RM32 mil kickbacks for Sarawak timber

6 April 2007 Report by Malaysiakini (source:
www.malaysiakini.com/news/65572)

RM32 mil kickbacks for Sarawak timber

Sarawak Chief Minister Taib Mahmud has been implicated in a scandal
allegedly involving RM32 million in kickbacks paid by Japanese shipping
companies for timber from the resource-rich state.

According to Japan Times, the multi-million ringgit ‘bribe’ - made over
a period of seven years - was paid to a Hong Kong company said to be
linked to Taib and his family.

The money came from a Japanese cartel consisting of nine companies
which buy timber from Sarawak.

They pay a Hong Kong-based company, Regent Star, 1.1 billion yen (RM32
million) for services rendered in this transaction. This was classified
as an expense, and was therefore not taxed.

However, the Japanese tax authorities have discovered that the payments
were “illegitimate expenses” as the Hong Kong agency did very little
“substantive work” to justify the income.

The Tokyo Regional Taxation Bureau has instead classified the payment
as a "rebate", which is taxable.

The newspaper reported that the shipping firms were likely to be
slapped with well over 400 million yen (RM11.6 million) in back taxes
along with heavy penalties for “hiding” the funds from the tax
authorities.

Money used as ‘lubricant’

According to Japan Times in its report last Thursday, 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.

Sarawak’s lumber export is controlled by the state government through
Dewaniaga Sarawak - a state-affiliated organ in charge of timber export
control which is headed by the Sarawak chief minister's younger
brother.

The affluent Japanese cartel was established in 1962 to avoid stiff
competition among the shipping companies in the import of lumber from
Southeast Asia, including Sarawak.

Among the companies implicated in the alleged tax evasion scandal are
top shippers Mitsui OSK. Kinkai Ltd and NYK-Hinode Line.

The cartel signed an agreement in 1981 with Dewaniaga Sarawak for the
export of timber to Japan.

Taib, who is the country’s longest-serving chief minister, is believed
to be one of Malaysia’s richest politicians.

His family has wide-ranging business interests in Sarawak since Taib
took office 25 years ago. This is mainly through public-listed
conglomerate Cahaya Mata Sarawak and many of its subsidiaries, which
Taib’s wife, Laila, has a substantial stake.

It has been estimated that Taib's family is worth at least RM2 billion,
though this is not officially confirmed.

Pak Lah, explain in Parliament

In an immediate response, Opposition Leader Lim Kit Siang said that he
had sent a letter today to Prime Minister Abdullah Ahmad Badawi
regarding the matter.

“In my letter, I reminded Abdullah of his pledge when he became prime
minister ... to make anti-corruption his top agenda, (and) his
proclamation of ‘zero tolerance for corruption’.”

Lim urged Abdullah to come personally to Parliament next Monday to
respond to the many serious allegations of high-profile corruption in
his government.

Malaysiakini has last week reported that another chief minister,
Sabah’s Musa Aman, had also been allegedly mired by a litany of
accusations involving graft and abuse of power.

These recent scandals came in the wake of explosive allegations of
corruption involving Anti-Corruption Agency chief Zulkipli Mat Noor,
who has since step down, and Abdullah’s deputy in the Internal Security
Minister, Mohd Johari Baharum.

Both individuals, who have denied the allegations, are currently under
investigations.

For more information and updates:www.malaysiakini.com