Wood carriers allegedly hid 1.1 billion yen income

According to the Japan Times, Sarawak Chief Minister Taib Mamudis
implicated in a scandal involving large kickbacks from Japanese
shipping companies. The news was reported on 29 March 2007 and taken up
by the Malaysian Internet News Service Malaysiakini in its 6 April 2007
edition.

29 March report by Japan Times (source: www.japantimes.co.jp):

Wood carriers allegedly hid 1.1 billion yen income

Kyodo News

Nine Japanese shipping companies that transport lumber from Sarawak,
Malaysia, allegedly failed to report some 1.1 billion yen of income in
total during a period of up to seven years through last March, sources
said Wednesday, alleging the money constituted kickbacks to Sarawak
officials via a Hong Kong agent.

Such tax irregularities have occurred as the Tokyo Regional Taxation
Bureau determined the companies' remuneration payments to Regent Star,
a Hong Kong agent, which has a connection with Chief Minister of
Sarawak Taib Mahmud and his family, were rebates, not legitimate
expenses, the sources said.

Although the Hong Kong agency did very little in the way of substantive
work, the shipping companies are believed to have used rebates as a
lubricant to facilitate their lumber trade, the sources added.

Lumber export is controlled by the Sarawak state government on grounds
of forest resources protection.

Rejecting the tax authorities' conclusion, the shipping firms claim the
transactions with Regent Star have been legitimate and deny wrongdoing.

The companies accused of the alleged tax evasion include Mitsui O.S.K.
Kinkai Ltd. and NYK-Hinode Line Ltd. belonging to the Nanyozai Freight
Agreement (NFA), a cartel formed in 1962 to avoid excessive competition
in import of lumber from Southeast Asia. The 12-member group is exempt
from the Antimonopoly Law.

The shipping firms will likely be slapped with well over 400 million
yen in back taxes along with heavy penalties, the sources added.

According to NFA and other sources, the Japanese cartel concluded an
agreement in 1981 with Malaysia's Dewaniaga Sarawak regarding lumber
transport. Dewaniaga is a state-affiliated concern in charge of lumber
export control and is headed by the Sarawak chief minister's younger
brother.