Note : Onn Mahmud is the brother of Taib Mahmud, the Chief Minister of Sarawak. The question being raised is the origin, accumulation and concentration of wealth into one family's hands. Further questions raised are the propriety and methodology of this wealth creation. How did it happen? As the Chief Minister and Land & Resource Minister, wealth can be transferred in various ways into one's own coffers.
As can be seen in this chart, Onn Mahmud holds large stakes in the Achi Jaya Group of Companies.
Just looking at Achi Jaya Holdings and Achi Jaya Plantations accounts as at 31.12.08 you can see the phenomeonal amount of wealth being generated.
Achi Jaya Plantations had assets of (Non-Current Assets (631m) + Current Assets (29m) ) 661m. It's Net Assets (Assets - Liabilities) was 289m.
The Revenue was 194m and the Profit was 55.6m. The Net Profit Margin was 28.68% (Out of the revenue of 194m, 28.68% was profit after cost, pretty good, these kind of margin in the business world is salivating).
Share Capital :- Onn Mahmud personally invested RM 9.5m. Achi Jaya Holdings invested another 15.4m
Achi Jaya Holdings had assets of (Non-Current Assets (745m) + Current Assets (83.8m) ) 829m. It's Net Assets (Assets - Liabilities) was 386.8m.
The Revenue was 277.6m and the Profit was 37.6m. The Net Profit Margin was 13.53% .
Share Capital :- Onn Mahmud personally invested RM21m as effectively the 100% shareholder. Note on a 21m investment, the net assets were 386.8m. 18 times the initial investment. That is amazing wealth creation. the profit itself (for 2008 only!) was 37.6m, 1.8 times the initial investment and this is only for one year.
So Onn Mahmud has invested in his name 36.5m (that's 36,500,000) into these companies. Where is this money from?
Net Worth
Based on Onn Mahmud's 100% holding in Achi Jaya Holdings, 15.19% holding in Achi Jaya Properties and 5.43% of Achi Jaya Plantations and the Net Assets of these companies, Onn Mahmud (Just based on his interest in these companies only) is worth (386.8m + (15.19% of 35.3m) + (5.43% of 289m) ) approximately a staggering 407.85m RM (407,850,000).
Herolite Investment Ltd and Grand Shine Trading Ltd
I can't find the ownership details on these companies. If someone more well versed in getting info from the Hong Kong company registrar can guide me I would be grateful.
These companies have collectively invested RM24.6m in Achi Jaya Properties and RM150m in Achi Jaya Plantations. Who are they? And why are they investing in parallel to Onn Mahmud as seen in the share capital section above?
Update : I have traced the ownership of Herolite and Grand Shine Trading through various HK$20.00 companies. The Ultimate parent is one Francisco C Sebastian and Integrated Financial Holdings in the British Virgin Islands. The British Virgin Islands offshore companies do not reveal ownership details to the public.
These are companies capitalised at HK$10,000 (Herolite and Grand Shine Trading are capitalised at HK$10,000) yet investing RM175m in Achi Jaya Plantations and Achi Jaya Properties.
Money can be siphoned off from Achi Jaya Transportation via consulting fees, high salaries, high rentals paid to associated companies, management fees etc. So the P&L of 3.9m does not really show how much is actually earned by the individuals involved. Current assets of 21m generally indicate near cash or cash items.So very liquid, likely fees from being the sole shipping agent.
Also note the low capital invested. 0.5m, while the turonover is 59.4m and the audited profit is 3.9m, almost 8 times the capital invested (for 2008 only!) (and cash of 21m on the balance sheet). I wish I could invest in this business and get these kind of returns.
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
Chief Minister Abdul Taib Mahmud’s family continues to want its “commission” on timber shipped to Japan
For 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.
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 BursaMalaysia, 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.
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.
that I have been highlighting in my blog. I will focus on those concessionaires that Taib's family has a direct interest in. This will not include those where they are directors but not shareholders. There are questions of propriety when for example the sister of the Chief Minister who is also Minister of Resources (Menteri Perancangan dan Pengurusan Sumber) and the Minister of Finance sits on the board of a timber concessionary. This is a clear conflict of interest given that the Chief Minister allocates these concessions. However direct shareholdings and the economic benefit derived are clearer indications of impropriety.
I will then move away from information in the dissertation to other rent-seeking activity in Sarawak and yes, there is a lot.
UPDATE : Having looked through some documents from the registrar of companies, I can see that the directors have been changed since the dissertation, so have the shareholders and some of the companies have been dissolved (perhaps those concessions have run their course). The dissertation is from 2001. Unless someone does the whole exercise again, it will be hard to identify specific timber concession companies.
So I will move on to the shipping monopoply highlighted in the dissertation and elsewhere and then to all the other reports on Taib's very public wealth.
In granting logging or other concessions, the state merely needs to gazette the land in question and provide a 60-day period of objection to those who would be affected.
Whether the affected communities are aware of this seems immaterial. The fact is that the people who are affected often find out about the state’s actions only when the logging companies show up at their doorstep.
By giving lucrative logging concessions to companies without clear, enforceable guidelines designed to ensure the protection and security of communities like the Penan, the government has left such communities completely vulnerable to encroachment, land loss, and the undermining of autonomy and self-sufficiency.
This analysis of Sarawak's nine largest timber concession holding groups provides much new data to support the findings of Dauvergne (1997) and Ross (1996) that Taib Mahmud awarded timber concessions to achieve patronage objectives. Timber concessions were awarded to provide political parties in the state's ruling coalition with political warchests for state elections. Fifteen individuals serving as ruling coalition proxies, six for the PBB party and nine for the SUPP party, hold managerial and equity positions in many of the concessions licensed to the state's top four timber conglomerates. Timber concessions were also awarded to the most powerful politicians now in Taib's inner ruling circle, including nominees and/or relatives of Minister of Finance George Chan, Minister of Industry Abang Johari, as well as direct awards to Secretary of State Hamid Bugo, Deputy Secretary of State Abdul Aziz, and deputy speaker of the state assembly and executive editor of the Borneo Post, People's Mirror, Sarawak Tribune, and Utusan Sarawak, Mohamad Awang Asfia Awang Nasar. Concessions were also awarded to repay the loyalty of those who stood with Taib in the Ming Court affair, including the son of Sim Kheng Hong, the wife and nephew of Alfred Jabu, and the family, friends and associates of Wahab Dollah. Also there is the function reserved almost exclusively for the Taib family group of timber concessions of providing managerial and equity shares to either current or former heads of the three most powerful Iban families and seven of their relatives, all of whom help bring in the votes of the state's largest group, the Iban community. As this represents an enormous diversion of rent toward clientelist rather than developmentalist ends, it suggests that Sarawak has failed to balance the dual imperative.
There is also strong evidence indicating that a fantastic sum of timber rent has been diverted neither toward building development nor toward creating political support, but instead toward something that is vastly less societally-productive, namely, the personal financial gain of the chief minister, his family and his close personal friends. The Taib group itself is the third largest concession holder in the state, a position of market dominance unmatched by any other head of state in any of the cases discussed in this dissertation. While the chief minister himself occupies no publicly recorded directorships or shareholdings in any of the timber concessions said to belong to him, informants identified nine of his personal nominees in such positions. Moreover, the chief minister's family members, including three of his brothers, his sister, his brother-in-law and his cousin, occupy managerial and equity positions on the boards of the timber concessions of the top four major Sarawak timber conglomerates. In addition, the Taib family owns the shipping company through which an estimated $4 billion in timber exports must pass each year. Also, there is Taib's financial penetration into various timber conglomerates. This has catapulted him into owning the largest private financial entity in the state, the CMS corporation, which raises his personal earning power to another order of magnitude.
Sarawak is also a textbook example of something that the comparative political economy of development tends to overlook, namely, that the challenge for many would-be developing states is not capitalists using state leaders to seek rent, but rather state leaders using capitalists to seek rent. Between the head of state and capital, heads of state often have the upper hand, as demonstrated by: Taib's extraction of angpau from timber magnates during the Chinese New Year; Sibu's timber conglomerate heads returning from all over the world to greet Tun Rahman when he came to visit their city; Lau Hui Kang's being forced to turn on his own brother; Ting Pek Khiing's skyscraper being used to provide penthouse office space to the chief minister's son; Prime Minister Mahathir's sending IRS agents to raid Rimbunan Hijau headquarters after his son had a falling-out with the group's owner; Rimbunan Hijau head Tiong Hiew King's holding a golf umbrella for Chief Minister Tun Rahman and Ling group head Ling Beng Siew's sending his sons to London to wash the body of Tun Rahman after both Tiong and Ling had been jailed by Tun Rahman on trumped-up charges. Such vast inequalities of power demonstrate the degree to which, in the developing world, it is not rent-seeking capitalists who use the state as a tool, but rent-seeking leaders who use capitalists as a tool.
Official timber rent capture in Sarawak
My hypothesis predicted that state timber revenues would be lower than optimal in Sarawak because the chief minister and other political elites were unofficially appropriating enormous amounts of timber rent, resulting in less timber rent remaining to be captured by the government. This turned out to be the case.
Despite the failure of timber revenue policy in Sarawak, two tax hikes did take place, in 1989 and again in 1993. In those years, the government respectively increased timber revenues from $11 to $20, and from $20 to $30, for each cubic meter of red meranti harvested and bound for export. At first glance, these seem like substantial revenue hikes. It can be seen that in the years during which these revenue increases took place, the amount of timber rent unofficially earned by timber concessionaires, and appropriated by the political elites who ran or owned many of these concessions, remained constant or increased. What this tells us is these revenue hikes did not significantly reduce the net profit of those who had to pay them.
While the royalty on red meranti rose from $11 to $20 in 1989, the ten percent tax on the export of red meranti was totally eliminated in that same year. Thus, in spite of the royalty nearly doubling, timber concessionaires came out only slightly worse than the year before. The amount of rent their political masters were able to appropriate from each cubic meter of red meranti fell a minuscule $1.20, from $64 in 1988 to $62.80 in 1989, the year the revenue hike was enacted.
As to the second major timber revenue hike of 1993, when the decision was made to increase the royalty on red meranti by 50 percent, from $20 to $30 per cubic meter, this also turned out to be painless for those who were asked to pay it as it followed on the heels of the skyrocketing prices of Sarawak timber. The 1993 hike in timber revenues took place in the aftermath of a gigantic leap in prices of raw logs on the world market in 1992, a leap to some degree engineered by the government of Sarawak itself.
By the early 1990s, Sarawak was the main world supplier of tropical hardwood logs. (Indonesia had outlawed the export of logs, the supply of logs from Sabah had dwindled and Papua New Guinea had not yet become a major exporter). Therefore, Sarawak was in a position to effect world price movements. This excerpt from a World Bank internal memorandum written in late 1992 argued that the government of Sarawak itself drove up world tropical hardwood log prices in late 1992:
The targeted [log production] level for 1992 was to have been 18 million m3 but by August [Sarawak concessionaires] had already produced 15 million m3. The government then put on a quota - dividing the remaining 3 million m3 between all of the existing concession operators. As a consequence there has been a shortage of logs during the last quarter of the year (for both domestic processing and export) causing log prices to shoot up as supplies tighten and operators seek to maintain cash flows from reduced production levels. Log prices in August averaged about $125 per m3. In October they have risen to about $165 per m3 (World Bank 1992t: 5).
The executive director of the Sarawak Timber Association confirmed that the government fully anticipated that a freeze in exports in December, 1992 would drive up the prices of logs and help Sarawak producers in the long run. Cheong Ek Choon, Director of Forests, was the one who ordered the freeze. Sarawak loggers were at first angered by the freeze, and telephone calls flooded into the Sarawak Timber Association. The executive director anticipated the deluge of phone calls and made sure that he was out of the country, and unreachable, during December 1992. Due to the freeze in late 1992, log exporters enjoyed a 300 to 400 percent increase in the price of logs in 1993. While those high prices did not last, the Sarawak Timber Association executive director calculated that the average price per cubic meter for raw logs in 1993 was over $40 higher than it had been in 1992 (13 November 1996 interview with Barney Chan). In fact, Sarawak Timber Association records show that the average log export price in 1993 was $65 higher than in 1992.
In short, because of the astronomical leap in the price of Sarawak logs, the 1993 timber royalty hike was not painful. Again, a hike in royalties from $20 to $30 per cubic meter may seem substantial but, as shown in Figure 4.2 above, in 1993, the year of the increase, the amount of timber rent earned by timber concessionaires, or appropriated by their political patrons, skyrocketed from $108 to $160 per cubic meter of timber, an all-time high for any of the cases covered by this dissertation. Although they paid $10 more in royalties, timber concessionaires and their political patrons also netted $52 more in timber rent for each cubic meter of red meranti harvested and exported.
The painlessness of the 1993 revenue hike was confirmed in several quarters. Sarawak Timber Association executive director Barney Chan characterized the reaction of his membership, stating, "There were no complaints because log prices had shot up concurrently with the royalty increases." Director of Forests Cheong Ek Choon confirmed Chan's account, adding that the "decision was well-timed" (13 November 1996, separate interviews with Barney Chan and Cheong Ek Choon).
The state's fourth largest timber concessionaire also confirmed that the royalty hike of 1993 was not felt by those who paid it. I asked Lau Hui Kang, chairman of the KTS group and President of the Sarawak Timber Association, about the royalty increase of 1993. At first, Lau said that no such increase had taken place. When I reminded him that Sarawak Forest Department publications stated that royalties on red meranti had risen from $20 to $30 per cubic in July, 1993 he replied, "This increase was only due to the rise in the price of raw logs" (30 October 1996 interview with Lau Hui Kang). The fact that Sarawak's fourth largest timber concessionaire could not even recall the largest timber royalty increase in the history of the state and then, when reminded of it, dismissed it's significance, is an indication of the failure of the government of Sarawak to capture timber rent in any meaningful sense.
Concentrating the spoils
While it is true that over the thirty year period covered by this study the lion's share of timber rent appropriation has been from raw log exports, over the last decade other wood products, especially plywood, have assumed increasing importance in Sarawak's timber export profile. In fact, during the last half-decade processed wood exports, especially plywood, have exceeded logs to become the largest portion of Sarawak's wood exports. In Sarawak (as in Indonesia) plywood industrial policy is increasingly used as a tool to concentrate timber rent in the hands of a few politically-connected timber conglomerates.
The policy tool used by the government to concentrate logs and the appropriation of rent in the hands of a small group of large companies is called the Log Export Requirement Quota (LERQ). Although nominally set up to ensure the supply of raw material to smaller, independent mills, the LERQ now does the opposite. The LERQ committee has been subtly adjusted over the years by the Department of Forestry and the Sarawak Timber Association so that today it works to drive smaller, independent mills out of business. While ostensibly promoting the efficiency of Sarawak's wood processing mills, the LERQ increasingly ensures the log supply to and continuing market domination of "efficient" (e.g., large, politically-connected, conglomerate-owned) plywood mills.
The LERQ committee, established in 1988, originally met on a quarterly basis to set timber export quotas with representatives of the Department of Forestry, the Sarawak Timber Association, and later adding representatives from the Sarawak Timber Industry Development Corporation. LERQ was designed to limit the amount of raw logs that any timber concessionaire could sell for export.The following table shows the percentage of logs set aside for domestic processing over time by the LERQ committee.
Table 4.11 Domestic quotas set by Sarawak's Log Export Requirement Quota committee
Source: Edmund Daging Mangku, STIDC, 14 November 1996
While the LERQ committee did, in fact, divide the overall log production of Sarawak into that allowed for log export and that allowed for plywood factories and sawmills, the real work of LERQ became setting raw log quotas for each mill based on capacity.This command-and-control decision-making produced a clear set of winners and losers: the winners are the larger, newer and more efficient mills, attached to the big timber conglomerates, which have come to control an increasingly large share of processed wood exports over time. The losers are the smaller, older and less efficient independent mills.
The executive director of the Sarawak Timber Association explained that while the smaller mills may have believed for a time that the LERQ would help them obtain increasingly scarce logs, they soon realized that the opposite was the case:
Even before the log set aside policy began, the independent mills were mad that Sarawak's timber concessionaires were not selling more logs to them. However, the position of the independent mills did not improve with time, but in fact got worse. This is due to the fact that it was always the policy of the Forestry Department and the Sarawak Timber Association to set aside fewer logs for Sarawak mills than was represented by their capacity (13 November 1996 interview with Barney Chan).
This policy of deliberately starving the smaller mills was undertaken, according to Chan, to weed out the least efficient mills. Said Chan, "Cheong [Ek Choon, Director of Forests] and I agreed all along that we should starve the mills a little bit." The policy continues to this day, as Chan explained, there are still "small, inefficient mills that I am trying to weed out" (8 and 13 November 1996 interviews with Barney Chan).
Cheong also confirmed that there was a deliberate policy of starving the mills in order to cull the least efficient ones. He said that the intention and result of the LERQ's policies was "concentration in the industry, which must put some sawmills out of business." Speaking bluntly, Cheong said, "Small mills must die" (13 November 1996 interview).
In truth it is difficult to know whether the LERQ's policy of starving smaller mills was motivated primarily by a desire to create more efficient mills or by a desire to concentrate as much raw material and rent as possible in the hands of a few politically-connected firms. One thing is for sure: more than a decade after the initial implementation of the LERQ's policies, Sarawak's mills are still not known for their efficiency. On the contrary, they maintain a log to lumber conversion ratio of 2:1, the same as in the rest of Southeast Asia.
Summary
In Sarawak, as in Indonesia, timber rent is funneled to the head of state on a large scale. Analysis of the managerial and equity positions of the timber concessions licensed to each of Sarawak's top four private timber concession holding groups, as well as other evidence with respect to the fifth through the ninth top groups, suggests that not only the political supporters, but more significantly, the families and friends of the chief minister, are virtually omnipresent as managers and owners of these concessions. Anticipating this maze of ties, I hypothesized at this study's outset that timber revenues would be low in Sarawak. In fact, the rate of official government rent capture in Sarawak is the lowest of any case in this study. Similarly, the rate of unofficial rent appropriation is the highest, reaching more than $160 per cubic meter during one year, despite the fact that timber royalties were increased by 50 percent in that same year. Sarawak was also found, like Indonesia, to be setting aside timber rent for large, politically-connected plywood conglomerates.
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.
Lynas must move its pollutants without delay
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Lynas’s plan to build an Acid-Cracking unit and Water Leaching Plant at
Kalgoorlie, West Australia or WA, must not be delayed. When I first
proposed the re...
Bye 2013, welocme 2014
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I am very happy to say good bye to 2013 with no regrets…. much have
happened but the beauty of 2013 is that I have survived it socially,
financially and po...
Kanang Ak Langkau was initially shabbily treated
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Malaysia’s most decorated war hero *Kanang Anak Langkau* could have died as
a pauper as his military services – helping to liberate Malaya (and later
Mal...
Sarawak Dayaks bracing for Change
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After the Sarawak State Elections where the opposition parties had,
especially DAP made inroads into Sarawak's urban constituencies, things
have quietened ...
For 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. 
