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Media Statement        
by Lim Kit Siang  
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(Parliament, Friday) : I have today sent an urgent letter to the Prime Minister, Datuk Seri Abdullah Ahmad Badawi to personally reply in Parliament on Monday in the winding-up on the Royal Address debate on high-profile corruption allegations in his administration. 

I also drew his attention to the Japan Times report last Thursday, which I described as “the latest instance of more and more adverse international reports about corruption in Malaysia, such as the adverse rankings given to the country by the corruption surveys of the Transparency International and  the Political and Economic Risks Consultancy (PERC)” which  warrant urgent action by Abdullah to salvage his reform agenda and pledge, in particular to make ant-corruption campaign the top priority of his administration. 

The Japan Times report of March 29, 2007 referred to 1.1 billion yen (RM32 million) timber export kickbacks involving companies connected to Sarawak Chief Minister, Tan Sri Taib Mahmud and his family. 

The Japan Times report, http://search.japantimes.co.jp/cgi-bin/nb20070329a5.html, is  as follows: 

Thursday, March 29, 2007 

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.

In my letter, I reminded Abdullah of his pledge when he became Prime Minister on October 31, 2003 to make anti-corruption his top agenda, his proclamation of  “zero tolerance for corruption” and his declaration after his first 100 days:  “My first 100 days was my statement of intent. Now we get to work and walk the talk.” 

However, after the unprecedented 91% parliamentary majority victory in the March 2004 general election, there has been no more talk by the Prime Minister about  “zero tolerance for corruption” or the pledge to make the fight against corruption as the top priority of his administration.

Ironically and tragically,  Malaysia is  today faced with the worst crisis of national integrity in the 40-year history of the Anti-Corruption Agency and 50-year history of the nation, with a spate of serious corruption allegations reaching the highest levels of government, including

• Questions about integrity affecting the Prime Minister and family;
• Serious allegations of integrity involving the Deputy Prime Minister in defence contracts such as US$100 million for Sukhoi jets from Russia and US$120 million for submarines from France;
• Serious corruption allegations against the Anti-Corruption Agency director-general Datuk Zulkipli Mat Noor, whose contract has not been renewed.;
• Serious corruption allegations against the Deputy Internal Security Minister, Datuk Mohd Johari Baharun on Emergency Ordinance (EO)  “freedom for sale”;
• Serious allegation by the Chief Justice, Tun Ahmad Fairuz Sheikh Abdul Halim of judges who accept bribes.
• Serious allegations against the Chief Ministers of Sabah and Sarawak.

I urged the Prime Minister to come personally to Parliament on Monday in the winding-up of the Royal Address motion not only to respond to the various serious allegations of high-profile corruption in the current administration, whether at national, state or local government level, but to give satisfactory assurance to Parliament and nation that he had not abandoned his anti-corruption pledge and agenda.

(6/4/2007)