Sarawak Report “Misleading” On Sabah Land Issue?

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There is no “cheap sale” of the troubled Sabah Forest Industries Sdn Bhd (SFI) land to anyone, as claimed by Sarawak Report, says a lawyer [Fuad Ahmad] who represents the Sabah government’s interests….

“The article concerning land previously owned by SFI is misleading, inaccurate and contains a number of factual errors,” he said in a statement on Tuesday (Sept 5).

The article claimed that a private operator received assistance “from the top” to have the land for only RM256mil – which the article claims to be a fraction of its market value – for the 280,000ha of forest land. The article also claimed that when SFI was first put up for sale in 2017, the same individual had agreed to pay RM1.2bil…

“Indian company Ballapur Industries Ltd who owned 90% of SFI, mismanaged both SFI’s timber concession and its pulp paper mill, causing operations to cease in November 2016.

“In 2017, SFI’s receivers and manager (R&M) – Grant Thornton Consulting Sdn Bhd – put the assets of SFI up for sale by tender.

“SFI’s assets consisted of the integrated timber complex machinery and an Acacia Mangium Forest area situated on 15 parcels of land amounting to approximately 12,000 ha,” he said, adding that the tender exercise did not include SFI’s timber concession licence as under the license terms, the concession cannot be sold.

He said that in August 2022, the Sabah government acquired the 15 parcels of land from the insolvent SFI under the ‘Sustainable Forest Timber Utilisation, Processing, Management, Conservation Research and Development Scheme, District of Sipitang’ (Public Purpose Scheme)…..  The sum offered was RM256mil.

“The basis of valuation, among others, recognised the fact that SFI’s buildings, structures and facilities were poorly maintained and in a hopeless state of disrepair.

“Moreover, the Acacia Mangium Forest areas were not maintained and properly managed, resulting in trees rotting, over-growing and suffering from disease. Also, SFI – having ceased operations in 2016 – cannot be valued as a going concern.

“The acquired land now vests absolutely in the Sabah government and will be developed in accordance with the Public Purpose Scheme by the Sabah government in conjunction with its various agencies and GLCs.

“That the R&M failed to mention this demonstrates bad faith on their part,” he said.

CM's decision having earlier granted the concession
CM’s decision having earlier granted the concession

Lawyers will eventually battle this matter out in court arguing the points from either side.

However, what is clear is that the mismanagement of the SFI rescue sale owes to the decision by Sabah politicians back in 2018 to hand over ownership of the entire business valued at RM1.2 billion to Malaysia’s best-known crony capitalist, Syed Mokhtar, on the basis of a 10% deposit.

The timber concessions were included in that agreement.

However, Mr Mokhtar did not complete on the payment as the hunt got underway to find a joint venture partner that was actually qualified to run the business.

Despite a renewal of the arrangement by the present CM to give an extended deadline (which included a commitment to include the timber concessions which it seems that Fuad Amad seeks to claim could not be included) Syed Mokhtar instead tried to knock down the price.

It was the CM himself who intervened before the deadline expired on this arrangement to withdraw the timber license and thereby scupper the re-sale by devaluing the bulk of SFI’s key assets (that swathe of concessions).

Here is his signed letter to that effect – see opposite. This was in defiance of a commitment by the state attorney general (viewed by SR) that should Mr Mokhtar not deliver on his chance to meet the extended deadline the receivers would be able to re-tender the SFI package – including those timber concessions.

It was also the CM who, according to Sabah Hansard of 24th May, confirmed to Shafie Apdal that under the proposed ‘Sustainable Forest Timber Utilisation, Processing, Management, Conservation Research and Development Scheme’, by which he had now confiscated SFI’s timber license, “We decided to give the concession to Tan Sri Mokhtar Al-Bukhary’s company“.

Hence, while thousands of dwellers of Sipitang have lost their livelihoods owing to the years of delay by Mr Mokhtar in fulfilling his commitments, Mokhtar himself has gained control of the area without paying more than a fraction of the initial RM1.2 billion which he originally promised.

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