The Sabah state government is already struggling to contain a devastating whistleblower scandal involving videos that show numerous party officials apparently complicit in bribery and corruption over mining permits.

Such conduct would appear to be in keeping with the allegations that have now emerged through court documents released in the long-running Sabah Forest Industries case, where the same state government stands accused of being complicit in an attempt by the tycoon Syed Mokhtar to acquire concessions and plant from the former Sabah Forest Industries (SFI) at a fraction of the market price that he had originally bid back in 2018.

When he signed a purchase agreement with the receivers of the failed business in 2018 Syed had agreed to pay RM1.2 billion.

However, after the Hajiji coalition grabbed control in 2020, a series of official manoeuvres were embarked upon that appear to have been designed to enable the tycoon to acquire the entire concession and other assets for RM256 million, only a little more than his initial deposit of RM120 million.

Certainly, this is the complaint of SFI which has ended up in an ugly court case.

Meanwhile, the company’s operations have stalled, putting thousands of native Sabah workers out of their jobs and homes, for which they are no longer being supported. In a drive to evict those destitute families the state authorities have deliberately cut off electricity to the settlement at Sipitang, despite an agreement between the SFI receivers, the workers and the supplier to pay for it on a prepaid basis.

Workers and SFI personnel have been locked out of the site allowing valuable plant and machinery from the company’s pulp and paper mills to be looted and destroyed complain the receivers of SFI.

Collusion?

Now, according to the latest claims submitted to the Appeal Court, SFI has obtained proof that the Sabah state government has been complicit in a further stunning act of duplicity in order to conceal its alleged collusion with the tycoon.

In 2020 the Hajiji administration cancelled SFI’s concession licence on the grounds of a ‘public purpose’ project by the state – a move SFI receivers have contested as a direct raid on the value of the company’s remaining assets.

The receivers say their research now clearly shows that the three companies selected by the state to perform the alleged public purpose project are merely RM2 front companies ultimately controlled by Syed Mokhtar himself.

This despite the fact that, according to SFI, Syed Mokhtar’s involvement in the scheme was specifically denied by the chief minister Hajiji himself only last November, when he announced in the state assembly that the state government had NOT proceeded with the award of SFI concessions to the tycoon’s company Pelangi Prestasi Sdn Bhd, but had instead awarded it to these three private companies on a 85:15 basis with the Sabah Foundation (Yayasan Sabah).

In an affidavit submitted by an authorised representative of the receiver (of which Sarawak Report has obtained a copy) the company states that the state government’s “true purpose” in acquiring SFI’s concession in the alleged public interest is therefore “to vest eventual control of the said lands and all SFI assets (both upstream and downstream) to Tan Sri Syed Mokhtar Al-Bukhary and not any purported public interest scheme”.

Detailed exhibits have been added to the affidavit to prove the Receiver’s point. These include evidence that the directors and shareholders of the three companies are all employees of Mokhtar’s own companies or professional agents with no actual investment potential in themselves:

Improper Motives?

Grant Thornton have challenged the state government to demonstrate what public interest work is being carried out by the three companies which have been granted its former concession areas apart from stripping SFI’s own assets?

Sarawak Report understands that the respondents in this case, which include the state government and chief minister of Sabah, have countered that it was made known to the state assembly since April last year that the three companies in question – Halaman Ramrod Sdn Bhd, Jungle Greens and Tenang Rimba Sdn Bhd –  which are all RM2 shell were under review to take on the concessions and were therefore not selected simply to disguise Syed Mokhtar’s interest after the stay was granted in November.

However efforts to prove this point are at a dead end given the Hansard for the relevant period was removed suddenly from the internet on the grounds of alleged improvements soon after that claim was made in November.

The claims and counter-claims have gained momentum following a stay ordered by the Court of Appeal on 8th November which ought to have brought to a halt all the state sponsored logging that has been underway in the SFI area.

The company complains that this court order has been flagrantly ignored, even following a belated instruction issued by the Sabah Forestry Department on December 20th to stop the logging.

This instruction came weeks after the same department had vigorously criticised Sarawak Report for reporting the illegal logging was taking place – Sabah Forestry had claimed our reporting was “inaccurate”.

Meanwhile, the company claims that evidence shows there have been exemptions given to the obligation to provide royalties to the state for much of this logging taking place, further undermining the justification that the confiscation of the area from SFI was done for a public purpose.

Removing ‘diseased wood’?

The announcement that the logging which continued throughout November and December in defiance of the court order was justified by the necessary removal of “diseased trees” is also attacked in the latest SFI representation to the court.

There has been no evidence brought of any such disease, say the receivers.  Moreover, if the wood was diseased it ought to to have been loaded onto barges for export!

This matter has also been raised by Sarawak Report and, so far, no explanation has been provided by Sabah Forestry Department as to how it has been permissible to transport diseased wood in contravention of the most basic quarantine rules?

The situation raises serious concerns about improper conduct on numerous official fronts in this matter which all would appear to be motivated by a desire to place SFI’s valuable concessions and assets in the hands of a crony business tycoon.

If this is the case it is reasonable to ask why Sabah government officials are thus seeking to favour Syed Mokhtar whilst apparently doing their best to conceal that fact?