Thursday, July 15, 2010

Taib's shipping monopoly

Below are some excerpts from various sources on Taib's monopoly over timber exports from Sarawak

"
Turning to another important Taib family business, the shipping of all timber exports in Sarawak goes through Archipelago Shipping (Dauvergne 1997: 109), a company almost entirely owned by the Chief Minister’s family.[1]  Because shipping a cubic meter of timber to foreign markets costs about $40, and because Sarawak exported an average of ten million cubic meters of timber each year during the 1980s, the company’s cash flow was four billion dollars during the 1980s.[2]  Hence, in addition to timber industry holdings, the chief minister and his family are enriched by this shipping monopoly. As Table 4.9 shows, the entire management and 92 percent of the shares in Archipelago Shipping are held by relatives of the chief minister or companies owned by them. 

 

Table 4.9            Taib family ownership of Archipelago Shipping



Name of board member or shareholder
Position in or percentage of shares held in company
Relationship to Taib Mahmud, Chief Minister of Sarawak

Onn Bin Mahmud

Director
Chief minister’s brother
Achi Corporation
52 percent shareholder
Company 100 percent owned and controlled by Onn Bin Mahmud, the chief minister’s brother
Fredahanam Bte Mahmud
Director
Chief minister’s sister
Serira
15 percent shareholder
Company 100 owned percent owned by the three sons of the chief minister’s sister, Fredahanam Bte Mahmud.
Mohd. Arip Bin Mahmud
Director and 10 percent shareholder
Chief minister’s brother
Haji Mohd. Tufail Bin Mahmud
Director and 10 percent shareholder
Chief minister’s brother

Grand Shine Trading               
8 percent shareholder
No obvious connection to the chief minister
Masba Holdings
5 percent shareholder
Company 100 percent owned by Abdul Aziz Haji Hussain, who is married to the sister of the chief minister, Fredahanam Bte Mahmud.
Source:  documents obtained during 28 October 1996 interview with Institut Pekerjaan Komuniti"




In Malaysia, Sarawak Has a Cash Register on the Port
http://www.asiasentinel.com/index.php?Itemid=178&id=871&option=com_content&task=view


Written by Tony Chan   
Wednesday, 14 November 2007
Chief Minister Abdul Taib Mahmud’s family continues to want its “commission” on timber shipped to Japan

malays-mahmudFor weeks, as many as a dozen Japanese-registered log carriers have been riding at anchor outside four Sarawak ports in Malaysia after being refused entry to pick up timber for the Japanese market. Several have left empty-handed while the owners negotiate with a company called Achi Jaya Shipping of Sarawak. 

The decision to shut out the Japanese vessels is because Achi Jaya is demanding payment of “commissions” of US$2-3 per square meter of timber. The shippers are refusing to pay because Japanese tax authorities earlier ruled that the payments were kickbacks to the family of Sarawak Chief Minister Abdul Taib Mahmud. 

Despite the publicity in Japan, Taib Mahmud is hanging tough. Sources say he is continuing to demand payment. When Japanese log carriers turned up at Sarawak ports, in October, they were told they would not be granted permission by Achi Jaya Shipping to pick up timber unless they continued to pay the kickbacks.

With strong ties to the governing Barisan Nasional in Kuala Lumpur and the ability to make local journalists toe the line, Taib has denied allegations of illegality and forced two of Malaysia’s government-linked newspapers to apologize for airing reports on the mess. Malaysiakini, the independent Internet-based publication, has also been threatened with a lawsuit but has refused to retract its story. When contacted by Asia Sentinel, a spokesman for Achi Jaya Shipping declined to comment.

The picture painted by Japanese tax authorities is fairly daunting. According to reports in Japan Times and Yomiuri Shimbun, the Tokyo Regional Taxation Bureau determined that the payments were rebates, not legitimate expenses, and it is likely to impose well over 400 million yen in back taxes and penalties against the shipping companies.

It is mandatory for all log carriers calling at Sarawak ports to register with the chief minister's family-linked company, Dewan Niaga Sarawak, as the sole agent for timber shipments out of the state and to appoint Achi Jaya as their ship-handling agent.

The payments – at least RM32 million (US$9.67 million) - previously were alleged to have been routed through a Hong Kong-based company called Regent Star, according to Japanese tax authorities. Some 90 percent of Regent Star allegedly was owned by Taib Mahmud’s brother Onn until the company was abruptly wound up in June after it became public that the tax authorities had gone after the ship-owners.

The tax authorities reportedly have ordered the Kansai Line to pay 50 million yen in back taxes and penalties for falsely reporting so-called intermediation fees totalling 130 million yen to Regent Star over a seven year period ending in December 2005, in its cost of loading logs in ports in Sarawak, in an effort to hide the payments.

So long as their owners refuse to pay the commissions, permission to pick up Sarawak logs and other timber products will be withheld, a shipping company executive told Asia Sentinel. Several large exporters have started making enquiries with other Malaysian-registered shipping lines in Sarawak but they too would have to go through Achi Jaya Shipping Agency as sub-agents.

The Japanese shipping cartel has made the payments since the early 1980s, reportedly on the order of the provincial government.  Although the Japanese tax authorities’ limit on the time period investigated kept the amount to RM32 million, payments made over the last 20 years are said to amount to hundreds of millions of ringgit. Sarawak's log and timber exports since 1970 have been valued at more than US$25 billion, based on figures available at the Trade Statistics Department in Sarawak.

In the Taib Mahmud empire’s defense, the companies said these were legitimate expenses as they were commissions paid to Regent Star in Hong Kong on the directive of the Sarawak provincial government.

A timber industry source said the decision to shut out the Japanese-registered vessels is a blow for exports, especially those with long-term ties to large Japanese buying houses, particularly for plywood. So long as their owners refuse to pay, permission to pick up Sarawak logs and other timber products will be withheld, according to a shipping company executive.

Several large exporters have started making enquiries with other Malaysian-registered shipping lines in Sarawak but they, too, presumably will have to go through Achi Jaya Shipping Agency as sub agents.

 A Family Affair
Achi Jaya is yet another part of the corporate empire that makes the state of Sarawak and its 2.2 million people a virtual Taib Mahmud family business, as Asia Sentinel reported in August. All five Achi Jaya Holdings directors are linked to Sarawak’s first family. They comprise Onn Mahmud, his wife Halimatun Abdul Ghani, 23-year-old son Omar Yakub and 28-year-old daughter Siti Hajah Hamidah, and Noor Zakri. Onn and Halimatun were the pioneer directors while their son became a director in January 2007.  Onn and his wife together own all the shares of Achi Jaya Holdings. Onn holds 499,999 shares while the wife has one share.
The Mahmud family’s main investment vehicle is a company called Cahya Mata Sarawak, which means “light of Sarawak’s eye” in English and goes by the acronym CMS, originally known as Cement Manufacturers Sarawak Bhd. CMS’s transformation has been remarkable. It was privatized and restructured from a state-owned public-listed company into a private sector public-listed conglomerate controlled by the Taib Mahmud clan.
By 1996, the family had consolidated operations from a publicly-owned cement producer into a private-sector diversified conglomerate involved in stock brokering, road construction, water, quarry operations, steel bar manufacturing, trading, cement production and investment holdings.  His 26-year tenure as chief minister also gave the company at least the appearance of having ready access to government power and favors during a time when the family company had a healthy cash flow and high annual turnover that drove up the share price. The company also got involved in numerous infrastructure projects.

 

Wednesday, 12 September 2007

Timber kickbacks: The Shea connection

PLEASE NOTE. This article was originaly published with photos and charts.
Timber kickbacks: The Shea connection - Malaysiakini.com
Erik Wang
Sep 11, 07 2:03pm

Exclusive He is a complete unknown. Perhaps his parents want him to be someone important - after all, his name ‘Kin Kwok’ means ‘nation-building’.

A search on the Internet does not reveal much of this shadowy man. He was a participant at a golf tournament for the elderly in Hong Kong, suggesting that Shea Kin Kwok is a senior citizen.

Golf aside, Shea is a businessman. He is a shareholder and director of two companies registered in Hong Kong - Regent Star Company Limited and Richfold Investment Limited.

Behind that veneer of anonymity, Shea has indeed much to do with Malaysia, specifically his ties to members of Sarawak Chief Minister Abdul Taib Mahmud’s (photo) family and their business empire.

Shea’s name first surfaced late March when Regent Star was implicated by the Japanese media in a multi-million ringgit timber-shipment kickbacks scandal.

It was reported that a Japanese shipping cartel of the country’s top shipping companies paid at least RM32 million to Regent Star to help “resolve” problems encountered in the exports of timber from Sarawak to Japan.

Japan’s tax authorities had considered these payments as ‘illegitimate expenses’ since Regent Star - believed to be a paper company - did little ‘substantive work’. As a result, the Japanese shipping companies were slapped with back taxes along with heavy fines for ‘hiding’ the funds from the tax authorities.

A week later, malaysiakini broke the news on the alleged kickbacks in Malaysia, quoting Japanese media sources.

Shea is one of two directors of Regent Star. The company was incorporated in Hong Kong 24 years ago. Corporate information obtained from the Hong Kong authorities indicated that Regent Star’s office is in Kowloon.

The company has a paid-up capital of HK$10,000 (RM4,500). Regent Star’s 1985 annual return said its two pioneers directors were Shea Kin Kwok and Kho Eng Beng. Both were appointed a week after the company was formed, and each director held 5,000 shares.

Kho was listed as a British national while Shea was a Hong Kong national. Kho resigned as director in 2001 and was replaced by Ng York Kee, a Philippine national.

In June - two months after the timber kickbacks scandal broke - Regent Star made a surprise move. Ng, on behalf of the company, applied to the Hong Kong Companies Registry for Regent Star to be deregistered.

This came in the wake of Taib’s lawsuits against malaysiakini and two opposition leaders for defamation over the alleged kickbacks scandal. The two PRK state leaders had reprinted press reports on the scandal from malaysiakini and Japanese media organisations for distribution to the Kuching public.

The PKR leaders have since, through their lawyer, written to the Hong Kong Companies Registry and Tax Office to query the deregistration of Regent Star.

Rise of Dewan Niaga Sarawak

The Sarawak government under Taib, who was also forestry minister, appointed Dewan Niaga (Sarawak) Sdn Bhd soon after he took power in 1981 as the local shipping agent for the exports of timber.


Dewan Niaga Sarawak, incorporated in 1981 as a wholly Sarawak-based entity, is the sole agent for timber shipments out of the state. Anyone who wants to export timber has to go through them.
The company has an authorised capital of RM1 million with an issued capital of RM200,000. Its directors are individuals closely linked to the state government as well as Sarawak’s Associated Chinese Chamber of Commerce and Industry.

Among them is ex-senator Wee Kok Tiong (photo), son of the late Sarawakian tycoon Wee Boon Ping.

Wee, who was Bandar Kuching parliamentary candidate in the 2004 general election, is from the predominately Chinese Sarawak United People’s Party (SUPP) - a key Barisan Nasional component party in the state. He lost to the DAP candidate in the contest.

Wee is also president of the Associated Chinese Chamber of Commerce and Industry and the vice-chairman of SUPP Kuching branch, as well as a member of the party’s powerful Central Working Committee. He also owns Sarawak-based Chinese-language daily, International Times.

Another prominent director of Dewan Niaga Sarawak is Abdul Aziz Husain. Abdul Aziz, one of the pioneer directors when the company was formed 26 years ago, was Sarawak’s state secretary until 2006. He is also Taib’s brother-in-law.

He has since been appointed group managing director of the public-listed Sarawak Energy Bhd, which is majority owned by the state government. Sarawak Energy is responsible for, among others, the generation, transmission and distribution of electricity in the state.


Two other family members of Taib are also directors of Dewan Niaga Sarawak - younger brothers, Onn Mahmud and Mohd Tufail Mahmud, were appointed in 1988 and 1991 respectively.

Sarawak’s first family


Dewan Niaga Sarawak’s shareholders are Achi Jaya Transportation Sdn Bhd, with 104,000 shares, the Associated Chinese Chamber of Commerce and Industry (80,000 shares) and Koperasi Koppes Bhd (16,000 shares).

The majority shareholder, Achi Jaya Transportation, is the new name for CMS Transportation Sdn Bhd. The company was established in 1983 and described its business as ‘transportation and trading of goods and services’. It has an authorised capital of RM3 million with an issued capital of RM500,000.

Three of the five directors of Achi Jaya Transportation are from the Mahmud family. They are brothers Onn, who is the company’s pioneer director, Mohammad Tufail, who became director two months after the registration of the company, and sister Fredahanam, wife of former state secretary Abdul Aziz.

Another director, Noor Zakri Abdul Ghani, shares the same registered residential address as that of Onn. Noor Zakri is believed to be Onn’s brother-in-law. The final director is one Chiew Chee Hung @ Chiew Chee Ung.

In turn, Achi Jaya Transportation’s sole shareholder is Achi Jaya Holdings Sdn Bhd, with 500,000 shares. Achi Jaya Holdings was set up as Achi Corporation Sdn Bhd in 1983 to provide ‘management services, property and investment holding and property letting’. It has an authorised capital of RM2 million with an issued capital of RM1 million.

All five Achi Jaya Holdings directors are linked to Sarawak’s first family. They comprise Onn, his wife Halimatun Abdul Ghani, 23-year-old son Omar Yakub and 28-year-old daughter Siti Hajah Hamidah, and Noor Zakri.

Onn and Halimatun were the pioneer directors while their son became a director in January 2007. Onn and his wife together own all the shares of Achi Jaya Holdings. Onn holds 499,999 shares while the wife has one share in the company.

This story would not be complete without mentioning CMSB, or Cahya Mata Sarawak Bhd.

Most Sarawakians know CMSB, which is majority owned by Sarawak’s first family. It is a public-listed company and its 2006 annual report put its revenue at RM6.4 billion.

CMSB is a conglomerate involved in manufacturing, construction, construction materials, stockbroking and other financial services, property development, insurance, and until recently, banking. However, its banking business - the RHB Bank - was recently sold to the Employees Provident Fund for RM2.25 billion.

Prominent among the board of directors are two of Taib’s sons - Abu Bakir, 43, and younger brother Sulaiman Abdul Rahman, 38. The elder son is CMSB deputy group chairman and a non-executive director while the younger son is a non-executive director.

Some of the key owners of CMSB are Taib’s immediate family members - wife Laila (11.23%), daughters Hanifah Hajar (13.85%) and Jamilah Hamidah (13.64%), and sons Sulaiman (8.94%) and Abu Bakir (8.92%).

Altogether Taib’s family owns at least 56.58% of the company. His brother, Onn, also owns 0.76% in CMSB.

Given its pedigree, CMSB secures some of plumpest contracts from the Sarawak government. Moreover, it owns more than 2,234 ha of vacant land in various locations in the state as well as offices, factories, quarries, premix operations, shophouses and even a jetty.

Shea’s investments

Shea’s business relationship with Onn dates back more than two decades. Shea’s Regent Star is linked to another Hong Kong-registered company, Richfold Investments, in which one of two directors is Onn.

A check by malaysiakini with the Hong Kong Companies Registry revealed that Richfold Investments was established on the same day as Regent Star - Nov 22, 1983. In addition, the two companies shared the same office in Hong Kong.

Onn owns 49,999 shares of Richfold Investments while Shea holds just one. Onn was appointed director of Richfold Investments together with Shea just a day after Shea was appointed director of Regent Star. (see Chart below)

Ng York Kee, another director of Regent Star, is also listed as Richfold Investments’s company secretary.

However, Shea’s links to Taib’s family is not restricted to Hong Kong. According to Bursa Malaysia, Shea was also a substantial shareholder of two Sarawak-based companies.

From the public-listed Sarawak Oil Palm Bhd (SOPB) annual reports of 2002 to 2005, Shea held shares in this well-connected company and was listed under the ‘30 largest shareholders’ category.
His shares were 1,309,400 or 1.38% in 2002, 1,239,400 or 0.97% in 2003-2005. However, it the 2006 annual return, Shea disappeared as a direct shareholder. It is not known if he had cashed out or moved his share ownership to other companies.

Another of Shea’s investments in Sarawak was CMSB, but this appeared shortlived. The CMSB 2001 annual report listed Shea as having 663,000 shares in the company. Subsequent annual reports do not list Shea as a direct shareholder.

For a person who is a complete unknown in Sarawak, Shea certainly has a strong connection to the state.

Is he a proxy?

It is also not clear how much the Japan’s shipping cartel had paid Regent Star over the more than two decades of its existence. The Japanese Taxation Bureau, whose probe is limited to seven years, estimated RM32 million was paid over that period.

This will translate into Japanese consumers having paid millions of ringgit extra for furniture and other timber products. And this could also translate into large tracts of forests saved or much improved livelihood for the native communities in Sarawak and Sabah who regarded land and forests as their life and blood.

But was this money paid to a Hong Kong national called Shea or was he merely a proxy? If so, a proxy to whom?

And just who is Shea? He doesn’t seem to play a significant role in Hong Kong corporate world because a search with Hong Kong Companies Registry does not show he has other business interests save for Regent Star and Richfold Investments.

What can be established however is that Shea is a business associate of Onn and that their association goes back to 1983 - the same year Onn incorporated Archipelago Shipping to be a shipping agent, the same year Dewan Niaga Sarawak executed the shipping agreement with the Japanese shipping cartel for the shipment of logs from Sarawak.

And 1983 is also the same year Dewan Niaga Sarawak appointed Archipelago Shipping to be the sole handler of shipments of all logs exported from Sarawak. What’s more, both Regent Star and Richfold Investments were incorporated at the same time in that year.

Clearly Shea is a person intrinsically linked to the alleged timber kickbacks involving the Japanese shipping cartels and Sarawak’s political elite. But this trail is about to turn cold as Regent Star could soon disappear should its application to close shop is approved by the Hong Kong Companies Registry.


 

Timber kickbacks scandal: Taib's 10-page clarification


Sarawak Chief Minister Abdul Taib Mahmud took the unusual step of refuting allegations of his personal involvement in a multi-million ringgit timber kickbacks scandal in the state assembly today.
In a 10-page ‘personal statement’, Taib “categorically and completely refute” all the allegations, which first appeared in Japan Times, a Tokyo-based newspaper.
“They are absolutely false,” he said.
Taib, who has been the Sarawak leader for 26 years, reiterated he would take legal action against all those who had made the allegations, both in Japan and Malaysia.
He had earlier vowed to sue malaysiakini and a number of opposition leaders for defamation.
“It must be noted that the said newspaper (Japan Times) and those in Malaysia, have not ... provided any fundamental facts to support their allegations that 1.1 billion yen (RM32 million) was paid to Sarawak officials as ‘kickbacks’ or ‘rebates’ and lubricant to facilitate the timber trade,” he added.
According to the March 29 Japan Times report, the multi-million ringgit ‘commission’ - made over a period of seven years - was paid to Hong Kong-based company Regent Star said to be linked to Taib and his family.
This was uncovered by Japanese tax authorities who deemed the payments made by nine companies, which is part of a shipping cartel, as ‘illegitimate expenses’ since the Hong Kong agency - believed to be a paper company - did little ‘substantive work’ to justify the payments.
According to tax authorities, the shipping companies had tried to disguise the payments as ‘business expenses’ and were thus not taxed.
Japan Times reported that the shipping firms were likely to be slapped with well over 400 million yen (RM11.6 million) in back taxes along heavy penalties for ‘hiding’ the funds from tax authorities.
According to the newspaper, the shipping companies were believed to have used the money as a “lubricant to facilitate their lumber trade”.
The shipping firms, which have rejected the tax authorities' claim and argued that the transactions with Regent Star were legitimate, have denied any wrongdoing.
Taib: I’ve no knowledge
Sarawak’s lumber export is controlled by the state government through Dewan Niaga Sarawak - a state-affiliated organ in charge of timber export control which is headed by the Sarawak chief minister's younger brother.
The Japanese shipping cartel was established in 1962 to avoid stiff competition among the shipping companies in the import of lumber from Southeast Asia, including Sarawak.
Taib, who is the country’s longest serving chief minister, denied any knowledge in the arrangement made between Dewan Niaga and the Japanese companies.
“All arrangements made by the shipping companies from Japan and Dewan Niaga with regard to the transportation of timber from Sarawak to Japan, or the appointment of Archipelago Shipping as their local shipping agent, were made by the companies themselves without interference or directive from the Sarawak government or the chief minister,” said Taib.
Archipelago Shipping has since changed its name to CMS Transportation Sdn Bhd, a company linked to Taib’s family.
Malaysiakini has reported that all log carriers seeking to transport timber exports are required to appoint shipping agency Archipelago Shipping as the sole agent for shippers to pick up logs from three key Sarawak ports - Tanjung Manis, Bintulu and Miri.
Taib also said that he and his state government “have no knowledge of Regent Star, and have not received any remuneration or other payments from the alleged Hong Kong company”.
“If there had been any payment by the Japanese shipping companies to Regent Star (as alleged), the Sarawak government and myself as chief minister, are totally unaware of such payments.”
However, Taib did not mention his family’s involvement in the companies that are allegedly involved in the scandal.
He said that he had decided to make the lengthy clarification today as the legal action he vowed to take against his detractors may take time.
Taib’s statement was made in the state assembly this afternoon under Standing Orders 22, which allowed a member to make a personal clarification.
However, the assembly speaker would not allow anyone to ask or speak on the matter after the statement was read out.











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