidate at an election, or on account of and as payment for his having assisted or agreed to assist any candidate at an election, applies to such candidate, or to his agent or agents, for the gift or loan of any money or valuable consideration, or for the promise of the gift or loan of any money or valuable consideration or for any office, place or employment or for the promise of any office, place or employment; and

(i) every person who, either before or during an election, directly or indirectly, by himself or by any person on his behalf, in order to induce any other person to agree to be nominated as a candidate or to refrain from becoming a candidate or to withdraw if he has become a candidate, gives or procures any office, place or employment, or agrees to give or procure or offers or promises to procure or to endeavour to procure any office, place or employment, to or for such other person, or gives or lends, or agrees to give or lend, or offers, or promises to procure or to endeavour to procure any money or valuable consideration to or for any person or to or for such other person, or to or for any person on behalf of such other person.

ALL illegal practices of the UMNO/BN ruling regime condoned by the partisan EC and other relevant authorities.

Punishment and incapacities for corrupt practice 

11. (1) Every person who—
 

(a) commits the offence of personation, or aids, abets, counsels or procures the commission of the offence of personation;

(b) commits the offence of treating, undue influence or bribery;

(c) prints, publishes, distributes or posts up or causes to be printed, published, distributed or posted up any advertisement, handbill, placard or poster which refers to any election and which does not bear upon its face the names and addresses of its printer and publisher;

(d) makes or publishes, before or during any election, for the purpose of affecting the return of any candidate, any false statement of fact in relation to the personal character or conduct of such candidate;

(e) makes or publishes, before or during any election, for the purpose of promoting or procuring the election of any candidate, any false statement of the withdrawal of any other candidate at such election; or

(f) being a candidate or election agent knowingly makes the declaration as to election expenses required by section 23 falsely, shall be guilty of a corrupt practice, and shall, on conviction by a Sessions Court, be liable, in the case referred to in paragraphs (a) and (b), to imprisonment for a term not exceeding two years and to a fine of not less than one thousand ringgit and not more than five thousand ringgit, and, in any other case, to imprisonment for a term not exceeding one year and to a fine not exceeding two thousand ringgit. Offences under paragraphs (a) and (b) shall be seizable offences within the meaning of the Criminal Procedure Code.

(2) Every person who is convicted of a corrupt practice shall, subject to any specific provision to the contrary in any written law relating to any election, by conviction become incapable of being registered or listed as an elector or of voting at any election or of being elected at any election, and if at that date he has been elected at any election, his seat shall be vacated from the date of
such conviction:

Provided that such disability shall cease on the expiry of five years from such conviction.

(3) A prosecution for a corrupt practice except any corrupt practice as defined in paragraphs (1)(d) and (e) shall not be instituted without the sanction of the Public Prosecutor.

PART IV
ELECTION AGENT, ELECTION EXPENSES ANDILLEGAL PRACTICES

...

Prohibition of certain expenses during campaign period

15A. (1) No expenses shall, with a view to promoting or procuring the election of a candidate, be incurred during the campaign period, by any person other than the candidate, his election agent and persons authorized in writing by the election agent on account—

(a) of holding, convening or organizing any open public meeting, open public rally, open public display or open public entertainment or giving open public address or lecture;

(b) of printing or issuing advertisements, circulars or publications; or

(c) of otherwise presenting to the electors the candidate or his views or the extent or nature of his backing, or disparaging another candidate:

Provided that this paragraph shall not—
 

(i) restrict publication in a newspaper or other periodical of any matter relating to the election;

(ii) apply to expenses incurred by any person in travelling or in living away from home, or to similar personal expenses.

(2) Where a person incurs any expenses required to be authorized by an election agent under subsection (1), he shall within fourteen days after the date of publication of the result of the election in the Gazette send to the election agent a return, accompanied by a declaration made by him (or in the case of an association or body of persons, a director, general manager, secretary or other similar officer thereof) verifying the return and giving particulars of the matters for which the expenses were
incurred:

Provided that this subsection shall not apply to any person engaged or employed for payment or promise of payment by the candidate or his election agent.

...

Expenses in excess of maximum to be illegal practice

 
19. (1) Subject to such exception as may be allowed in pursuance of this Act, no sum shall be paid and no expense shall be incurred by a candidate at an election or by his election agent, after the date of publication of the notice of the election in the Gazette, during or after an election, on account of or in respect of the conduct or management of such election, in excess of—
 

(a) two hundred thousand ringgit in the case of an election to the Dewan Rakyat;
 

(b) one hundred thousand ringgit in the case of an election to a Legislative Assembly;
 

(c) ten thousand ringgit in the case of an election to a local authority other than a local council;
 

(d) three thousand ringgit in the case of an election to a local council:

Provided that paragraphs (c) and (d) shall have no application in Sabah and Sarawak.

(2) Any candidate or election agent who knowingly acts in contravention of this section shall be guilty of an illegal practice.

It is a well-known fact that on top of everything else, UMNO/BN candidates spend far more than the legally allowed maximum, even going into the millions. There is no real enforcement, even if it happens under the very eyes of a compliant EC. Complaints are more often than not just swept aside or ignored. 

Even the courts have been cooperative in deciding that party expenditure as a whole does not constitute part of each candidate's expenditure, thereby allowing a loophole through which hundreds of millions are allowed to be spent by the party in elections, even though the total expenditure far exceeds each candidate's allowed expenditure when divided amongst all the party's candidates.

Certain expenditure to be illegal practice

20. (1) No payment or contract for payment shall, for the purpose of promoting or procuring the election of a candidate at any election, be made—

(a) on account of the conveyance of electors or voters to or from the poll, whether for the hiring of vehicles, vessels or animals of transport of any kind whatsoever, or for railway fares, or otherwise; or

(b) to or with an elector or voter on account of the use of any house, land, building, or premises for the exhibition of any address, bill, or notice, or on account of the exhibition of any address, bill or notice.

(2) Subject to such exception as may be allowed in pursuance of this Act, if any payment or contract for payment is knowingly made in contravention of this section either before, during, or after an election, the person making such payment or contract shall be guilty of an illegal practice, and any person receiving such payment or being a party to any such contract, knowing the same to be in contravention of this section, shall also be guilty of an illegal practice.

(3) A person shall not let, lend, or employ for the purpose of conveyance of electors or voters to and from the poll any vehicle, vessel or animal of transport of any kind whatsoever which he keeps or uses for the purpose of letting out for hire, and if he lets, lends, or employs such vehicle, vessel or animal of transport knowing that it is intended to be used for the conveyance of electors or voters to and from the poll he shall be guilty of an illegal practice.

(4) A person shall not hire, borrow, or use for the purpose of conveyance of electors or voters to and from the poll any vehicle, vessel or animal of transport of any kind whatsoever which he knows the owner thereof is prohibited by subsection (3) to let, lend, or employ for that purpose, and if he does so he shall be guilty of an illegal practice.

(5) Nothing in subsection (3) or (4) shall prevent a vehicle, vessel or animal of transport of any kind being let to, or hired, employed, or used by an elector or voter or several electors or voters at their joint cost for the purpose of being conveyed to or from the poll.

(6) Notwithstanding anything in the preceding provisions of this section—

(a) where it is the ordinary business of an elector or voter as an advertising agent to exhibit for payment, bills and advertisements, a payment to or contract with such elector or voter, if made in the ordinary course of business, shall not be deemed to be an illegal practice within the meaning of this section;

(b) where electors or voters are unable at an election to reach their polling stations from their place or residence without crossing the sea or a branch or arm thereof or a river, means may be provided for conveying such electors or voters to their polling stations, or to enable them to cross the river in order to reach their polling stations, and the amount of payment for such means of conveyance may be in addition to the maximum amount of expenses allowed by this Act:
 

Provided always that such means of conveyance shall be made available equally to all such electors or voters who wish to avail themselves thereof.

Another provision largely abused during elections, especially by UMNO/BN.

Limitation of political propaganda on nomination day

24A. (1) No person shall, on nomination day or days—

(a) furnish or supply any musical instrument or loud speaker to any person with intent that it shall be used by any person in any way or used in or upon any vessel, animal, motor car, truck or other vehicle; or

(b) use himself or use in or upon any vessel, animal, motor car, truck or other vehicle any such musical instrument or loud speaker, as, or for the purpose of, political propaganda.

(2) No person shall, on nomination day or days, wait or loiter within a distance of fifty metres from the limit of any place of nomination.

(3) Any person who contravenes any of the provisions of this section shall be liable, on conviction, to imprisonment for a term not exceeding one year or to a fine not exceeding three thousand ringgit or to both such imprisonment and fine.

Yet another provision largely abused with impunity during elections, especially by UMNO/BN. 

It will be seen that all the EC's actions or inactions and manipulations are calculated to give the greatest advantage in elections to UMNO/BN, no matter what the law says. This combined with the collusion of almost all government institutions almost guarantee UMNO/BN wins most elections, except when the majority vote for the opposition is so overwhelming that it cannot be covered by such manipulations.

It is an uphill battle, and every vote will count in GE-13 against all the breaches of law, cheating, bribery, promises, coercion, threats and other multitude of election offences that UMNO/BN will commit to win.

A victory for the opposition in GE-13 will be a victory for the future of the Malaysian people against oppression, injustice, intolerance, abuse of power, mismanagement and misgovernance, etc. etc. of the cursed ruling UMNO/BN regime.

ALLAH bless Malaysia.

Fallacious Arguments To Maintain Federal Control of State Petroleum Resources

An increase in oil royalty and KL Takes All: A Slue to Fallacy

by YB Dato Abdul Rahman Dahlan 

With comments by Sarawak Headhunter in red.

Time and again, we have listened to the opposition's over the top vitriol on two very emotive issues to Sabahans; the promise of 15% increase in oil royalty to Sabah and the allegation of federal government taking away all Sabah resources and in return, giving almost nothing back to Sabah. These issues must be answered factually and timely to prevent anyone from being deceived into emotional shadow boxing by the opposition. 

Let's start with the 15% increase in oil royalty issue. While on the surface it sounds quite appealing, there are serious concerns over the mechanics needed to bring the notion to fruition. Making promises is one thing; executing them is another thing all together.

Since the mechanics of bringing about the formation of PETRONAS and the very validity of the Petroleum Development Act vesting all the States' petroleum resources in PETRONAS may itself be questioned, it is high time to look seriously at this usurpation of state resources by the Federal government under the pretext of bringing about the economic development of the poorer States. 

Where there is a will there is a way. 

There is certainly no excuse for not redressing the balance in favour of the poorer States of Malaysia whose rich petroleum resources have been literally stolen by an avaricious Federal government. 

AN OVERVIEW 

The petroleum business is not a business arrangement for the Average Joe. The capital outlay, technical challenges and financial risks are so great and prohibitive that only the companies which have specialized expertise and bottomless bank accounts normally dare enough to go into it.

While certainly the petroleum business is not for the Average Joe, the risks are not as great as the companies and the government would like us to imagine. The reason that such companies have bottomless bank accounts is the fact that they are making enormous PROFITS from the petroleum business.

7 of the top 15 most profitable companies in the world for 2011 (including PETRONAS by the way) are oil companies. See the full list here. No. 1 was Gazprom, which made US44.5 billion in 2011 and No. 2 was Exxon Mobil, which made US41 billion.

The fact that PETRONAS has been able to contribute huge revenues to the Federal government, even amounting to 40% of the national budget, much of it extravagantly misspent, wasted and unaccounted for, also shows the fallacy of this statement.

WHAT risks?   

Imagine trying to lower drilling pipes, 4.5km from the sea level, in an intensely-pressurized environment to search for the elusive black gold. It requires special and extremely expensive equipment and expertise which only the world’s oil major players (the likes of Shell, Murphy Oil, ExxonMobil, etc) possess. The cost of exploration drilling could run into hundreds of millions of dollars which would go to absolute waste should no oil be found in vicinity of choice.

There is actually no need to let your imagination run wild and the black gold is not as elusive as the writer would have us believe. No oil company would spend hundreds of millions on exploration drilling without a high probability of finding oil and/or gas. There are preliminary geological, seismic and other surveys that are done first to maximise the probability of finding oil when the exploration drilling phase starts. Expenses are also usually capped to avoid waste.

The fact is that even if hundreds of millions are spent on exploration drilling in any particular area, which is not normally the case, any oil strike would be potentially worth billions and render these expenses immaterial.    

The nation’s oil company, Petronas, like her counterparts in other  developing countries (Indonesia, Venezuela and Nigeria etc), does not have the capacity to absorb the financial risk mentioned above.

This is simply not true. PETRONAS's deposits in Malaysian banks alone keep the Malaysian financial system afloat. PETRONAS is ranked 12 68 (up from 68 86 in 2010 2009) of the top one hundred most profitable companies in the world and made US21 billion in profit in 2011. To say that it doesn't have the capacity to absorb such financial risk is incredulous to say the least.                                                                                 

It is not financially equipped to spend billions on research and development and take on the financial risks in the exploration and production phases when the same billions are very much needed to be spent on the country’s development.

This is another blatant lie that PETRONAS itself would probably refute. The fact is that the UMNO regime has even used PETRONAS illegally as a lender of last resort (which is supposed to be the Central Bank's role) in bailing out entities such as Bank Bumiputra and MAS and to bankroll the construction of Putrajaya, thereby putting it at even greater financial risk.

In addition, unlike Petronas - which primarily operates within Malaysia’s waters - the oil majors  enjoy economies of scale. They operate all over the world which helps to defray the costs of R&D, the exploration and production phases.

Another lie. PETRONAS is a multinational and operates in many other countries around the world very profitably. This is what PETRONAS says on its website:

"PETRONAS has come a long way from managing the work of foreign production sharing contractors. We have evolved our own upstream capabilities and ventured into the entire spectrum of downstream activities to add value to our petroleum resources.

With our strategy of integration, adding value and globalisation, PETRONAS continues to deliver excellence towards realising our vision of becoming a leading oil and gas multinational of choice."

Also from its website:

• "Malaysia’s hydrocarbon reserves stand at 20.56 billion barrels of oil equivalent (boe) with an average production of 1.63 million boe per day.
• PETRONAS’ total hydrocarbon reserves stand at 27.12 billion boe with an average production of 1.1 million boe per day.
• International reserves in Africa, Southeast Asia, the Middle East and Central Asia stand at 6.56 billion boe, comprising nearly a quarter of PETRONAS’ total reserves.
• PETRONAS achieved a Reserves Replacement Ratio of 1.1 times in Malaysia and 4.1 times internationally, comparable with the industry average.
• Malaysia's first deepwater field, Kikeh, employing the first Truss Spar floating production unit outside the Gulf of Mexico came onstream in August 2007. The project achieved world-class performance with only five years elapsing between discovery and production."

 
Who is the writer trying to kid, and why is he downplaying PETRONAS's capabilities?

In the event that oil is actually discovered, the capital that needs to be spent in the subsequent phases is even more substantial. It is reportedly said that the cost of the oil production phase could reach as much as RM2 billion. Sometimes even more.
 
Rubbish! This is a gross over-exaggeration. See the following source: 

 "The International Energy Agency (IEA) -- in its latest November 2008 world energy outlook -- gave the following estimates for the all-in costs of producing oil from various types of hydrocarbons in different parts of the world:

 
 Oilfields                   Estimated Production
 /source                        Costs ($ 2008)
 Mideast/N.Africa oilfields         6 -  28
 Other conventional oilfields       6 -  39
 CO2 enhanced oil recovery         30 -  80
 Deep/ultra-deep-water oilfields   32 -  65
 Enhanced oil recovery             32 -  82
 Arctic oilfields                  32 - 100
 Heavy oil/bitumen                 32 -  68
 Oil shales                        52 - 113
 Gas to liquids                    38 - 113
 Coal to liquids                   60 - 113
 
 Source: International Energy Agency World Energy Outlook 2008"(emphasis added).

 

To cushion such uncertainties and spread the financial risk, Petronas enters into a joint-venture agreement (known in the industry as Production Sharing Contract or PSC and later, a variant called RSCs or Risk Sharing Contracts) with multinational oil companies like Shell, Murphy Oil or ExxonMobil and others.

These giant oil companies are given a percentage of the oil revenue generated in return of them bearing the financial risk and sharing technologies worth billions in Research & Development.
 
The FACT is that PETRONAS's own subsidiary, CARIGALI, does exploration and oil production for PETRONAS, not just in Malaysia but in other countries around the world such as Vietnam and Sudan. As its own website says:

"Globally, PETRONAS has exploration and production presence in over 22 countries in Southeast Asia, the Middle East, Central Asia, Latin America and Africa. These overseas ventures account for almost a quarter of our total oil and gas reserves." 

PETRONAS TAKES ALL?

The opposition always paint the perception that Petronas has been unfairly profiting from Sabah’s oil revenue, so according to them, it is only right for Petronas to give 15% extra oil royalty to Sabah.

Can it be done? Is it even doable? Let’s explore the realities.

While the following example will not be able to capture every essence of all the JV partnerships Petronas entered into, none the less, it is suffice to give a fair view of what the realities are on the ground.

The illustrations below explain how much Petronas makes from Sabah oil.

For every RM100 revenue derived from Sabah oil, 5% goes to the state’s coffer while another 5% to the Federal coffer. Approximately 45% goes into recovery cost, and the remaining 45% goes to the joint venture’s gross profit.

In the end, it is clear that Petronas’ profit, after splitting revenue with others and after paying taxes, is only around 16.74%. If Petronas is asked to pay up the extra 15% from its profit margin, this will effectively render them unable to pay their overheads, financial commitments and re-investment for future income. The end result is financial blow which may lead to bankruptcy!

Again, this is highly misleading and only focusses on one part of PETRONAS's revenue, that is the selling of crude oil (for which it actually gets a premium on the international market). PETRONAS's actual revenues also include that from the refining of crude oil, gas processing and sale and the retail sale of petrol and other petrochemicals, for which there is a large value-added from the purchase of cheaper crude.  

If Petronas is unable to pay without jeopardizing its very existence, where would the additional 15% come from then? Obviously there are two other choices left; the PSC partner or the federal government.

It is very unlikely for the PSC partner to give up what was already agreed in the contract between them and Petronas. Furthermore, lower profit percentage would make oil exploration in Malaysia unattractive to them.

Has any real analysis been done on the recovery cost of 45%? This appears to be very much on the high side. The oil companies would of course be more than happy to get away with it, if they were allowed to incorporate elements of profit into cost that is then more than fully recovered.

If the joint venture partners refuse jobs in Malaysia, we will not be able to extract our oil in an economically viable manner. This may lead to a serious energy security problem for Malaysia: with no one extracting oil, we may end up importing all of our energy requirement!

Mere scare-mongering. If PETRONAS can operate by itself profitably in other countries, it can also operate by itself profitably in Malaysia without the necessity for expensive high-cost joint venture partners who have already by themselves made tens if not hundreds of billions from Malaysia.

With Petronas and its joint venture partners unable to commit the extra 15% (or about RM12.5 billion) to the oil producing states of Sabah, Sarawak and Trengganu, the other option is of course to take it from the federal government which receives dividend around RM30 billion annually from Petronas.

As the oil-producing states only get their 5% based on the crude oil price, there should be no difficulty in giving them a fair share of the downstream processing and sale of refined products, which can easily come up to an extra 15% or more.

This 15% increase would actually mean RM3.2 billion for Sabah, Sarawak RM8.3 billion & Terengganu RM9.3 billion, or a total of RM20.8 billion which is approximately 30% of Petronas's profit for 2011.

This option is not without its own ramifications.

With reduced dividend from Petronas, the federal government will have less money for its development budget. This means there will be less public spending on subsidies, schools, hospitals, police stations, roads and other infrastructures. Obviously, the most impacted would be the non-oil producing states.

  

There is obviously something wrong with the present system where the oil-producing states still remain among the poorest in the country.

Anwar Ibrahim must have the moral courage to inform the non-oil producing states that as a Prime Minister, he will cut their federal allocated budgets by RM12.5 billion. Unfortunately this is not happening. 

The last option available to Anwar Ibrahim is to increase Sabah’s oil royalty by 15% but in order to ensure he has enough funds available for the rest of the country, he will have to cut Sabah’s federal allocation. Remember, cutting Sabah’s federal allocation is within his prerogative as a Prime Minister. This option is plausible given the fact he has never given any assurances publically that he would not cut Sabah’s federal allocation which, at the moment, is one of the highest among all the states in Malaysia.

It is actually funny how Anwar hardly shares the specifics of his promise of 15% increase in oil royalty with the rest of the country. Perhaps he knows very well that he won't be able to provide explanation for them. Apparently, keeping Malaysians in the dark makes the illusion easier to perform. In fact, I remember asking opposition members, including Anwar Ibrahim himself, in Parliament of the specifics but instead of an answer, I got a blank response followed by sharp stares!

FEDERAL GOVERNMENT COLLECTS MORE THAN IT SPENDS IN SABAH

This is yet another irresponsible claim by the opposition to gain sympathy votes in Sabah. It is a very powerful lie which if not countered factually, could result in deep division and hatred towards the Barisan Nasional federal government.

Let's address this issue objectively and see if it is true that the federal government has been taking so much of Sabah's resources (including oil money) but giving back so little in return.

The following two illustrations show what federal government collected in Sabah in 2011 and how much it had spent in Sabah in the same year. 

Contrary to lies spawned by the opposition, the federal government actually spent more (by a whopping RM4.736 billion) in Sabah in 2011 compared to what it collected in the same year!

Isn't it amazing therefore that poverty is still so high in Sabah compared to other states that don't have the oil resources but live off oil revenues of the oil-producing states?

The statistics, which were made available to me by Bahagian Analisa Cukai dan Bahagian Pengurusan Belanjawan, Kementerian Kewangan Malaysia, went as far back as 2007 and had breakdowns for each federal ministry.

It showed the same consistent trend of federal government spending more in Sabah than what it collected in each year. Nothing is more revealing than the truth and fact! Statistics, in the end, don't lie.

There are only lies, damn lies and then there are statistics.

For the year 2012 onwards, there is no reason to believe the trend will reverse itself especially when Dato Sri Najib Tun Razak has made it very clear that special emphasis will be placed on Sabah's development under his economic transformation program.

Towards this, Barisan Nasional Sabah is happy to note that to date, the Prime Minister has not disappointed Sabahans.

Tell that to all those poor Sabahans (and Sarawakians).

Thank you.