According to the Japan Times, Sarawak Chief Minister Taib Mamud is 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.
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 | 
