Scandal of Sarawak’s Budget Black Hole

Thursday, August 19th, 2010 GMT

DAP - Winners at Sibu, have tough questions for Taib

Scandal highlighted by DAP

Taib Mahmud, the Chief Minister of Sarawak, has failed to account for a staggering RM 4.8 billion of government expenditure over the past 3 years alone, according to explosive figures released by the opposition DAP party. This represents more than half the Development Budget, which in turn represents nearly three quarters of the total expenditure for the State!

Put another way, in 2009 RM 1.825 billion of the State’s total expenditure was allocated to persons unknown, compared to the government’s estimated revenue for that year of RM 3.726 billion. That is about half of all your cash!

The secret projects soaking up Sarawak’s cash

The DAP, who recently triumphed over BN at the Sibu by-election, have produced a closely argued Alternative Budget for 2010, in which they demand a return to proper accounting methods, so that taxpayers can know exactly how their money has been spent. This is their right and it is also Malaysian law, in line with the rest of the civilised world.

The DAP figures show that Taib has not only reserved 80% of the State’s entire Development Budget to the three Ministries controlled directly by himself, but that shockingly most of that money has been spent on secret projects about which he has provided zero information.

Under the circumstances the people of Sarawak are entitled to assume that the money has been stolen. As the DAP points out:

“This [state of affairs] defies the basic principle of political accountability in a democratic system and is susceptible to great abuses”.

So let us all guess what those abuses might be and where the money might have gone. Some on more Rolls Royces for the Chief Minister? Some on more foreign properties for his family? Some on bailing out projects by Taib-owned companies?

The Chief Minister appears to think he can get away with not telling people where he has decided to spend this money, but we can be comfortably certain that none of these secret projects involve benefitting any of the impoverished people whose lands he has taken for palm plantations now owned by his family and friends.

The “Government Contribution Towards Approved Agencies Trust Fund”

So what is going on and how has all this money disappeared?

The DAP budget documents provides a detailed analysis. Firstly, it outlines the extraordinary level of personal control that Taib has assumed over Sarawak’s expenditure. The septuagenarian personally manages the three main spending departments in the State. This means that almost every spending decision has to go through him and that no other Minister can do anything without getting his permission.

In particular his three ministries (the Finance Ministry, Planning and Resources Ministry and Chief Ministry) together control 80% of the Development Budget, which alone accounts for around three quarters of all money spent, although it is argued many of the projects would more sensibly belong under different departments.

Secondly, the document explains the secretive system that the Chief Minister has developed for allocating more half this huge sum of money. Over the past several years he has employed a highly mysterious expenditure category termed the ‘Government Contribution towards Approved Agencies Trust Fund’ into which this money is channelled. There is no specification as to who these ‘Approved Agencies’ are or which Trust Fund is being referred to and the Government has consistently refused requests for information on the subject! It could be going to his aunty, or his sister, or cousins, or kids, or secret mistress…… how is anyone supposed to know and what right has he to keep it secret?

Thus, in 2009 RM 1.825 billion (59.3% of the total RM 2.430 billion) is unaccounted for in the Development Budget, according to the DAP calculations. In 2008 it was RM1.719 billion (60% of the total RM2.865 billion) and in 2007 it was RM1.257 billionn (54.8% of the total RM2.294 billion). The DAP raise the valid question as to what is the point of carefully auditing 40% of the budget if the remaining 60% is kept secret?

The truth must be told

We can only assume that the ‘Approved Agencies’ must be outfits the Chief Minister would rather we did not know about. Certainly, if these ‘Approved Agencies’ were doing any good to the people he is supposed to serve, then he would be broadcasting the fact next to a picture of himself in every page of the Borneo Post!

However, he is not and therefore we can safely conclude that they are just doing good for the Taib family and their business cronies, like so many of his other projects.

Unmasked! Taib The Godfather

Monday, August 9th, 2010 GMT

Held in trust by private agreement - 50% of the shares of Sakti International, worth approximately US$ 40 million.

Sarawak Report has uncovered devastating documents which prove that Abdul Taib Mahmud, Sarawak’s Chief Minister, is the real owner of millions of dollars of property assets held in the name of family members abroad.

The damning discovery lays bare a system of private deals, which enabled the Chief Minister to conceal his true ownership of the properties. This was presumably in order to hide the extent of his enormous wealth, for which he has yet to provide any legitimate explanation.

Under the system, whilst it is Taib’s relatives who are publicly registered as the official shareholders and directors of the companies owning the properties, a separate, private agreement ensures that the shares are actually held in trust for him.
Download PDF.

Documentary evidence of elaborate concealment

260 California Street, San Francisco - Bijou Sakti Office Block

Among documents in its possession Sarawak Report has a copy of one such private agreement (see above) relating to the shares in Sakti International, a company that owns buildings in San Francisco. Sakti is part of a web of companies started in North America by the Taibs, which includes Sakto, a major Ottawa property company, and Wallysons, which owns the Abraham Lincoln Building in Seattle, housing a top secret anti-terrorist facility for the FBI.

The five official shareholders of Sakti International, which is registered in California, are Taib’s brothers, Onn Mahmud and Arip Mahmud, along with three of his children, Sulaiman Taib, Mahmud Taib and Jamilah Taib. However, as the document which we have obtained shows, a resolution made soon after the formation of the company has privately ruled that half those shares (a commanding majority) are held in trust for the Chief Minister. The value of these shares amounts to 40 million US dollars for Sakti alone, according to the company’s own documents.

Tip of the iceberg?

However, Sakti International, estimated to be worth US $80 million, accounts for just a small proportion of the Taib family wealth. Our previous exposes have revealed a vast portfolio of further international property assets, which are owned by members of Taib Mahmud’s immediate family. For example, Taib’s own children are the shareholders and directors of numerous companies controlling residential and commercial buildings in Canada, Australia, Britain and the United States together worth hundreds of millions of US dollars. Yet, suspiciously, many of these assets came into their possession when they were in their early 20s and still college students with no visible access to legitimate resources to invest. The inevitable question for Taib Mahmud, therefore, is whether, as in the case of Sakti International, they are also secretly holding these other properties in trust for him? If not, what explanation can there be for these investments?

Golden Wedding Couple - The Godfather and his family

A number of reports have already been made to the Malaysian Anti Corruption Commission (MACC) regarding the recent disclosures of the Taib family wealth. These new revelations proving the direct link to the Chief Minister will increase the pressure on the MACC to respond with a proper investigation.

Further Fingerprints

The Sakti International documents in our possession, released as part of the disclosure in a recent court case, provide further extensive evidence of Taib Mahmud’s involvement in the company, despite his denials of any business connections. Indeed one of the company’s earliest official documents, signed in 1987, even lists him as one of the Directors of Sakti International.

Chief Minister's name in black and white, listed as a Director Of Sakti International

The document in question is a Domestic Stock Corporation Statement for Sakti International, which is required annually by the State of California. In 1987, the year the company was set up, its inaugural statement clearly registers Taib Mahmud, along with his brothers Onn Mahmud and Arip Mahmud, as a Director of the company. The only officer of the company is listed as Mahmud Taib, the Chief Minister’s eldest son.

It is well-known that in subsequent Taib family enterprises the Chief Minister has always scrupulously avoided including his own name in any documentation. This early mistake will undermine his constant claims that, in keeping with his role as Chief Minister, he has no direct business interests. It is clear that he in fact set up Sakti International, using the address of his own house in San Francisco. Download PDF

Cover Up

Subsequently, records show that the structure of the company was altered to make Onn, Arip and Mahmud Taib the three Directors, while Rahman became the only officer of the company. But, as we are now able to exclusively report, Taib Mahmud secretly retained his control through a resolution by the company directors dated April 8^th 1988. This resolution (see top) placed 500 of the 1,000 shares issued by the company in trust for him.

43 Presidio, Taib's San Francisco town house and early HQ for Sakti International

The Godfather

The Sakti documents give a fascinating insight into the manipulative methods used by Taib Mahmud to control his family members, who are supposedly the earners and ‘businessmen’ who have generated the Taibs’ legendary wealth. The five relatives who were selected to own shares in Sakti International were each been given a different number of shares. Each then surrendered differing proportions of these shares to be held in trust for the Chief Minister.

Brother Onn Mahmud gets 400 shares, but of them 200 are held for the Chief Minister, whereas brother Arip gets just 200 shares, 100 of which are in trust for Taib. Mahmud Taib has the same arrangement ast Arip. However younger brother, Sulaiman Rahman Taib, who was later made sole Director of Sakti, only gets 100 shares under the agreement and they are all in fact held in trust for his father. Daughter Jamilah also only gets 100 shares, but she gets to hold them all herself.

The system ensures that Taib Mahmud has half of all the shares held in trust for himself, whereas none of the others hold more than 200 shares. In this way he clearly keeps a commanding control over the company he pretends not to own.

Classic Car on Standby - Vintage Ferrari kept ready for Chief Minister's occasional visits to 43 Presidio Avenue. Son Rahman Taib, who shared his father's interest requested a 4,000 square foot garage to house his car collection in the States

Taib in charge

Former employees of Sakti have testified to the controling position the Chief Minister holds over the other members of the family. Rahman, as he was known in the States, was still in college when he became sole Director of Sakti and has been described as being in awe of his father, whom he once had to wait a week to get a meeting with.

“We always considered Taib to be the ultimate boss and decision-maker” one former executive has told Sarawak Report, “It was obvious that he was the source of the money and Rahman was extremely deferential towards him”.

Where did the money come from?

The Chief Minister has so far made no comment on the string of recent exposes regarding his wealth. However, this new evidence will increase the widespread demands for him to explain how he and his family accrued the millions necessary to acquire such investments. Taib’s personal salary from his numerous concurrent positions still only delivers an official income of just under 50,000 MYR (around US $16,000) a month.

Multi-billionaire? Chief Minister's finances beg immediate scrutiny

In past weeks the existence of Ridgeford Properties in London and Sakto Corporation in Ontario, Canada have also been made public (see previous exposes on Sarawak Report). These companies own and manage numerous office blocks worth hundreds of millions of dollars. Ostensibly the Directors and owners of these concerns are Jamilah Taib and her husband Sean (Hisham) Murray, a Canadian national. However, like Sakti, Sakto was originally set up under the names of Taib family members, not Mr Murray.

Although numerous members of Sean Murray’s family now work for Sakto, all the evidence indicates that these are in fact Taib family businesses, ultimately controlled by the Chief Minister of Sarawak.

Surely the weight of evidence is now such that the Malaysian Anti-Corruption Commission will be unable to ignore the deluge of demands requiring thorough investigation into Sarawak’s White Haired Raja? - Sarawak Report