Sarawak Chieftain's US Properties

Kuching
Thursday, 8th July 2010

The FBI is at home in a Taib office building in Seattle

We reprint the second report by the Sarawak Project, an NGO based in the East Malaysian state, which has done an exhaustive study of the property holdings controlled by Abdul Taib Mahmud, who as long-serving chief minister controls an enormous empire of natural resources that for decades has allegedly gone to serve his family’s interests rather than the state’s. In the wake of an opposition victory in the town of Sibu in May, Taib for the first time faces the real possibility he could be defeated in the state election which must be held before the end of 2011.

When you have dozens of properties and as many companies to manage them it is always a good trick to stick to similar names. Sarawak Report can reveal that there is a US arm to the Taib family’s North American property empire.

In Ottawa, Canada the family’s interests are managed by Sakto Corporation, but in the US they are managed by Sakti International Corporation. Sakti International Corporation comprises properties totalling an estimated value of US$80 million according to their own company documents. Each property is held under a separate company, usually named after the property’s street address, again in order to aid recognition. For example, W.A. Boylston manages 1117 Boylston St, Seattle (shown right).

However, one of these companies is not so named. Wallyson’s Incorporated, based in Seattle, operates what is known as the Abraham Lincoln Building. The Abraham Lincoln Building houses an FBI (Federal Bureau of Investigation) facility and to enter requires maximum security clearance.

This is the North West Regional Headquarters for the FBI, America’s domestic security and counter-terrorism service. The Seattle branch lists among its particular responsibilities countering terrorism threats from Far East Asia. This building is owned by the Taib family.

Sakti’s other main US office block, 260 California Street, San Francisco, also rents space to an impressive list of clients including Citibank. It shows once again the Taib family’s ability to ingratiate with the establishment in host countries for their foreign investments.

Taib company history in the USA

Also like Sakto, Sakti is currently managed by Sean Murray, husband of Jamilah Taib, who is the daughter of Abdul Taib Mahmud, Chief Minister of Sarawak (salary RM20,000 per month). Sean Murray was re-named Hisham Murray when he converted to the Muslim faith on his marriage to Jamilah, but never uses this name in his business or social capacities outside of Sarawak.

However recent court documents deposited with the San Francisco Superior Court show that the company has always belonged to the Taib family. Sakti makes several key acknowledgements in its deposition to the court. The company admits that Sakti was incorporated in California in 1987 and that it was initially managed by Mahmud Abu Bekir Taib. The documents state “The Defendants [Sakti International Corporation] admit that beginning September 10, 1987, Sakti’s designated Chief Executive Officer, Secretary and Chief Financial Officer was Mahmud Taib”.

Previous revelations in Sarawak Report have proved that Mahmud Taib, the eldest son of the Chief Minister, was also an original Director of Sakto in Canada, formed in 1983, along with his sister Jamilah and their uncle Onn Mahmud, the Chief Minister’s brother.

Court Admissions

The Sakti court deposition goes on to admit that Mahmud Taib, who is now a Director of CMS Sarawak, was later succeeded by his younger brother Sulaiman Abdul Rahman Taib as “sole officer and director of Sakti.” Sarawak Report has documents to show that he was also the sole officer of Wallyson’s.

When Sakti was incorporated in 1987 Mahmud Taib was 27 years old and his brother Rahman Taib was just 20. However, the youthful brothers were supported in their roles by the involvement of other close family members. Two of the Chief Minister’s brothers (Mahmud Taib’s uncles) joined him as the original directors of the company. The deposition by Sakti says “[The] Defendants admit that the original members of Sakti’s Board of Directors were Onn Mahmud, Arip Mahmud and Mahmud Taib”.

Shareholders

Equally significantly Sakti admits that the shareholders of Sakti are all the Chief Minister’s own children or his brothers. The document deposited by Sakti International Corporation states ”the original shareholders of the company were Mahmud Taib, Onn Mahmud, Jamilah Taib, Arip Mahmud, and Rahman.” It goes on to confirm that “Mahmud Taib, Onn Mahmud, Jamilah Taib, Arip Mahmud and Rahaman are still shareholders of Sakti Holdings” (the company into which the shares have been moved).

Sarawak Report can therefore verify that Sakti in the US, like Sakto in Canada, was set up and originally managed exclusively by the Taib family, which provided the original US shareholder investments. The involvement of Sean Murray, the current manager of Sakto and Sakti, began only after his marriage to Jamilah Taib and in fact he succeeded Rahman Taib as the Manager of Sakti only in 2006.

Sarawak Report therefore invites Murray to declare whether he currently holds any shareholdings in the companies he directs, or if he is merely an employee of his wife’s family.

Sarawak Report also invites the Taib family to explain how between 1983 and 1987 they were able to invest millions of dollars in the setting up of two property companies in Canada and the US whose combined portfolios are now worth at at least US$200 million. Of the original shareholders, Jamilah, Rahman and Mahmud (the children of Chief Minister Abdul Taib Mahmud) were in their early 20s and at college at that time, while the other two shareholders, Arip and Onn, are the Chief Minister’s brothers. If the money was all coming from the two uncles, who are purported to be businessmen, then their generosity in including the Chief Minister’s children rather than their own in these shareholdings is surprising.

Time for some answers

Sarawak Report believes that the people of Sarawak deserve an immediate explanation of these facts from Chief Minister, Abdul Taib Mahmud. The chief minister should instantly reveal whether he holds or once held a stake in these companies in North America and if any of the money invested was provided by him. If Taib Mahmud is the beneficial owner of any of the shares in these companies the Sarawak taxpayer is entitled to know he obtained them. Malaysia’s law enforcers should be enquiring on their behalf.

The FBI should also be willing to issue a statement enlightening the public about the ownership of the building they occupy. As joint defendants in the California court case Wallyson’s and Sakti International admitted that the owner of Wallyson’s Incoporated is a company called Rodinmass, which is registered in the British Virgin Islands. It is inconceivable that the FBI did not check who the owners of Rodinmass were, given the sensitivity of this building. As the sole officer of Wallyson’s was Rahman Taib, Sarawak Report contends that the owners and shareholders of Rodinmass are, like with Sakti International, the Taib family. Our information is that Laila Taib was the majority shareholder of Rodinmass.

Taib’s wife, brothers and children are all linked to these North American companies. It is for Taib to now demonstrate that somehow he is not also linked as a beneficial owner of these lucrative properties.

Original article was published in Asia Sentinel on 5th July 2010

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Malaysia's Najib and the Crony Culture

Kuching
Thursday, 8th July 2010

The government backs down on a tycoon's sports betting plan

The Malaysian government has portrayed its recent decision not to legalize sports gambling as the action of a responsible administration responding to public opinion and keeping its promise to be more open and accountable.

In fact, the episode is a sharp reminder of how deeply entrenched the crony culture is in the country and how little has changed under the leadership of Prime Minister Najib Tun Razak.

While Najib has pleased many Malaysians by refusing to allow businessman Vincent Tan to expand his gambling empire, the prime minister's image has suffered because of his secretive attempt to revive sports betting.

In the public outcry over the proposal, Najib was also outmaneuvered by the political opposition through its control of key states in peninsular Malaysia. By reversing course, he underlined his growing reputation to backtrack on policy in the face of protest, as he has done over his ambition to dismantle certain parts of the New Economic Policy, the affirmative action plan that has benefited ethnic Malays for four decades.

Malaysians were kept in the dark this year as Vincent Tan, invoking an unpublicized agreement negotiated with the government decades ago, geared up to begin accepting bets on the World Cup in South Africa. With little warning, his company, Ascot Sports Sdn Bhd, announced that it had obtained exclusive rights to a business that could top RM20 billion annually – without competitive bidding or public discussion.

Dramatic as the news was, it wasn't the first time that Tan had been on the brink of starting Malaysia's first legal sports betting operation.

In 2004, months after becoming prime minister, Abdullah Ahmad Badawi discovered that a license had been issued to Tan in 2003 by Premier Mahathir Mohamad in his capacity as finance minister.

Abdullah's aides said Mahathir had awarded the license not long before retiring, but the former premier denied being "personally responsible" for it.

Worried that his administration would be open to criticism by conservative Muslims, especially the opposition Parti Islam Se-Malaysia, which had long campaigned to close existing gaming outlets, Abdullah vetoed the gambling concession.

Tan's revived plans burst into the open in early May in a filing with the stock exchange. Tan's publicly listed Berjaya Corporation Bhd. said it was buying his 70 percent stake in dormant Ascot Sports for RM525 million. (His son holds the remaining 30 percent.)

Berjaya said, "The Ministry of Finance has given its approval for the re-issuance of the license…upon certain terms and conditions." Berjaya subsequently made it known that the "re-issuance" took the form of a "letter of approval" it had received from the finance ministry in January. Najib acts as finance minister as well as premier.

In the uproar that followed, some of the mysterious history of the sports betting proposal emerged.

It transpires that Dr. Mahathir's government first issued a license to Tan in 1987, without informing the public. After suffering losses, Tan surrendered the license in 1990, but apparently negotiated for Ascot Sports to be given the right of first refusal if a new license was issued.

At first, the Najib government did not dispute Berjaya's claim to have obtained the license. But as opposition mounted to more legalized gambling – betting is permitted by non-Muslims on horse racing and lotteries and in a casino -- Najib, wearing his finance minister's hat, stunned the country by declaring that the license had not yet been issued after all.

In a written reply to members of Parliament, he said the government was "still getting feedback from various quarters" and had not finalized the terms and conditions. Najib's hesitation in following through on the letter of approval his ministry sent to Berjaya four months earlier reflected his political dilemma.

A strong element in the backlash was the memory of the Mahathir era, when well-connected businessmen, widely termed cronies, were given privatization and other government contracts without any tendering process. Vincent Tan was the chief non-Malay crony.

Moreover, Tan made his initial fortune when granted the privatized lottery Sports Toto, until then controlled by the Ministry of Finance, in 1985. The deal was kept secret initially, erupting into what became the "Sports Toto Scandal" when word of it eventually leaked.

By seeming to allow the license to go to Ascot Sports in a non-transparent fashion, Najib drew attention to what looked like his broken promises to be more open. He also appeared to be condoning gambling, which is forbidden in Islam and opposed by many Malays.

The government attempted to frame the widening debate as an effort to curb underground sports betting, which is known to be rampant in Malaysia.

But in reality Najib needed increased gambling tax to help reduce Malaysia's officially projected budget deficit from 7 percent to 3 percent of gross domestic product by 2015. One industry group estimated illegal sports betting turnover at RM20 billion to RM30 billion, and calculated potential government revenue at RM1 billion to RM3 billion.

Najib was also outflanked by the opposition. The Penang state government, led by the Democratic Action Party, declared a ban on sports betting, followed by Kedah and Selangor. Kelantan, controlled by Parti Islam and the only other state in opposition hands, forbids all forms of gambling.

Narrowing Najib's options further, sections of his United Malays National Organization, including UMNO Youth, opposed the move. Terengganu state, in UMNO hands, also said it would not allow sports gambling, according to local press reports.

After a meeting of UMNO's Supreme Council, Najib capitulated, saying the decision was taken "after much deliberation on the impact it will have from the perspective of religion and politics." Left unsaid was why Najib felt bound by a tainted agreement entered by a past administration, and whether more such deals might surface.

Barry Wain, writer-in-residence at the Institute of Southeast Asian Studies, is author of Malaysian Maverick: Mahathir Mohamad in Turbulent Times. The original article was published in the  Asia Sentinel on 7th July 2010

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