Corrupt Malaysia money distorts Melbourne market

By Nick McKenzie, Richard Baker, John Garnaut. Published by The AGE National on 23 June 2015.

In 2013, the private sale of an unassuming five storey apartment block near Monash University in Caulfield stunned local observers. Even in Melbourne's booming property market, the $22.5 million price tag for a  building designed like an IKEA cupboard seemed well above the odds. That's because it was.

Named Dudley House by developers keen to imbue it with a sense of grandeur, it seems the last place to host any untoward dealings. But the sordid tale of this building highlights one reason that federal treasurer Joe Hockey is so concerned about the foreign funds flowing into an already overheated property market, as well as why local and international corruption fighters say Australia has become an investment hot spot for the crooked and corrupt.

An eight-month Fairfax Media investigation has traced suspicious money flows, court files and corporate records across three continents to uncover why Dudley House's purchase price was so high. 

Its sale was part of a global money laundering and bribery scheme engineered by greedy local developers and powerful officials overseas who pocketed $4.75 million in bribes on this single deal.

Fairfax Media has also discovered that some of these same figures are linked to tax haven companies which are also behind the purchase of around $80 million in Australian properties.

By following a complex money trail - which, in a curious twist, includes front companies set up by a Singaporean wedding-cake maker – Fairfax Media has identified the foreign officials who appear to be using Australia as a money laundering hub.

There are also Australian facilitators tied to these suspect dealings, including Melbourne man Peter Mills, who once did a stint in Pentridge prison for corporate fraud. Mills was recently quizzed in a civil court case about whether the $4.75 million generated by inflating Dudley House's sale price was used "to grease palms" overseas.

His reply was short but surprisingly honest. "Yeah, I think so".

Financial laundromat

For a country whose leaders claim it to be a world leader in integrity, Australia is developing an ugly reputation. 

In 2012, PNG's chief corruption fighter labelled Australia the "Cayman Islands" of the Asia Pacific, due to the ease in which PNG politicians could invest their ill-gotten wealth in Australian property.

The Chinese government has more recently launched its own campaign, warning that crooked officials are taking refuge and squirelling away embezzled funds in Australia.  

Fuelling this developing scandal have been incentives, including fast-tracked Australian residency visas, for overseas businessmen who invest large amounts here.

Earlier this year, Joe Hockey himself intervened to force one of China's richest men  to divest a $39 million Sydney Harbourside pad because he'd tried to use front companies based in tax havens to avoid foreign investment restrictions. Last month Fairfax revealed that another Chinese businessman hid behind an elderly Melbourne couple to disguise the purchase of an even bigger mansion in the same neighbourhood, the $52 million Altona.

Only last month, the Paris-based anti-laundering agency, the Financial Action Task Force, warned that "Australia is seen as an attractive destination for foreign proceeds [of crime], particularly corruption-related proceeds, flowing into real estate, from the Asia-Pacific region." 

The Dudley House deal is the clearest example to date. But it would have almost certainly remained a secret without Melbourne tradesman John Bond.

The Malaysian connection

Bond, 53, is a man who doesn't walk away from a fight. The barrel-chested former suburban footballer helped manage a jail for young offenders before starting his own window and door company. When the window-maker won a lucrative job to help outfit Dudley House, he dreamed of dramatically expanding his business. But employees need to be paid. And after working on the development for many months, Bond, along with his own staff and dozens of other contractors, were owed several million dollars. 

"They [the developers] kept putting it off. It became one week. Then one month. Then six months.  And I thought to myself, something is terribly wrong here. They seem like they are never going to pay us."

The 'they' were Melbourne developers, Chris Dimitriou and Peter Mills, along with their joint venture partners – two mysterious Malaysian businessmen.

These two businessmen, Yusof Gani and Ahmad Azizi, appeared keen to keep a low profile in Australia. 

"We knew they were influencing things behind the scenes, but I never met them," says Bond. "All I know is that they are powerful back in Malaysia."

Emails uncovered by Fairfax Media and sent to the Malaysian pair suggest this low profile was aimed at avoiding scrutiny by the Australian Foreign Investment Review Board.

In one missive, their Australian manager, Dennis Teen, suggests that Gani and Azizi understate their true investment in the Dudley House development by falsely nominating Teen as the majority shareholder.

"The maximum for each individual foreigner without FIRB approval is 15 per cent," wrote the manager in one email, so he suggested the Malaysian duo claim their shareholding was only "14 per cent." 

"I'm agreeable," one of them replied. 

In Malaysia, Gani and Azizi have a much bigger profile. Each has been anointed a "Dato" by the Malaysian government -- the Malaysian version of a knighthood. 

Facebook posts show Azizi and his two sons, Erwin and Erwan, mixing with the elite and getting around in Porches and Ferraris. Erwan hangs out at the Kuala Lumpur Porsche club. There is plenty of international travel, including a family trip to Paris.

In Malaysia, where wealth and political connections go hand in hand, the Azizis didn't just have the funds to invest in a multi-million dollar Australian property development. They also had the contacts to pull off a remarkable deal: the sale of this development to the Malaysian government at a massive mark-up.

According to confidential documents, it was Dato Azizi's Porsche-loving son Erwan who facilitated this deal via a network of contacts connected to a multi-billion dollar Malaysian government institution called MARA.

Created in 1965 with the noble aim of helping the rural poor, MARA is a household name in Malaysia. But MARA's decision to buy Dudley House through a subsidiary, MARA Inc, shows how far it has strayed from its core values.  

The right price

The property that John Bond had helped to build was worth $17.8 million and Mills, Dimitriou, Azizi and Gani were, according to paperwork, intending to sell it for this amount.  

But, around the time that the Porsche-driving Azizi junior helped introduce certain Malaysian officials to the deal, the sale price was suddenly inflated by $4.75 million.

As the two Datos' Australian manager Denis Teen later explained in civil court proceedings lodged on behalf of the Dudley House creditors: "If we didn't agree on the $4.75 million, we would not have the deal". 

This inflated sale price of $22.5 million should have increased the prospect of tradesman like John Bond getting paid. But Bond's fears that he and his fellow creditors were about the be ripped off dramatically increased when the Australian developers Mills and Dimitriou appointed an administrator, indicating their company would not be able to pay the bills of the tradesmen who built Dudley House. 

By 2013, Bond had spent two years working on the project. He was broke and desperate. His tipping point had come when his son, Cooper, asked his dad to pay for a trip to an interstate football carnival to represent Victoria.

"I couldn't afford it," says Bond quietly in an interview with Fairfax Media. "I had to borrow money from my own parents to send Cooper to Darwin."

The experience left Bond determined to find out who had got rich from Dudley House while he was left facing ruin.

Harking back to his days as a suburban footy player, he pushed back. Hard. With several other creditors, he went to the Victorian Supreme Court, and demanded the appointment to the project of a new liquidator, Pitcher Partners boss Andrew Yeo.

Yeo assigned the case to a bright young Pitcher Partner employee, Odie Henzel, and told him to start digging. 

With his well cut suit, neat hair-cut and quiet demeanour, Henzel and Bond could not be more different. But the financial analyst and the window maker soon struck up a rapport. Incensed at Bond's treatment, Henzel joined the mission to unearth the secrets of Dudley House. 

Among a cache of documents, Henzel discovered a strange email. It was dated March 8, 2013 and sent by a man purportedly working for Malaysian government officials. It stated that in return for the Malaysian government agency MARA buying Dudley House, a payment of "AUS$4,785,000 in the form of introduction and consultancy fees" would have to be wired to a mysterious Singapore shelf company.

Taking the cake

Fairfax Media tracked down the director of this company to a cake shop in a busy, upmarket Singaporean shopping strip. Her name is Hanna Kamruddin and she nervously revealed she'd been appointed a director of the shelf company after her brother, a Harley Davidson-riding Malaysian called Hishan Kamruddin, introduced her to three men who wanted an offshore company and bank account set up. Hanna Kamruddin agreed to help them in return for $1000. "I'm so naïve," she said when asked about the arrangement. 

"When I look back it was a very stupid decision."

Kamruddin insists she does not know the identity of the Malaysians who paid her the $1000. 

But she remembered one thing. They were somehow linked to a Malaysian government agency. 

Corporate records in Australia reveal more about those linked to front companies directed by the young cake maker. One of the firms was taken over by several powerful Malaysian officials: a former politician turned MARA Investment chairman, Dato Mohammad Lan Bin Allani, and a MARA chief executive, Dato Halim Bin Rahman. 

When contacted by Fairfax Media, Allani said he couldn't recall the Dudley House dealings, even though he visited Melbourne to inspect the property in May last year, according to a Malaysian Consulate website. He said he was involved in setting up offshore companies in tax havens as a "convenient" way of selling property bought by the Malaysian government. When questioned about his knowledge of any alleged kickbacks, the former politician hung up the phone. 

The front companies directed by the Singapore cake maker aren't the only suspicious corporate vehicles Malaysian officials have used to purchase Australian properties. A company called Thrushcross set up in notorious tax haven, the British Virgin Islands, was used to purchase Dudley House, along with a $23.5 million property on Swanston Street, near Melbourne University. (Dato Azizi's son, Erwan, signed some of the paperwork associated with the deal.) 

Malaysian officials from MARA have also used other shelf companies in Singapore, which is also regarded as a tax haven, to purchase properties in Queens Street and Exhibition Street in Melbourne's CBD for around $40 million. 

The circuitous path of the $4.75 million dollars generated by inflating the price of Dudley House also points back to the Malaysian government. The money was paid by the Dudley House developers for non-existent services, including "professional advice" and "consultancy and advisory fees." 

Corporate records reveal that the firms behind these sham invoices are closely linked to several powerful Malaysian figures, including another top MARA official. The liquidation proceedings lodged in the Victorian Supreme Court after John Bond and Pitcher Partners' intervention provide further evidence that the $4.75 million was paid as bribes.

When quizzed directly about these apparent "kickbacks" in court, developer Chris Dimitriou stated: "To the best of my knowledge, that $4.8 million went to Malaysian parties." Dimitriou refused to answer any of Fairfax Media's questions.

His fellow developer Peter Mills was more forthcoming, telling Fairfax Media in a phone interview that the deal was corrupt. 

"I suppose I have to [take responsibility]. But no one told me about it beforehand. Otherwise, I wouldn't have gone along with it."

Zero consequence

While Fairfax Media's investigation has revealed that at least some of those involved in the Dudley House deal have engaged in serious criminal conduct, nobody has been, so far at least, called to account by authorities in Australia or Asia.  

To this extent at least, they join hundreds of allegedly corrupt investors confident they can park their ill gotten gains in properties in Sydney, Melbourne or elsewhere.

Australian resident Denis Teen, who managed the local affairs for Dudley House's Malaysian developers, was also called to the stand in the liquidation proceedings. He spoke quickly, appeared nervous and denied knowledge of any corruption (a denial he repeated to Fairfax Media). But his testimony still provided insights into the way he and his partners do business.  

"We are not saints," Teen told the court. "We just want a deal done."

Link: http://www.theage.com.au/national/corrupt-malaysia-money-distorts-melbourne-market-20150623-ghu6a0?skin=smart-phone

China Businessman Paid Malaysia Politicians To Receive Honourable Title

By KEITH BRADSHER. Published on 19 Nov 2014 by The New York Times.

CAA Resources has been at the center of the push here, reopening Malaysia’s most famous mine. Discovered in the jungles of eastern Peninsular Malaysia in 1916 by a Japanese geologist, Bukit Besi became one of the world’s largest mines as it supplied the Japanese steel industry through World War II.

The British seized the mine as war spoils after Japan’s surrender and handed it over to a British company. The British mining company initially struggled with Communist insurgency attacks on its rail lines, including bombings that destroyed three train stations, but nonetheless became a big supplier of ore for Japan’s postwar industrial revival.

Then, in 1971, the mine closed because of what a historic marker here describes as bureaucracy and labor union troubles. The site sat idle for most of the next four decades.

Learning from the mistakes of his predecessors, Mr. Li, the 27-year-old CAA chief and scion of a Chinese family that had grown wealthy in the mainland iron ore industry, immediately worked to build ties with local and national political leaders, as well as with Malaysian royalty.

“If you’ve got these two to support you, then you can do anything you want, because the natural resources are all controlled by them,” Mr. Li said.

Mr. Li, who owns 56 percent of CAA, said that he had paid for each of the ruling party politicians with indirect stakes in the mine to receive the royally granted title of “dato,” which roughly translates as “the honorable.” It costs about $100,000 to arrange each royal grant, he said.

Although anti-corruption groups have campaigned against such arrangements, particularly indirect stakes, Mr. Li said he was simply following common practices in Malaysia. A government-linked industry group in Beijing announced plans on Oct. 24 to introduce standards for Chinese companies in areas like labor rights, environmental protection and community relations.

To avoid potential labor issues, Mr. Li has largely imported workers, who are not unionized. CAA Resources brought in about 40 mining engineers, accountants and other professionals from China, and filled the rest of its work force with laborers from low-wage countries like Cambodia, Myanmar and Vietnam. The workers are on 12-hour shifts, up to seven days a week, and are paid based mostly on how much iron ore each shift can produce, Mr. Li said.

Pacing across the jungle mine, Mr. Li described his recruitment pitch to potential hires. “You can save a lot of money, there is nothing to do here,” he said, “I say, ‘Each of you will be a hero, you will take back 100 percent of your savings, your wife will be happier, your children will be happier.' ”

He has avoided filing an environmental-impact statement by erecting an eight-foot-high, blue corrugated-steel fence across the middle of the site with a gate, and calling it two mines, each less than 500 acres. Only mines over 500 acres require environmental approval.

Now, CAA’s biggest challenges are from outside forces.

For one, Bukit Besi’s ore is less rich in iron than what rivals produce in Australia or Brazil, although better than most Chinese ore. Less concentrated iron ore needs to go through a costly extra step, known as beneficiation, before it can be sold. That eats into CAA’s profit.

Transportation, too, is a costly proposition. Australian and Brazilian iron ore mines are connected by rail lines to deepwater ports that can handle some of the world’s largest bulk freighters. That limits their shipping costs to China at around $8 a ton. By contrast, it costs $16 a ton to ship Malaysian iron ore to China because Malaysian ports are shallower — although a deeper port is scheduled to open by the end of next year.

But CAA benefits from a home-field advantage of sorts.

The Chinese steel industry — and the Chinese government, which guides purchasing policies — has been reluctant to rely exclusively on Australia and Brazil, given its past difficulties. In the years before the global financial crisis, such players sharply increased ore export prices.

“There is a strategic imperative — China does not want to be solely dependent on Australia and Brazil,” said Tim Huxley, chief executive of Wah Kwong Maritime Transport Holdings, a big Hong Kong shipping company active in carrying iron ore to China. “They’ve done that before, and it cost them a lot of money.”

With migrant workers, CAA’s labor costs are tiny compared with those of mines elsewhere. The company has brought in Chinese mining equipment at less than half the cost of American or Japanese equipment — and has the connections with manufacturers to get broken parts fixed quickly.

So Mr. Li insists that his company’s Malaysian mines could still cover their costs and show a modest profit shipping ore back to China at prices close to $80 a ton.

“We’re still positive by this time,” he said. “The open pit process has low costs.”

Read more here: http://www.nytimes.com/2014/11/20/business/international/chinese-interests-look-to-malaysia-for-cheap-iron-ore-and-profits.html

Malaysia Government seeks EXTRA RM2.3 BILLION for 2013 expenses

By Leven Woon. Published by Free Malaysia Today on 24 March 2014.

Putrajaya today tabled an RM2.392 billion Supplementary Supply Bill in the Dewan Rakyat today seeking extra allocations for 2013 expenditures. The Prime Minister’s Department and Public Service Department were among the agencies seeking the largest additional allocations of RM55.6 million and RM53.3 million respectively. Meanwhile the Treasury sought RM2.09 billion contribution to statutory funds.

According to the bill, the contribution was meant to finance development expenditures last year. Public Service Department on the other hand reasoned that the RM53.3 million was to fund the medical costs of retired civil servants and army veterans. It said the amount for that purpose has been credited to the contingency funds beforehand but additional costs have been incurred.

Meanwhile, Prime Minister’s Department said it is requesting RM55.6 million more due to the expenditures of the new Istana Negara’s opening ceremony celebration (RM31.2 million) and Federal Territories Land and Mineral Office’s contractual workers’ salaries (RM10.74 billion).

It is also to cover the Eastern Sabah Security Command (Esscom) operation costs (RM8 million) and operation cost shortages (RM3.4 million). Other requests were from the Foreign Ministry (RM28.1 million), Agriculture and Ago-based Ministry (RM20 million), Natural Resources and Environment Ministry (RM8 million), Works Ministry (RM50 million), Energy, Green Technology and Water Ministry (RM13.8 million), Communication and Multimedia Ministry (RM46.9 million) and Home Ministry (RM15.9 million). Science, Technology and Innovation Ministry sought an extra RM20 million while Urban Wellbeing, Housing and Local Government was asking additional RM10 million.

Th government had tabled a RM251.6 billion budget in 2013 and had initially asked for an extra RM15 billion in the first Supplementary Supply Bill.

Link: http://www.freemalaysiatoday.com/category/nation/2014/03/24/govt-seeks-extra-rm2-3b-for-2013-expenses/

In the last five years, the Malaysian Anti-Corruption Commission (MACC) only convicted 1,395 inividuals and collected RM48 million in fines despite receiving a RM983 million government allocation, said Kampar MP Ko Chung Sen today.

“This means for every case convicted, the government spent an average of RM704,744,” Ko told reporters in Parliament’s lobby today. He said Minister in the Prime Minister Department Paul Low should take responsibility and resign over MACC poor conviction rate despite receiving a high government allocation.

He added that MACC’s budget had increased by 24.4% in 2013 compared with 2011 but the number of cases convicted had dropped by 31.7%. Ko said in 2013, MACC received a RM251 million allocation and convicted 265 individuals.

In 2011, MACC’s allocation was RM202 million and number of individuals convicted 388. “The MACC is not only catching the big sharks, the little fishes are also getting away,” said the DAP lawmaker.

Ko said it was worrying that 90% of corporate executives agreed that bribery and corruption were a major problem for business in Malaysia as shown in a survey done by international auditing firm KPMG in January.

Read more here:

http://www.freemalaysiatoday.com/category/nation/2014/03/24/maccs-huge-allocation-not-justified/

Despite the government paying RM270 million, a mentoring programme implemented since 2011 to improve English language teachers’ skills has had minimum impact on the quality of English among students and teachers alike.

The Dewan Rakyat was told today that the Program Penutur Jati Bahasa Inggeris (PPJBI), which hires foreign teachers to mentor local English language primary school teachers from rural areas, was unable to prevent last year’s UPSR results for the English subject plunging lower than ever.

However, the programme, which ran from 2011 to 2013, has since been extended from Oct 1, 2013 to Sept 30, 2015, at an additional cost of RM184.4 million, according to Deputy Education Minister P Kamalanathan.

Read more here: 
http://www.freemalaysiatoday.com/category/nation/2014/03/24/rm270-million-spent-on-english-yet-no-results/

Kos dan perbelanjaan yang diperuntukkan untuk kempen dan iklan cukai perkhidmatan dan perkhidmatan (GST) yang akan dilaksanakan pada 1 April 2015 mencecah RM365 juta.

Perkara itu dinyatakan oleh Menteri Kewangan Datuk Seri Najib Razak dalam jawapan bertulisnya bagi menjawab pertanyaan Khalid Samad (PAS-Shah Alam) berhubung kos kempen dan iklan cukai itu.

Dalam jawapan bertulisnya, Najib yang juga perdana menteri berkata perbelanjaan yang telah dan akan dilakukan kerajaan berhubung kempen itu merangkumi:

i) RM98 juta untuk sistem perkomputeran GST yang siap dibangunkan oleh Jabatan Kastam Diraja Malaysia bagi 2013/2014.

ii) RM150 juta penyediaan perisian perakaunan bersubsidi kepada Perusahaan Kecil dan Sederhana (PKS) sedang diuruskan oleh kastam - meliputi RM125 juta pada 2014 dan RM25 bagi tahun berikutnya.

iii) RM100 juta bagi geran latihan kepada peniaga yang diuruskan oleh Kementerian Kewangan yang meliputi RM50 juta pada 2013 dan RM50 juta untuk tahun ini.

iv) RM17 juta bagi program publisiti melalui media arus perdana dan media sosial - akhbar, televisyen, radio dan papan tanda, laman web, blog, Twitter dan Facebook - yang diuruskan oleh Kementerian Kewangan pada 2012-2014.

Sebelum ini, Khalid yang juga ahli jawatankuasa Pusat PAS membangkitkan perkara sama dalam sidang medianya pada Februari lalu.

Sementara itu, dalam sidang medianya di lobi parlimen hari ini, Khalid mengkritik kos kempen cukai itu yang ditanggung dan menurutnya akhirnya membebankan rakyat.

"Belum apa-apa lagi, kerajaan nak kena tanggung RM365 juta untuk nak laksanakan GST. Ini duit rakyat, dan akhirnya digunakan untuk membebankan rakyat."

Selanjutnya: http://www.malaysiakini.com/news/258026

Taib might have broken Sarawak state law as Chief Minister

Written by Ho Wah Foon. Published by The Edge Malaysia on 3 March 2014.

Tan Sri Abdul Taib Mahmud, who has just stepped down as Sarawak chief minister and become the Yang di-Pertua Negeri (state governor), had led the state imperiously for 33 years; and during these years, his family members have amassed billions of wealth.

Ruling with a tight fist, Taib had allowed his immediate and extended families to control 400 companies in every sector in Malaysia and hold overseas assets worth more than RM800 million in four countries, according to the 8-page special cover story in The Edge Weekly.

Under the state constitution, the Chief Minister shall not hold any office of profit and shall not actively engage in any commercial enterprise, but according to the research findings of The Edge Weekly Taib might have broken this state law while he was ruling Sarawak. “Checks show that Taib is a director/shareholder of at least five Malaysian companies: Demak Jaya Holdings Sdn Bhd, Hamamorial Sdn Bhd; Mesti Bersatu Sdn Bhd, Pehin Sri Heritage Sdn Bhd and Ramah Jelita Sdn Bhd,” stated The Edge Weekly.

For example, Demak Jaya Holdings was started in 1988 and made an exempt private company on July 15, 2013. It is co-owned by Taib (50%) and his sister Hanifah Hajar Taib-Alsree (50%). The weekly, in its in-depth investigative report this week, also revealed that due to various reports on the web of companies owned by Taib’s family members, his family members have relinquished some of the companies or converted them to exempt status, which will block public access to their financial information.

Apart from revealing which companies have used the exempt status as a shield, The Edge Weekly also reported the connections of Taib’s family to some of the controversial privatisations of public listed companies in Malaysia and listed what assets they hold overseas.

Although as Yang di-Pertua Negeri, Taib is supposed to hold a ceremonial role, the political analysis of The Edge Weekly sees him as more than a figurehead. “He will wield more power and influence than any governor in history,” said its writer.

A full investigative report and detailed analysis on this powerful politician and his business empire, headlined A Sprawling Family Business Empire, is found in the pull-out of The Edge Weekly (March 3-March 9).

Link: http://www.theedgemalaysia.com/business-news/278183-highlight-taibs-family-in-400-firms-worth-billions-and-taib-might-have-broken-state-law-as-cm-says-the-edge-weekly-.html#.UxQo94hh3N0.twitter

It’s A Misconception To Think Sarawak Chief Minister Is Really Retiring

By Barry Porter and Manirajan Ramasamy. Published by Bloomberg News on 10 February 2014.

Abdul Taib Mahmud plans to retire as chief minister of Sarawak, after running Malaysia’s commodities-rich eastern state for more than three decades.

Taib, 77, intends to inform Sarawak’s head of state to of his intention to resign, Malaysia’s official Bernama news agency reported, citing the chief minister. The decision comes seven months after the Malaysian Anti-Corruption Commission formed a multi-agency task force to expedite investigations into claims of graft. Taib has denied corruption allegations, and press reports say he may seek to become the state’s governor.

During his 33-year rule of Malaysia’s biggest state, Taib’s government handed out concessions for logging and supported the federal government’s mega projects, including construction of the country’s largest hydroelectric dam. Oil palm plantations spread as loggers rolled back the frontiers of Borneo’s rain forest, home to nomadic people and rare wildlife such as orangutans and proboscis monkeys.

Some stocks linked to his relatives fell after the Berita Harian newspaper first reported on Feb. 5 that Taib planned to retire as chief minister and become the state’s governor. Cahya Mata Sarawak Bhd. (CMS), a construction and building materials maker, rose 3.8 percent today after declining 8.6 percent last week after the report.

‘More Powerful’

“It’s a misconception to think he’s really retiring,” said James Chin, professor of political science at the Malaysian campus of Australia’s Monash University. “When he moves up to governor, he becomes even more powerful. Certain things need his signature. He appoints the chief minister. All mining leases must be signed off by him.”

Taib and his allies control 25 Sarawak seats in Malaysia’s national parliament. That’s enough to ensure the ruling Barisan Nasional coalition falls from power should they ever choose to switch support to the opposition, said Chin. Prime Minister Najib Razak’s alliance was returned to power in May 2013 by its narrowest margin since independence in 1957.

Taib told Bernama he would step down from his current position by the end of this month. He is Malaysia’s longest-serving chief minister, in power longer than Mahathir Mohamad, who retired after 22 years as prime minister in 2003.

Important Role

“Taib is not really gone from Sarawak politics,” Ibrahim Suffian, a political analyst at the Merdeka Center for Opinion Research, said by phone. “From behind the scenes or even as the new governor, he will play an important role including handling economic issues. Most important now is who will be Taib’s successor.” Opposition parties have made some inroads in Sarawak in recent years, he said.

Taib had doubled up as the state’s finance minister, and minister for planning and resource management, according to his official website. He’s also president of Parti Pesaka Bumiputera Bersatu, or PBB, and state chairman of Barisan Nasional, Malaysia’s ruling political coalition headed by Prime Minister Najib Razak.

PBB met at the weekend and gave Taib a mandate to nominate his successor, the Star reported, citing party Chairman Amar Asfia Awang Nassar.

Local media, including the Star, have named three candidates short-listed by Taib to replace him. They are the party’s deputy president Amar Abang Johari Openg, senior vice president Amar Awang Tengah Ali Hasan and information chief Adenan Satem.

To contact the reporters on this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net; Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

Link: 

http://www.bloomberg.com/news/2014-02-10/commodities-rich-sarawak-s-top-minister-to-retire-after-33-years.html

Published by Today Online on 10 February 2014.

But Mr Taib’s influence over the sprawling Borneo island state is likely to remain strong as he is expected to take on the job of state governor, a more ceremonial role than his current post.

His departure will raise doubts over whether a successor will be able to maintain Mr Taib’s political balance between defending the interests of native Sarawak residents, and supporting the national Barisan Nasional (BN) coalition. The state is majority Christian in Muslim-majority Malaysia.

Sarawak, the country’s largest state, has been increasingly crucial to the long-ruling BN coalition as its support wanes in peninsula Malaysia. Without the 25 seats that Mr Taib’s party and his allies won in last May’s election, the national coalition would have lost its majority in the 222-seat parliament, likely ending its 57-year rule.

Mr Taib’s party emerged from the election as the coalition’s second-largest party after the ruling United Malays National Organisation (UMNO), boosting his sway over national politics.

Mr Taib has short-listed three possible successors, including his housing minister who is seen as having close ties with the federal government and Prime Minister Najib Razak.

“I think the big question is what happens over the longer term, whether his successors will develop minds of their own,” said Mr Ibrahim Suffian, head of the Merdeka Center polling firm.

Mr Taib, who travels by Rolls Royce and private jet, has been under pressure to step down amid a growing focus on alleged timber corruption in the state.

Environmental groups say that under his rule, Sarawak — which accounts for a quarter of the world’s tropical log exports - has lost 95 per cent of its virgin forest. Sarawak officials say 84 per cent of the state is forested although this includes massive oil palm estates planted in place of forests.

UNDER INVESTIGATION

Mr Taib has been under investigation by Malaysia’s anti-graft agency since 2011 and is regularly accused by activist groups of enriching his family through his control over awarding huge infrastructure contracts.

Ms Clare Rewcastle-Brown, who has long been a critic of Mr Taib and who runs the Sarawak Report website, said Mr Taib was merely “moving upstairs” into the new role and would maintain his overall influence on state affairs.

“He will never willingly give up power as it would be too dangerous for him and threaten the business empire he has built up across Sarawak,” she said.

Mr Taib is presiding over a US$100 billion (S$127 billion) plan to harness the state’s rivers into 12 dams by 2020 and transform it into an energy hub that can power smelters built by Japanese and Australian firms and also light up the rest of Borneo island.

Shares in Cahya Mata Sarawak, owned about 40 per cent by Mr Taib’s immediate family, snapped three days of losses to rise 2.5 percent today on expectations Mr Taib will still have a say in how the state awards infrastructure jobs.

Timber companies such as Ta Ann Holdings and Jaya Tiasa that benefit from logging licenses awarded by Mr Taib rose 2.3 per cent and 1.3 per cent respectively.

All the counters outperformed the broader market which inched up 0.4 per cent. REUTERS

Read more here:

http://www.todayonline.com/world/asia/controversial-malaysia-state-boss-due-retire?singlepage=true

Published by Free Malaysia Today on 12 February 2014.

Research by Swiss NGO, the Bruno Manser Fund (BMF), has shown that Taib’s family raised US$16.94 million (RM55.9 million) from the sale of one of his San Francisco properties. The historical 11-storey building at 260 California Street in San Francisco’s financial district was sold by Sakti in mid-2012. Sakti, a US company, is allegedly controlled by Taib via his closest family members.

Documents released by the late whistleblower Ross Boyert back in 2010 showed that 50% of Sakti’s shares were held “in trust” Taib by his two brothers – Onn and Arip – and his three children. The Swiss NGO said in a statement that Taib’s majority control of Sakti was kept a secret because the Sarawak constitution prohibits the Chief Minister from actively running commercial interests.

The constitution states that the head of government and the Governor “shall not hold any office of profit and shall not actively engage in commercial enterprise...The Sakti sale is a textbook example of money-laundering. A foreign politician who acts in an illegal and unconstitutional way should not be allowed to operate freely in the United States. The US and the Malaysian authorities have to act decisively and confiscate all Taib assets whose origin cannot be explained,” the statement said.

Read more here:

http://www.freemalaysiatoday.com/category/nation/2014/02/12/bmf-taib%E2%80%99s-us-property-sold-for-over-rm55-mil/

Show us your income tax returns, Najib

Dear Najib,

You have come out to call tax evaders traitors. That’s a very strong word. If you had used it on corrupt public officials and politicians, especially government ministers, that would have been more apt. It would have struck a resonant chord. It would also have indicated your seriousness in fighting corruption within your ranks.

As it is, according to your minister Paul Low, the Malaysian Anti-Corruption Commission (MACC) arrested nine politicians who were reported to be involved in corruption between 2010 and August 2013, and only five have been charged. That’s a pretty low number over the course of four years. The minister did not clarify who these politicians were, but one would presume that they were part of the ruling party.

It may well be that Malaysian politicians, including those holding public office, are generally clean, but the unofficial allegations that have been brought up from time to time tell us a hugely different story. You may be aware of them yourself – allegations about this minister living beyond his means, like building a palatial home, and that minister receiving kickbacks or laundering money for his so-called “adopted son”. And of course the biggie surrounding Sarawak Chief Minister Taib Mahmud and his relatives, some of whom were caught on video earlier this year by the international NGO Global Witness allegedly offering logging licences in return for profit.

Only a few days ago, Sarawak Report exposed another alleged scheme of Taib and his family in exploiting the Bandar Samariang low-cost housing project for their own financial gain. If these allegations about the family are true, what would you call the people involved? More important, would you launch an investigation and haul them in for corruption?

Okay, let’s get back to the tax evaders issue. I have a proposal for you that I hope you will accept to prove your sincerity and accountability as a leader.

Since you call tax evaders traitors, show us you are not one. Release your income tax returns to the public. Let us know how much income you make, what assets you own and how much tax you pay. Get your ministers to do the same. Show us that you are not a traitor, that you do not under-declare your income or resort to tax shelters in order to pay less tax.

Don’t try and back out of this one, with some excuse or other. The US president publicly reveals his income tax returns and declares how much tax he pays. And that’s good, don’t you think? He apparently has nothing to hide. Even if he tried to, it’s all out there in the open. If he’s found out later, he can be held accountable.

You should do the same. Since you condemn others for evading tax, it is all the more incumbent on you now to show that you are not doing it yourself. You probably know the saying, “Let him who is without sin cast the first stone.”

For your information, the tax returns of US presidents are protected by law from public disclosure, but since the late 1960s, most of them have chosen to release their returns publicly. Apparently, Gerald Ford is the only exception. Even candidates for the presidency do the same, including those contesting in party primaries.

If you want to look at the combined tax returns of Barack Obama and his wife, Michelle, for 2012, please click here.

Barack and Michelle reported an adjusted gross income of US$608,611. They both paid US$112,214 in total tax. It could have been higher if they had not donated about 24.6 per cent of their adjusted gross income to charity. That’s a generous US$150,034.

Out of curiosity, may I ask how much you donate to charity? You may of course include your wife’s donations too, if you like. Oh, by the way, does she pay income tax?

On top of the federal income tax, the Obamas also released their state tax returns and reported paying US$29,450 to their home state of Illinois.

For Vice-President Joe Biden and his wife Jill’s combined federal tax returns for 2012, have a look here. 

They reported an adjusted gross income of US$385,072 and paid US$87,851 in total tax. For state income tax, they filed separate returns, with Jill filing a non-resident one for the state of Virginia. They paid US$13,531 to Delaware and US$3,593 to Virginia.

The Bidens gave to charity US$7,190. That’s a small fraction of what the Obamas donated, but that’s not the point.

The point is, don’t you think this sort of declaration contributes to a wonderful and open system?

Other countries that operate with such openness and transparency include Sweden, Finland and Norway. In fact, there, everyone’s income tax returns are made public. It is said to cohere with the Scandinavian tradition of jantelag, which roughly means that nobody is better than anyone else.

It should also cohere with the “best democracy” that you promised for Malaysia in the speech you made on September 16, 2011. Don’t you agree?

If you recall, on that occasion, you announced the repeal of the Internal Security Act (ISA), which effectively outlawed the use of preventive detention in Malaysia. Now that preventive detention is back – reinstated through the recent amendments to the Prevention of Crime Act – does your promise of “best democracy” still hold true?

In that speech, you also said the repeal of the ISA was part of the political transformation that your government was carrying out pertaining to human rights. You said, “The time has come for us to take another step forward not only in economics and education but also in upholding democratic principles.”

Do you still believe that?

If you do, walk the talk. For now, to put your money where your mouth is, disclose your tax returns publicly. And get your deputy and your other ministers to do the same. Be a leader and lead the way. Prove to us that you can lead.

Otherwise, you are just sounding like a prime minister who is talking in abrasive language because your coalition didn’t win the popular vote at the last general election in May.

Otherwise, we will not know for sure that you are not a traitor – like any vile, shameful, despicable, crooked, cheapskate tax evader.

Sincerely,

Chye

* Kee Thuan Chye is the author of the new bookThe Elections Bullshit, now available in bookstores.

Published by MSN News Malaysia on 26 November 2013. Link here:

http://news.malaysia.msn.com/community/blogs/blog-show-us-your-income-tax-returns-najib

Malaysian GLCs snapping up London properties above market rates

Published by The Malaysian Insider on 23 October 2013.

State-linked Malaysian firms are buying up London properties at inflated prices in an otherwise stagnant United Kingdom property market, raising fears that a meltdown could wipe away millions in public funds.

Several realtors have pointed to Felda's £97.9 million (RM495 million) deal for the 198-unit Grand Plaza service apartments in Bayswater, London, as an example of an overpriced buy, saying that high-end real estate agents Savills and Knight Frank had only valued the property at £80 million (RM408 million) in the past few years.

"The UK property market is stagnant in most places but in London. But what Malaysian companies are paying is insane and could go very wrong," said a Malaysia-based realtor who declined to be named.

The Malaysian Insider had reported that the deal was being investigated by the Malaysian Anti-Corruption Commission (MACC) and had been reported to the Public Accounts Committee (PAC).

The realtor said several other Malaysian government-linked companies (GLCs) and agencies such as the Employees Provident Fund (EPF) and Tabung Haji (Pilgrims Management Fund) had also bought commercial properties in the English capital.

"Some agencies are by-passing the real estate agents and going straight to the sellers to pay prices higher than what is on offer,” said one real estate agent specialising in London properties.

"The real estate agents lose the commissions but more importantly, the prices are not justifiable. Who ends up losing in the end? Malaysians."

Asking not to be named, she said commission agents were making inquiries on behalf of the GLCs but then went directly to the sellers to make deals at higher prices.

It is understood that Tabung Haji, under new chairman Datuk Abdul Azeez Abdul Rahim since July 2013, is on the prowl for more properties in London after buying its second major asset, the £205 million (RM1.04 billion) purchase of 151 Buckingham Palace Road in the city centre last February.

Realtors said Tabung Haji fended off stiff competition from under-bidder Hines, as well as Malaysian pension funds EPF and KWAP, to pay £15 million (RM76 million) less than the offer price.

The 151 Buckingham Palace Road purchase followed Tabung Haji’s deal to buy SJ Berwin’s distinctive city offices at 10 Queen Street Place for £165 million (RM841 million) in September 2012.

Read more here:

http://www.themalaysianinsider.com/malaysia/article/malaysian-glcs-snapping-up-london-properties-above-market-rates-say-realtor

Sarawak lagging behind in everything

By Joseph Tawie. Published by Free Malaysia Today on 23 May 2013.

Sarawak, which is the largest state in Malaysia, has only 212 government-run clinics. According to the Social Statistics Bulletin Malaysia 2012, this included only seven rural clinics (Klinik Desa), 197 health centres and eight 1Malaysia clinics.

Expressing his surpise, Ba’ Kelalan assemblyman Baru Bian said in comparison Perak which has about the same population as Sarawak had 328 clinics of which 242 were rural clinics (Klinik Desa). “(Even) Pahang, the largest state in Peninsula Malaysia but with an area less than a third of the size of Sarawak, has a total of 324 clinics, 243 of which are rural clinics,” he said yesterday while debating the address of Yang Dipertua Negeri Sarawak.

“Whichever way one looks at it, it cannot be denied that Sarawak has not been getting her fair share of allocation, resulting in deprivation of adequate healthcare for her people. “The people deserve the same standard and accessibility of healthcare as that received by their fellow citizens in West Malaysia but it seems that this will continue to be denied to them for many years yet,” he said.

Fifty years ago, then prime minister of Malaya Tunku Abdul Rahman said that one of the principal objectives in forming Malaysia was to further the economic development of the Borneo territories so that their standards of living and technical skills might be raised, and a firm basis provided for accelerated economic growth. He announced that “measures would be introduced to accelerate industrial development in the Borneo territories, and to minimise the disqualifying effect of free play of the economic forces so that the gap between a relatively backward state and the advanced would be narrowed and not widened.”

Bian said: “Half a century after the formation of Malaysia, the ethnic communities of Sarawak are still not able to integrate into the economic system of Malaysia. “At this 50th year mark, it is appropriate that we examine the extent to which Sarawak has benefited from the economic progress of Malaysia, given that prior to the formation of Malaysia, the political leaders of Malaya made many promises, tacit or expressed, regarding the potential diffusion of socio-economic development from Peninsula Malaysia to Sabah and Sarawak,” he said.

Poverty, education interlinked

Bian also touched on the issue of poverty in Sarawak, saying that while statistics showed that the situation had improved in 2012 as compared to 2009, he was still skeptical. In 2009 poverty levels stood at 5.9%. This figure dropped to 2.4% in 2012. “Whilst I would dearly like to believe this statistics, my observations during my trips in the rural areas and in the interior of Sarawak give me reason to doubt the accuracy of this figure. “The standard of living of a population is causally related to their educational attainment, which in turn determines their levels in the occupational hierarchy.

“In Sarawak, even to this day, the indigenous people, with only primary education or a lack of formal education, are relegated to jobs at the bottom end of the occupational hierarchy such as skilled agricultural workers or elementary workers. The Labour Force Survey Report Malaysia 2010 shows that Sarawak has the second highest number of workers in the labour force with no formal education that is 94,000 workers, which accounts for 22.6% of the national total.

“The figure for Sabah is even higher, and in total, both the Borneo states account for 55.5% of the workers in the Malaysian labour force with no formal education. “Worse still, there are 242,000 Sarawakian workers with only primary education, who account for 23% of the labour force of Sarawak and 12.8% of the labour force of Malaysia. “The number of workers with no formal education combined with those who have only primary education account for 31.9% of the Sarawak labour force and 35.4% of the national labour force,” he said.

‘Illiterate workers’

He pointed out that Sarawak accounted for only about 8% of the total labour force of Malaysia, but within that small fraction, Sarawakian workers accounted for 35.4% of the country’s functionally illiterate workers. This disparity, he said, bodes poorly for Sarawak in relation to its standing and competitiveness within Malaysia.

“With such a large proportion of the Sarawak labour force having inadequate education, how can the government hope to achieve its high-income economy goal by 2020? In fact, the energy-intensive SCORE region in Central Sarawak has plans to attract 1.2 million foreign workers over the next decade or so.

“Already, there are 600,000 foreigners in Sarawak and of these no less than 240,000, it has been estimated, are illegal immigrants from Indonesia and elsewhere. This leads to various other problems, which have been brought up here before in this August house,” he said.

He said that workers with no formal education combined with those who only have primary education are classified as ‘functionally illiterate’ by the World Bank. He said the majority of them currently worked in the primary or agriculture industry and in secondary (or manufacturing) and tertiary sectors as unskilled or elementary workers.

“Whatever mechanical or technical skills they may have acquired will not prevent them from being marginalized when micro-electronic processes are introduced to their work places in the near future,” said Bian, pointing out that skills are becoming obsolete more rapidly, and the demand for continuous skill training for the current workforce will be tremendous.

He said around 51% of this portion or 123,420 of Sarawak’s labour force are less than 35 years old and would still be alive by 2040. “The government needs to provide adequate training for them in community colleges so that they can acquire some form of skills and functional literacy to survive the Knowledge-based economy of the future,” he said.

According to the Social Statistics Bulletin Malaysia 2012, there are only three community colleges in Sarawak – Kuching Community College, Mas Gading Community College and Branch Betong Community College – with a total enrolment of 182 students. “Sadly there are only three community colleges in Sarawak. I urge the government to seriously address the needs of the 123,420 workers who will need to be trained,” he said.

Link: 

https://www.freemalaysiatoday.com/category/nation/2013/05/23/sarawak-lagging-behind-in-everything/

Outrage grows over scandal-tainted Malaysia state boss

By AFP. Published by MSN news on 23 May 2013.

Taib, 77, and his family are accused of massive corruption and running Malaysia's largest state like a family business, controlling its biggest companies with stakes in hundreds of corporations in Malaysia and abroad.

A Rolls Royce and flashy jet cover his transportation, while a vast war chest has kept his political authority unrivalled in 32 years in charge of the resource-rich Borneo island state, which remains one of Malaysia's poorest.

"The amount of control he has is astounding. He has been able to dominate politics and society here for nearly four decades," said Faisal Hazis, a political scientist with Universiti Malaysia Sarawak.

But pressure is rising both at home and abroad for action against a man referred to by his harshest critics as the "thief minister" and viewed as the prime example of a culture of corruption fueling public disgust.

Swiss-based activists Bruno Manser Fund (BMF), citing financial records, last year estimated the 77-year-old's worth at $15 billion, which would make him Malaysia's richest person.

Such revelations are hugely embarrassing for Prime Minister Najib Razak, who faces a slide in support due in part to corruption blamed for bleeding the country of billions of dollars annually.

But Taib, a member of Malaysia's 56-year-old ruling coalition, is widely considered untouchable because the Sarawak parliamentary bloc he controls helps keep the coalition in power.

"We don't see the political will to address grand corruption like this and it could destroy the country" by crippling economic development, said Josie Fernandez, Transparency International's Malaysia director.

A 2008 US State Department cable revealed by WikiLeaks called Taib "highly corrupt" and "unchallenged", saying Taib-linked companies dominate Sarawak's emerging economy.

He and his family are accused of routinely taking kickbacks for lucrative government contracts or awarding the projects to companies they control.

A prime example dominates the languid capital Kuching -- the state-assembly building whose swooping, golden roof gleams like a crown in the tropical sun.

A Taib-linked company won the $98 million contract to build the structure, which opened in 2009 and is home to a legislature he controls. A similar story surrounds a futuristic convention centre nearby.

Taib's office declined repeated interview requests.

A member of the Melanau tribe, supporters see him as defender of the autonomy of Sarawak -- which is marked by Christian and tribal groups -- against the Muslim Malay-dominated federal coalition based on mainland Malaysia.

Taib denies wrongdoing, saying Sarawak must be developed for its 2.4 million people. His critics spout "a web of lies and half-truths wrapped around ignorance and twisted logic", he fumed last year.

But pressure grows, including in the rugged interior where Taib is blamed for decimating vast rainforests through logging and dam projects and evicting tribes from ancestral lands, sparking protests.

Philip Jau travelled for two days by road with dozens of his Kayan tribesmen to protest this week in Kuching against a mega-dam pushed by Taib on the remote Baram river despite local opposition.

"The dam is a curse from hell," said Jau, wearing a feather-strewn traditional woven cap. "Taib will benefit, but he is killing the people."

Jau fears the dam will destroy a river ecosystem the Kayan rely on, noting that tribes near the already-completed Bakun dam, Malaysia's largest, say that has happened there.

BMF head Lukas Strauman said Taib and his family are the "chief culprits in destroying one of the world's last great rainforest areas."

In December, Swiss parliamentarians called for a freeze on any Taib assets there, saying he had abused office "in a spectacular way". Swiss authorities are yet to respond.

Malaysia's anti-graft agency launched an investigation in 2011, but it is widely accused of foot-dragging.

Faisal said action is highly unlikely as Sarawak seats proved crucial to the federal coalition winning May 5 elections, showing Taib is "more important than ever" to the government. Premier Najib's office declined to comment.

Taib has gotten even richer since the polls.

Shares of Taib-linked CMS -- Sarawak's largest conglomerate -- have soared 65 percent following the ruling-coalition win, and the compliant state assembly tripled Taib's pay to nearly $400,000 on Tuesday -- his birthday.

Link: http://news.malaysia.msn.com/regional/outrage-grows-over-scandal-tainted-malaysia-state-boss