Investment, Sarawak Style


“Why invest in SCORE?”, a poster hanging beside a large map of Borneo reads. The government official sitting in front of it obscures the suggested reasons as he leans forward to work his smart phone.

A recent hidden camera video, shot by the London-based NGO Global Witness, documents proposed illegal land deals in the Malaysian state of Sarawak (one of two Malaysian states in Borneo). Close relatives and associates of the Chief Minister of Sarawak, Abdul Taib Mahmud, explain the deals in detail to a potential “foreign investor”.

The official in the video works for the government agency overseeing the state’s astonishing industrialisation scheme, the Sarawak Corridor of Renewable Energy (SCORE). In response to an inquiry from the would-be investor about buying land for oil palm plantations, he calls some of Taib's cousins.

The Sarawak government is aggressively competing for international investment in its SCORE initiative — a multibillion dollar plan to open up more than 70,000 square kilometres of Sarawak’s central region, including over 8 million hectares of forests, to agriculture, resource extraction and heavy industry, which would be powered by a string of hydroelectric dams built in the state’s jungle interior. The grand plan is to attract plantation, aluminium, glass, steel and oil-based industry to kick-start a transformation of the economy. As detailed in a report from the National University of Singapore (pdf):

"The development corridor’s primary aim is to grow the Sarawak economy by a factor of five, increase the number of jobs in the state by a factor of 2.5, ballooning from 900,000 in 2006 to 2.5 million, and to double the population to 4.6 million by 2030, creating over a million jobs and doubling the population."

Opponents of the scheme, particularly the dams — which would flood the land of tens of thousands of indigenous people — aim to convince business leaders of the risks of investing, given increasingly well-documented evidence of corruption in Sarawak and of the abuse of the rights of its native inhabitants. How those risks will weigh against the lure of cheap power and huge tax breaks remains to be seen.

This week Sarawak is host to the International Hydropower Association congress, a meeting of industry leaders and stakeholders at which state electricity company Sarawak Energy intends to showcase two massive hydro projects already built in the state. At least nine more dams are planned which would increase installed electricity capacity to over seven times current demand.

The project has been underwritten by Goldman Sachs to the tune of RM4.87 billion (AU$1.65 billion). Construction is proceeding on the premise that a supply of “cheap”, “clean” power provided by Borneo’s rivers will create its own demand, but in the lead-up to the conference, where the government is spruiking its plan’s potential, activists and NGOs have been digging up evidence for the claim that corruption itself is driving the SCORE agenda.

Back in the world of the Global Witness sting, the Chief Minister’s cousins — daughters of the previous chief minister and the sisters of a sitting MP — offer the “investor” 5000 hectares of land, licensed for palm oil plantation, that Taib gave them for a token sum a couple of years earlier.

The land is to be sold through a shell company, for an astronomical profit, with the bulk of the money transacted in Singapore in order to avoid tax. Questioned about the possibility of indigenous inhabitants of the land, the sisters erroneously assert that any indigenous communities in the area are “squatting” on state land, which they have no claim to.

“Our investigator was offered four land leases in total,” said a brief released by Global Witness in support of its video.

“Members of the Chief Minister’s family were direct shareholders in or beneficial owners of three of these land leases, while the fourth deal was, according to an intermediary, proposed on the understanding that Taib would receive a multimillion dollar kickback from the selling party.”

“Corruption is rampant,” says Peter Kallang, a former oil and gas industry engineer, who is the chairman of Save Rivers, a network opposing dam-building in Sarawak.

“Corruption is the whole reason why they are going to build the dams and all these things are going on. All these projects are given to the cronies of the Chief Minister. All these companies belong to somebody who has political power.”

Abdul Taib Mahmud has held the leadership for three decades, and also controls the resources and finances portfolios. His family have amassed vast fortunes. As a 2009 US diplomatic cable revealed by Wikileaks stated, Taib’s family’s companies, “control much of the economy” in Sarawak.

CMS (Cahya Mata Sarawak) a company nicknamed “Chief Minister’s Sons”, conducts quarrying, road maintenance and property development. It's at least 40 per cent owned (pdf) by Taib’s four children and his deceased first wife. CMS holds an exclusive 10-year licence for the construction and maintenance of public roads and has a monopoly on cement production in the state.

A 2006 US diplomatic cable described the construction of the state assembly building in Kuching, which was contracted to CMS, as “perhaps the most obvious and extreme example of the self-enrichment of the state's chief minister and other senior government officials”.

Swiss NGO Bruno Manser Fund also released a report (pdf) targeting the Norwegian CEO of Sarawak Energy, for overseeing the awarding of contracts worth more than US$220 million to businesses linked to the Chief Minister.

Following the publication of the Global Witness video, the Malaysian Anti-Corruption Commission, which was already investigating Taib, announced it would “act accordingly”. Few commentators have faith in the commission’s capacity and preparedness to properly investigate, given it has not demonstrated much independence in the past, and Taib, who reliably delivers most of Sarawak’s 31 parliamentary seats to the Prime Minister’s ruling Barisan Nasional coalition, is seen as politically untouchable.

The Chief Minister himself thumbed his nose at the Anti-Corruption Commission. When asked if he would cooperate with its investigation, he told the media, “they don’t deserve my cooperation because they have been quite naughty”.

The video exposé showed one side of the story of land issues in Sarawak. The other side was told by the leaked report of the Malaysian human rights commission’s national inquiry into the land rights of indigenous peoples, which documented the almost endless ways in which the rights of poor, indigenous people to their ancestral lands are being abused in Sarawak.

The commission heard evidence that land assessments and the processing of native title claims were subject to delays — of up to 15 years — during which time logging and plantation leases were often issued over the land in question. In any case, evidence suggested, it wasn’t unusual for leases to be issued over land even when information about native title rights was available.

Communities were often pressured into accepting ex-gratia payments for their land because they were unaware of their rights, and the requirement for native title areas to be excised from commercial leases fell to leaseholders themselves to observe and was not subject to monitoring. Most logging licences, which according to regulations should be issued for a period of a year, were in fact made out for 10-25 years.

Gebril Atong, a representative of the Punan people’s national association, was one of many witnesses from Sarawak quoted in the commission’s report.

“Life is centred on cash but we are still poor and all land was taken from us. We are told that this is to develop and modernise our country, so anyone who dares to question development is labelled anti-development.”

In the hotel room where the Global Witness sting plays out, the well-fed Fatimah Abdul Rahman is defending her controversial cousin. “I mean if you look at the good he’s done for the state, it outweighs all the things that people have said about him,” she says. “I know people are talking about him being corrupted and all but I think, ‘Who isn’t in this world, when they’re leaders?’” And flinging up her hand in a that’s-how-it-is gesture, she breaks into a throaty chuckle.

Update 23/05/2013: Around 300 protesters are today demonstrating outside the IHA conference in Kuching, and an “alternative” conference will be held tomorrow.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.