Wednesday, July 7, 2010

Chapter 4 : Unofficial Timber Rent Appropriation in Sarawak (Part 8 -Ting Pek Khiing, Limbang Trading & Ling Group)

Ting Pek Khiing  

The group of companies headed by Ting Pek Khiing controls licenses to harvest over 310,000 hectares of timber, making it the sixth largest private concession holding group in the state. Like Sarawak's other major timber heads, Ting funnels a substantial portion of his timber rent directly to Taib. The critical difference between Ting and Sarawak’s other timber barons (which puts him more or less in the same league as Indonesia's Prajogo Pangestu and Bob Hasan) are his extensive non-timber business ties with the head of state.

Ting Pek Khiing appeared to start out as an ordinary timber businessman with a company called Woodhouse, but his timber holdings began to grow rapidly once he went into business with the chief minister, starting with Ting's purchase in 1992 of Pacific Chemical, a 100 percent Taib family-owned company.

When Ting purchased Pacific Chemical in 1992, its sole shareholder was a company called Majahrata, which was owned exclusively by four members of the chief minister’s family, Mahmud Abu-Bekir Taib (managing director and 58 percent shareholder), Sulaiman Abdul Rahman bin Abdul Taib (42 percent shareholder), and their wives Jamilah Hamidah Taib and Hanifah Kajar Taib (printed materials obtained from Institut Pekerjaan Komuniti on 28 October 1997).
 After Pacific Chemicals was purchased from the Taib family it still retained a 38.9 percent shareholding in the company (Jardine Fleming 1993: 36). Ting and Taib then injected Pacific Chemicals into their jointly-held timber company, Usama Industries, in which Ting holds 55 percent of the shares, and the Taib family company Majahrata holds 40.5 percent.

At the same time, Ting’s original timber company Woodhouse was injected into Ekran, a timber and construction company concern that was, for a time, one of the most closely-watched companies on the Malaysian stock market. Ekran’s major source of raw material came from the Ting-Taib owned Pacific Chemicals.

Through the early 1990s, Ting became a typical Sarawak timber baron, whose rising fortunes were totally dependent upon his diverting a substantial portion of the economic rent generated from his logging operations to the chief minister. However, Ting traded up and went into business with Daim Zainuddin, Malaysia’s former finance minister, current treasurer of the ruling Malay party UMNO and probably the most important political and economic figure in the country next to Prime Minister Mahathir. Ting is said to have come to the attention of Daim and Mahathir when, in less than 100 days, Ting completed a five star hotel in Langkawi an island offshore from the prime minister’s home state of Kedah. Turning Langkawi into a tourist destination was a keystone of Mahathir’s efforts to remain popular in his geographically and economically marginal state. Mahathir was reportedly so impressed with Ting’s ability to produce results that he put Ting in charge of the construction of the Bakun Dam (Business Times 1992b). The dam was one of Mahathir’s many mega-projects renowned for their size and length such as Kuala Lumpur City Center, the world’s tallest building, Linear City, the world’s longest building and the Malaysian-made Proton automobile, 1,998 of which were lined up to form the world's longest convoy. The Bakun Dam, had it been built, would have followed suit, requiring the pouring of more concrete than any dam before it and using the world’s longest undersea electrical transmission cable to service its customers.

Mahathir briefly changed directions and awarded the construction contract for the dam to a consortium headed by Chief Minister Taib. But Ting and Daim managed to regain control of the dam construction project.

It had been assumed that Ting Pek Khiing would be awarded control of the project.  But then, in a surprise to all, Chief Minister Taib did an end run, obtaining approval for the dam to be built by a joint venture between Multipurpose (the leading company of the Malaysian Chinese Association, the political party representing the loyal-to-Mahathir segment of the Malaysian Chinese community) and the Sarawak Electric Supply Company (or SESCO, a parastatal company from which Taib hoped to profit once it was privatized).  The deal was brokered by Sarawak Capital and Sarawak Securities, investment banks owned by the Chief Minister's family (Insan 1996: 7-10). Ting and Daim had been resting on their laurels, assuming they had the Bakun deal in hand, and were caught by surprise by the Multipurpose-SESCO end run.  In an effort to regain control of  the project, Daim flew to Sarawak to see Taib.  Ting flew to Kuala Lumpur to see Mahathir.  Daim and Ting together pressured Taib and Mahathir to abandon the Multipurpose-SESCO deal, and instead have it awarded to Ekran (18 August 1997 interview with Raphael Pura).  Mahathir relented, and returned to his original plan to designate Ekran as the sole builder of the dam.

With Ting and Daim in control of the dam project once again, they and their proxies were in a position to profit handsomely, due to the fact that they controlled substantial shares. According to Ekran's 1995 annual report, Ting was the company's major shareholder, with a 21 percent stake, and his wife with an additional five percent. Daim/Mahathir associates also appeared among the shareholders and board of directors of Ekran. For example, "Analysts note that Shuaib Lazim, an associate of former finance minister Daim Zainuddin . . . was an Ekran director. . . . Mr. Shuaib has a 3.1 percent stake in Ekran's increased paid-up

capital . . ." (Business Times 1992b). Shuaib Lazim is a former UMNO senator and state assemblyman from Kedah, Mahathir’s home state. Rasip Haron, a one- percent shareholder in Ekran, is reportedly a close associate of both Daim and Ting (Insan 1996: 11-12). On the board of directors, two associates, Dr. Regina Norani binti Nuruddin and Josephine Permala Sivaretnam, represented Daim and were the only board members besides Ting. A well placed and knowledgeable source in Sarawak wrote me, "Dr. Regina and Josephine were shadow directors; mostly deemed . . . nominees for an interested party - you know who.” The informant eventually named the interested party he was referring to: Daim Zainuddin (30 March 1997 interview).

After edging Chief Minister Taib out of control of construction of the Bakun Dam, it appears that Ting sought to make amends by awarding the chief minister and his family shares in Ekran and making them beneficiaries of selected dam construction contracts. For a time Taib's two sons were the 16th and 17th largest shareholders of Ekran. However, when a case was brought against Taib for conflict of interest, he asked his children to give up their shares in Ekran, although some believe that Taib's children still retain their holdings through nominees. Taib personally benefited from the Bakun project when his CMS corporation was awarded a RM1.2 billion ($480 million) contract for construction of the Bakun Dam (22 August 1996 interview with Muniandy Thayalan). Another example of the chief minister appropriating rent from the Bakun project involved the clearing of about 69,450 hectares of forest area which was to be flooded upon completion of the dam. Ting’s forestry companies, in which the chief minister owns substantial shares, were awarded the license to log these areas (The Star 1995b).

The Bakun Dam was to have displaced 8,000 indigenous people in 15 longhouse communities (Financial Times 30 May 1994).  The contract for relocating the displaced people was to have gone to a company owned by deputy chief minister and Taib loyalist Alfred Jabu (11 November 1996 interview with James Ng). 

Ting is also in business with the chief minister in the area of steel fabrication. In a deal brokered by Taib-owned Sarawak Capital, a consortium was put together to link the state’s electrical utility, SESCO, a sister company of Sarawak Capital called Central Paragon, and a Ting Pek Khiing company called Universal Cable. The ties between the chief minister and Ting in this particular venture were not only financial, but also spatial. Universal Cable has a suite adjoining that of Sarawak Capital on the top floor of Wisma Ting Pek Khiing, the tallest office building in Kuching. On the opposite end of Wisma Ting Pek Khiing, in the basement parking garage, three large Rolls Royce sedans can be seen gathering dust. A source indicated that Chief Minister Taib had initially purchased these Rolls Royces to chauffeur heads of state visiting Kuching for a meeting. After the meeting ended, Taib no longer needed the cars and sold three to Ting.

Ting also uses earnings from timber to finance the electoral objectives of the chief minister. An official from the prominent national NGO, the Consumer Association of Penang, told me that Ting had reportedly contributed $27 million to candidates from the chief minister's Sarawak Alliance during the 1994 elections (23 August 1996 interview with Mary Assunta).

Despite the many joint ventures between Ting and Taib, Ting still manages to defy the chief minister. He is unique in this respect. One example of Ting's contradicting the chief minister was when he financed the unseating of Taib ally Wong Soon Kai. Ting had agreed to build, and partly subsidize, six bridges across the Rejang River. While these bridges would have eventually aided in the construction of Ting's Bakun Dam, they also constituted a key infrastructure improvement, and in this sense (rather like the Samling group's subsidization of urban renewal in Miri and Bintulu) would have served the broader political objectives of the chief minister. But former deputy chief minister and former chairman of the SUPP, Wong Soon Kai, withheld the release of the state's share of funds for the project.

Because of Wong Soon Kai’s opposition to the bridges, and to Ting's opening a branch of the MCA-linked Tunku Abdul Rahman College in Sarawak, Ting provided financial backing to Wong Soon Kai's electoral opponent, Wong Ho Leng, of the opposition Democratic Action Party (DAP), thus removing Wong Soon Kai from power. Ting helped Wong by providing financial backing to bookmakers, who in turn placed unrealistically steep odds of 20:1 in favor of Wong Ho Leng's victory. Many were tempted to bet on such odds, and once they stood to make money from Wong Soon Kai's loss, they, their friends and families voted for Wong Ho Leng. Betting on elections is common in Sarawak, but subsidizing bookmakers, as Ting did, is not. Some speculate that Ting did not want Wong Ho Leng to win so much as he wanted to "show Wong Soon Kai who was boss." Ting also provided similar gambling-mediated backing to a relative of his who ran as an independent and successfully defeated a highly unpopular SUPP member in Meradong (8 and 16 November 1996 interviews with Michael Goldman).

Ting, like his fellow timber barons, is compelled to funnel timber rent to Taib, who jointly owns all of Ting's timber operations, and was given a $480 million contract in Ting's Bakun dam project. Ting has demonstrated a degree of independence from Taib, as when he won back control of the Bakun contract from Taib. However, Ting has only maintained control of the project through ties to nationally prominent Prime Minister Mahathir and UMNO treasurer Daim Zainuddin.

Limbang Trading

One of the best known and least understood concession holding groups is Limbang Trading. Many erroneously assume, due to the high government positionof its outspoken chairman, James Wong,

Wong serves as the state's Minister of Environment. He also is the chair of the NREB, the state board that approved the environmental impact assessment for the mammoth Bakun Dam. Taib had served as chair, but when a case was brought against him in a Kuala Lumpur court for conflict of interest, he appointed Wong.
that Limbang’s timber holdings are vast and its political currency strong. Neither is really the case. Wong has been barely tolerated by the state’s leadership for more than half of his public life, resulting in the modest size of his concession holdings.

When I interviewed Wong, he gave a heroic account of his beginnings in the timber trade. He said he started his timber company in 1946 out of desperation to feed his mother and seven brothers and sisters after Japanese soldiers had executed his father. Wong said he started by selling firewood to Hong Kong, but later decided to get into the extracting and selling of commercially valuable timber. The type of logging prevailing at the time was the logging of ramin from peat swamps in coastal areas, but all such areas near his home had already been given out as concessions. Wong said he decided, therefore, to obtain a license to harvest timber from the mountains instead and approached the British colonial administrators of Sarawak. According to Wong, a 234,000 hectare timber concession in the upper Limbang valley was his "for a song" in 1949. He claims that it took him eleven years of arduous work to develop the concession before it produced its first shipment of timber and that he personally pioneered tropical hill logging in Southeast Asia (12 November 1996 interview with James Wong).

A less heroic version of Wong’s beginnings in the timber trade was given by Hugh Peyman, then Managing Director for Asia for the investment bank of Dresdner Kleinwort Benson. Peyman recounted that in 1949, when Wong was purportedly awarded the timber concession, he was only in his early 20s, if not late teens, and would have lacked the connections to acquire such a huge concession. Rather, his father-in-law acquired the concession as payment for many years of loyalty to the British who "drew some lines on a map, and the deal was done.” The land was then passed down to Wong's brother-in-law, who introduced Wong to the timber business, and cut him in on ownership of the concession. Wong is, in this sense, not entirely the self-made man he claims to be (23 July 1997 interview with Hugh Peyman).

Just as Wong’s history in the timber trade is open to multiple interpretations, so is his role in Sarawak politics. Wong at first appears to have been a pivotal political player in Sarawak. For nearly four decades, he served as head of one of the four parties in the Sarawak Alliance: the Parti Pesaka Bumiputra Bersatu (PBB), led by Chief Minister Taib Mahmud; the Sarawak United People's Party (SUPP), led until recently by Wong Soon Kai; the Sarawak National Party (SNAP), led by Wong; and the Parti Bansa Dayak Sarawak (PBDS).

Despite Wong's position at the head of SNAP, his political career has been difficult. His public life began in 1961, when then-Malaysian Prime Minister Tun Abdul Rahman called for a congress to discuss the entry of Singapore, Sabah and Sarawak into the Federation of Malaysia. Wong attended and was an early supporter of Sarawak's joining the federation.

Sarawak's first chief minister under the new arrangement was Stephen Ningkan. Wong, a newly-elected independent from Limbang district, decided to join Ningkan's SNAP, a multi-racial party with a substantial Chinese element. Wong’s rise was initially meteoric, and he was appointed deputy chief minister after Ningkan's party won state elections (Wong 1983: 10-11). Said Wong in an interview, "Because I was made deputy chief minister, and I had joined SNAP, I was also made deputy president of SNAP" (12 November 1996 interview). It was Wong's senior position in SNAP that gave him political staying power.

Wong’s political fortunes changed with Ningkan's removal from power in 1966. This relegated SNAP to the opposition until 1974, when, after six years, the party was finally readmitted to the Sarawak Alliance. Wong's political currency should have improved at this point, but instead he was jailed for two years by then-Chief Minister Tun Rahman on the grounds that Wong had been colluding with the nation of Brunei to facilitate the annexation of Wong's home district, Limbang, into Brunei. Wong, however, maintains that Tun Rahman jailed him because he saw Wong and SNAP as a political threat.

In 1981, five years after his release, Wong ascended from deputy president to president of SNAP (12 November 1996 interview), which coincided with the election of Taib to the chief ministership. With Wong's higher position in the party and a new chief minister in office, Wong should have been in a position to start afresh with improved relations with the state’s leadership. But in 1983, his leadership of SNAP was vigorously challenged by Leo Moggie, who with his followers left SNAP and formed the PBDS. Wong was held in low esteem by Chief Minister Taib because of PBDS's breakaway from SNAP. PBDS went on not only to pose an electoral challenge to Taib but also to embarrass him on the timber issue

The misuse of the state's timber resource by Taib was a pivotal issue for the PBDS. One press account looks back on "the PBDS's campaign issues of Dayak rights and environmental issues. Had the PBDS gained control of the state government, the timber industry would have been adversely affected as the PBDS would have taken action to curtail logging activities that are rapidly depleting the state's rain forests where large numbers of Dayaks live" (Economist Intelligence Unit 1991). 

As a result of Wong's inability to rein in the PBDS, he had difficulties with Taib from 1981 to 1985. However, Wong's explanation for these difficulties was that Governor Tun Rahman’s advisers to Chief Minister Taib had "poisoned his mind" against him (12 November 1996 interview). But a 1984 news report suggests that, if anything, Tun Rahman saved Wong from Taib's wrath during those difficult years.

The increasingly embarrassing delay in announcing a new Sarawak cabinet after the state's 28-29 December 1983 election results from severe disagreement between Chief Minister Taib Mahmud and his uncle, state Governor Rahman Yakub. The election was supposed to cement Taib's ascendancy in Malaysia's largest and potentially wealthiest state but the result also threw doubt on the future of the Sarawak National Party (SNAP), mauled in the election by a breakaway element. Taib wants to push SNAP right out of the ruling coalition, but ironically Rahman, noted for his acute political sense, insists on keeping a weakened SNAP within the government, where it can be more easily influenced (FEER 1984b).
Finally, however, Wong managed to rehabilitate himself during the Ming Court affair.

With the exception of the years leading up to and including the Ming Court Affair (1985-1987), the year following the 1983 elections marked the second largest handout of timber concessions on record in Sarawak. In an effort to augment his political warchest and/or buy political supporters, Taib awarded 17 new concessions (see Table 4.1 above.) This demonstrates yet again how rent from the harvest of timber is the important form of political currency in Sarawak.

Wong was one of three new ministers appointed by Taib in March, 1987 to replace defectors to Tun Rahman's camp (Ritchie 1987: 31-32). Nevertheless, Wong’s political importance is marginal because since 1983 SNAP has been electorally insignificant, especially now that the larger PBDS has rejoined the ruling coalition. In Sarawak, SNAP is referred to as a "mosquito party."

Wong still retains a state assembly seat in Limbang, but lost his (national) parliamentary seat in Bintulu to Sarawak's only DAP parliamentarian, Chiew Chin Sing. Chiew maintains that as he prepared to challenge Wong for the Bintulu seat, Wong's intermediary offered Chiew RM3 million($800,000) not to run (19 July 1997 interview with Chiew Chin Sing).

James Chin gives an interesting insight into the purpose of SNAP, which he calls "the vehicle for James Wong's personal aggrandizement." Wong, ethnically Chinese, continues to obtain the votes of the Iban because, as Chin put it, "He buys them at election time" (12 August 1997 interview). Over four decades, Wong has merely maintained power by using rent from his family's modest concession to buy votes. This explains the independent, quirky role he continues to play in the state’s government, where he is tolerated at points but rarely loved. 

Ling group

As with Ting Pek Khiing and James Wong, there is occasionally negotiation between heads of state and the heads of timber conglomerates in Southeast Asia, but it is rare. This is illustrated by the rising and falling fortunes of the ninth largest timber concession holder in Sarawak, the Ling group.

In the 1960s, the largest concession holder in Sarawak was the Ling group, headed by Ling Beng Siew. When Tun Rahman came to office in 1971, he arrested Ling Beng Siew and confiscated many of his timber holdings. One source argues this was done to cripple the political and economic power of Ling, who had headed the Pusaka party, an important part of the Chinese-Dayak opposition to Tun Rahman's rise to power (27 May 1997 interview with a reliable and informed academic). Another source speculates Ling's arrest was a consequence of his declining to help Tun Rahman in his bid for office.

Before 1970, nobody could believe that a short man like Rahman Yakub would one day become Chief Minister of Sarawak. Even Ling Beng Siew, an astute man, had wrongly assessed [Tun Rahman's potential].
In that year, Yakub was rushing here and there collecting election funds. The first person he approached was Ling Beng Siew. . . . Yakub was confident that Ling Beng Siew would give him a helping hand. But to his disappointment, Ling Beng Siew did not donate even a single cent as he really could not believe that Yakub, such a short and thin person would become an astute statesman with boundless prospects . . . Later, Yakub brought him to Singapore under the pretext of playing golf. So once he stepped down from the plane at Subang Airport, he was arrested and sent back to Sarawak. Meanwhile, there was a rumor saying that Ling Beng Siew's refusal to donate 3,000 dollars had brought him a few months of detention (Lau 1995: chapter 18, page 1).

After the disaster of being jailed, Ling Beng Siew began re-ingratiating himself with Tun Rahman, and rebuilding the family fortune. Ling worked to become the important figure in delivering votes to the chief minister in the Rejang River basin (27 May 1997 interview with a reliable and informed academic). According to S.K. Lau, however, Ling’s efforts to rehabilitate himself with the Chief Minister went just beyond bringing in votes:
On one occasion, while recuperating in hospital in United Kingdom after an operation, [Chief Minister Tun Rahman] was then attended to by the cousins Ling Lee Chung, Ling Beng Siong's eldest son, and Ling Lee Sung, Ling Beng Siew's son. They were specially sent by their fathers to serve Yakub. Later Ling Lee Chung, my good friend told me that in London, he and [Ling] Lee Sung had to take turns to scrub Yakub's body and help change his undershirt (Lau 1995: chapter 5, page 4).

The lengths to which timber businessmen must go to stay in business is further demonstrated by the actions that the Ling family took once Tun Rahman stepped down from the chief ministership and the post was filled by his nephew Taib Mahmud.

When Taib [had] just [taken] over as Chief Minister, Yakub was then the State Governor who still held great power. How to serve these two persons? There should be no problem. As a bright and shrewd businessman, Ling Beng Siew immediately arranged for his eldest son Ling Lee Sung to follow Yakub and his [second] son Dr. [Philip] Ling Lee Kang to closely follow Taib. In this way, no matter who lost power in [the] future, the remaining one was still his man. . . . There would be no loss" (Lau 1995: chapter 5, page 4).

The Ling group also injected five timber concessions totaling 115,000 hectares into the publicly listed company Pan Pacific Asia (Sarawak Securities 1996: 4). The board of directors of Pan Pacific Asia reflects the extent to which timber businessmen must align themselves with politicians to survive. The Ling family now seems to be casting their lot with West Malaysian politicians, rather than those from Sarawak.


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