Where did the money go? (part 4)
Tuesday, March 01, 2005
Wagging the dog: when the head has to follow the tail
SPECIAL REPORT ON SABAH’S LOGGING SCANDAL
It is quite natural for the dog to wag its tail. Sometimes, though, you will find the tail wagging the dog. And I would like to relate an incident that occurred in Sabah in November 2001 when the tail wagged the dog -- only that that ‘tail’ is now Sabah’s ‘top dog’ (in American lingo this means ‘head honcho’, ‘big chief’, or in Chinese lingo, ‘Taiko’).This happened during Datuk Chong Kah Kiat’s tenure as Sabah’s Chief Minister. Kah Kiat took over from Datuk Osu Sukam on 27 March 2001 and retired on 27 March 2003, after which Musa Aman, the current Chief Minister, took over. Musa Aman, then, was Sabah’s Finance Minister, promoted from the head of Yayasan Sabah (Sabah Foundation), the state’s cash cow that, according to Dr Mahathir Mohamad, was bled of RM3 billion during the time Joseph Pairin Kitingan was the Chief Minister from 22 April 1985 to 17 March 1994.The question that one must now ask is: and how many more billions did it lose in the hands of the Chief Ministers thereafter? I am sure they are not going to volunteer the answer to this question but it would be nice to know.On 13 November 2001, Chief Minister Datuk Chong Kah Kiat wrote a letter to Dr Mohd Fowzi Mohd Razi, the Group Chief Executive of Innoprise Corporation Sdn Bhd. In the letter, Kah Kiat referred to the meeting he had in his office with Musa Aman, the Finance Minister, as well as the Chairman of Innoprise Corporation, Tan Sri Khalil Datu Jamalul.This is what the letter said:
RE: LOG SALE & PURCHSE AGREEMENT WITH RINTISAN BUMI (M) SDN BHDI refer to our recent meeting in my office on the 23rd October 2001 with the Finance Minister and the Chairman of ICSB wherein we discussed, inter alia, the appeal by the abovenamed company the actual base price to be used for the 10% upward review for logs purchased. The abovenamed’s letter to your goodself dated the 14th August 2001 is relevant.Pursuant to our aforemeeting and having considered the matter fully, I have come to the conclusion that the base price for logs should be RM50.00 per cubic metre and the new revised price payable by the abovenamed company should therefore be RM55.00 per cubic metre.You are accordingly instructed to take all necessary steps to rectify the agreement and arrange for the relevant Boards to endorse the revised price of RM55.00 per cubic metre.The letter was signed by Kah Kiat and copied to Tan Sri Khalil.The same day, 13 November 2001, Kah Kiat sent another letter to Dr Mohd Fowzi as follows:
RE: (1) TERUS PELANGI SDN BHD (2) TERAS SELASIH SDN BHDOur meeting of 23rd October 2001 concerning the problems faced by the above two companies on the log price being pegged to the prevailing market price refers. Copy of their respective letters to me of the 28th October and 25th October 2001 herein enclosed.Pursuant to the above meeting and having considered the matter fully, I have decided to accept a fixed rate of RM80.00 per cubic metre for logs of and above 60 cm and a fixed rate of RM50.00 per cubic metre for logs of and below 59 cm to be paid in cash by each of the abovenamed companies for logs felled within their respective concession areas.You are accordingly instructed to take all necessary steps to rectify the respective agreements and arrange for the relevant Boards to endorse the revised log prices stated above.The letter was, again, signed by Kah Kiat and copied to Tan Sri Khalil.Dr Mohd Fowzi, however, was not happy with this arrangement so he lodged a protest. The market price for logs then was RM300.00 per cubic metre. So, at RM50.00 or RM55.00, Innoprise Corporation, the wholly-owned investment arm of Yayasan Sabah, would stand to lose around RM100 million, and more if the log purchases increased. Further to that, it is the government’s policy to tender out the logging concessions and to award the concessions to the highest bidder, not negotiate behind closed doors and sell the logs at way below market price as what they were doing.Perturbed about this highly irregular and certainly illegal arrangement, Dr Mohd Fowzi wrote Kah Kiat a letter dated 21 November 2001 stating his case and his objection to the whole thing. And one very crucial issue that Dr Mohd Fozwi was most unhappy about: why is Musa Aman calling the shots when he is only the Finance Minister whereas Kah Kiat was the Chief Minister? Should it not be the dog that wags the tail and not the other way around?Musa Aman was furious. He stormed into Kah Kiat’s office like the devil himself was on his tail. Musa Aman instructed Kah Kiat to take Dr Mohd Fowzi down a peg or two and show him who is the Boss and who runs the state; meaning Musa Aman that is, the Finance Minister.Kah Kiat, with his tail between his legs (a lot of stories about tails today) meekly complied and he sent Dr Mohd Fowzi another letter on 26 November 2001 stating as follows:
RE: LOG SALE AND PURCHASE AGREEMENT (1) RINTISAN BUMI (M) SDN BHD (2) TERAS SELASIH SDN BHD (3) TERUS PELANGI SDN BHDReferring to the above matter and to your letter ICSB/GCE/2001/E1/004 dated 21 November 2001, I have taken into consideration all aspects including the ‘opportunity loss’ as mentioned in your letter before making my decision.With regards to this my instructions as per my memo dated 13 Novemebr 2001 must be implemented, expect for Terus Pelangi Sdn Bhd where the implementation must be deferred until further instructions.But Dr Mohd Fowzi would not take this lying down. Sabah was going to lose too much money by allowing these companies to exploit the logs at such a ridiculously low price. If the concessions were tendered out there would be many companies that would be prepared to pay the market price of RM300.00 per cubic metre instead of just RM50.00 or RM55.00. And what perturbed him even more was the fact that Musa Aman and not Kah Kiat was the one calling the shots.But poor Kah Kiat could not do anything about the matter. Musa Aman was not just the Finance Minister, but he was also the Umno Sabah head. And this difference of RM250.00 per cubic metre or RM100 million was supposed to be paid as kickbacks to Umno Sabah. And Umno Sabah, not Chief Minister Kah Kiat, was the Boss calling all the shots in Sabah.The funny thing though, Umno Sabah did not see one Sen of the money. So, again, we shall have to ask: WHERE DID THE MONEY GO? Whose pockets did the money go into?On 4 December 2001, Kah Kiat sent Dr Mohd Fowzi the final letter. In this letter Kah Kiat confirmed the meeting they had in his office ‘some time ago’ in the presence of Tan Sri Khalil and Musa Aman.The ‘arrangement’ (to sell logs way below market price) between the three companies and Yayasan Sabah, said Kah Kiat, was sealed “long before any of us were here, except for Musa Aman”.
“Musa Aman and I agree with Rintisan Bumi (M) Sdn Bhd’s opinion that the price should be increased 10% from the RM50.00 base price as this is the real selling price,” added Kah Kiat.On the issue of ‘opportunity loss’ raised by Dr Mohd Fowzi, Kah Kiat replied that this issue is not relevant because if the price was increased and the companies are not able to pay this price increase this would mean there would be no income for the state so there would be no opportunity loss.What Kah Kiat means by this is not clear, but then it was not meant to be clear anyway. What he was probably trying to say is there would only be an opportunity loss if the companies made money and if they did not because the price is too high then there would be no opportunity loss.Makes sense to you?One very important point to note is the part in Kah Kiat’s letter which says: The ‘arrangement’ between the three companies and Yaysan Sabah was sealed long before any of us were here, except for Musa Aman. What Kah Kiat means is that Musa Aman struck the deal on the sale of logs some time back when neither Dr Mohd Fowzi nor Kah Kiat were in office yet, so they should not question or torpedo the deal.Then Kah Kiat instructs Dr Mohd Fowzi to replace Terus Pelangi Sdn Bhd with PINAWANTAI SDN BHD. But the reason for this was not explained. How could then Kah Kiat say ‘the arrangement between the three companies and Yaysan Sabah was sealed long before any of us were here, except for Musa Aman’ when this is a NEW arrangement?Anyway, Dr Mohd Fowzi was removed soon after that and forced into retirement, his only crime being trying to ensure that the state follows government procedure in giving out logging concessions and trying to ensure that the state did not loss RM100 million. But Musa Aman could not afford to have anyone who ‘fights back’ heading Sabah’s cash cow that is not that cash rich anymore by the looks of it.And who are all these people behind Rintisan Bumi (M) Sdn Bhd, Teras Selasih Sdn Bhd, Terus Pelangi Sdn Bhd and Pinawantai Sdn Bhd and is it true that they are linked to Rais Yatim?That will be the subject of our next report Where did the money go? (part 5)
Where did the money go? (part 3)
Where did the money go? (part 2)
Where did the money go? (part 1)
Wagging the dog: when the head has to follow the tail
SPECIAL REPORT ON SABAH’S LOGGING SCANDAL
It is quite natural for the dog to wag its tail. Sometimes, though, you will find the tail wagging the dog. And I would like to relate an incident that occurred in Sabah in November 2001 when the tail wagged the dog -- only that that ‘tail’ is now Sabah’s ‘top dog’ (in American lingo this means ‘head honcho’, ‘big chief’, or in Chinese lingo, ‘Taiko’).This happened during Datuk Chong Kah Kiat’s tenure as Sabah’s Chief Minister. Kah Kiat took over from Datuk Osu Sukam on 27 March 2001 and retired on 27 March 2003, after which Musa Aman, the current Chief Minister, took over. Musa Aman, then, was Sabah’s Finance Minister, promoted from the head of Yayasan Sabah (Sabah Foundation), the state’s cash cow that, according to Dr Mahathir Mohamad, was bled of RM3 billion during the time Joseph Pairin Kitingan was the Chief Minister from 22 April 1985 to 17 March 1994.The question that one must now ask is: and how many more billions did it lose in the hands of the Chief Ministers thereafter? I am sure they are not going to volunteer the answer to this question but it would be nice to know.On 13 November 2001, Chief Minister Datuk Chong Kah Kiat wrote a letter to Dr Mohd Fowzi Mohd Razi, the Group Chief Executive of Innoprise Corporation Sdn Bhd. In the letter, Kah Kiat referred to the meeting he had in his office with Musa Aman, the Finance Minister, as well as the Chairman of Innoprise Corporation, Tan Sri Khalil Datu Jamalul.This is what the letter said:
RE: LOG SALE & PURCHSE AGREEMENT WITH RINTISAN BUMI (M) SDN BHDI refer to our recent meeting in my office on the 23rd October 2001 with the Finance Minister and the Chairman of ICSB wherein we discussed, inter alia, the appeal by the abovenamed company the actual base price to be used for the 10% upward review for logs purchased. The abovenamed’s letter to your goodself dated the 14th August 2001 is relevant.Pursuant to our aforemeeting and having considered the matter fully, I have come to the conclusion that the base price for logs should be RM50.00 per cubic metre and the new revised price payable by the abovenamed company should therefore be RM55.00 per cubic metre.You are accordingly instructed to take all necessary steps to rectify the agreement and arrange for the relevant Boards to endorse the revised price of RM55.00 per cubic metre.The letter was signed by Kah Kiat and copied to Tan Sri Khalil.The same day, 13 November 2001, Kah Kiat sent another letter to Dr Mohd Fowzi as follows:
RE: (1) TERUS PELANGI SDN BHD (2) TERAS SELASIH SDN BHDOur meeting of 23rd October 2001 concerning the problems faced by the above two companies on the log price being pegged to the prevailing market price refers. Copy of their respective letters to me of the 28th October and 25th October 2001 herein enclosed.Pursuant to the above meeting and having considered the matter fully, I have decided to accept a fixed rate of RM80.00 per cubic metre for logs of and above 60 cm and a fixed rate of RM50.00 per cubic metre for logs of and below 59 cm to be paid in cash by each of the abovenamed companies for logs felled within their respective concession areas.You are accordingly instructed to take all necessary steps to rectify the respective agreements and arrange for the relevant Boards to endorse the revised log prices stated above.The letter was, again, signed by Kah Kiat and copied to Tan Sri Khalil.Dr Mohd Fowzi, however, was not happy with this arrangement so he lodged a protest. The market price for logs then was RM300.00 per cubic metre. So, at RM50.00 or RM55.00, Innoprise Corporation, the wholly-owned investment arm of Yayasan Sabah, would stand to lose around RM100 million, and more if the log purchases increased. Further to that, it is the government’s policy to tender out the logging concessions and to award the concessions to the highest bidder, not negotiate behind closed doors and sell the logs at way below market price as what they were doing.Perturbed about this highly irregular and certainly illegal arrangement, Dr Mohd Fowzi wrote Kah Kiat a letter dated 21 November 2001 stating his case and his objection to the whole thing. And one very crucial issue that Dr Mohd Fozwi was most unhappy about: why is Musa Aman calling the shots when he is only the Finance Minister whereas Kah Kiat was the Chief Minister? Should it not be the dog that wags the tail and not the other way around?Musa Aman was furious. He stormed into Kah Kiat’s office like the devil himself was on his tail. Musa Aman instructed Kah Kiat to take Dr Mohd Fowzi down a peg or two and show him who is the Boss and who runs the state; meaning Musa Aman that is, the Finance Minister.Kah Kiat, with his tail between his legs (a lot of stories about tails today) meekly complied and he sent Dr Mohd Fowzi another letter on 26 November 2001 stating as follows:
RE: LOG SALE AND PURCHASE AGREEMENT (1) RINTISAN BUMI (M) SDN BHD (2) TERAS SELASIH SDN BHD (3) TERUS PELANGI SDN BHDReferring to the above matter and to your letter ICSB/GCE/2001/E1/004 dated 21 November 2001, I have taken into consideration all aspects including the ‘opportunity loss’ as mentioned in your letter before making my decision.With regards to this my instructions as per my memo dated 13 Novemebr 2001 must be implemented, expect for Terus Pelangi Sdn Bhd where the implementation must be deferred until further instructions.But Dr Mohd Fowzi would not take this lying down. Sabah was going to lose too much money by allowing these companies to exploit the logs at such a ridiculously low price. If the concessions were tendered out there would be many companies that would be prepared to pay the market price of RM300.00 per cubic metre instead of just RM50.00 or RM55.00. And what perturbed him even more was the fact that Musa Aman and not Kah Kiat was the one calling the shots.But poor Kah Kiat could not do anything about the matter. Musa Aman was not just the Finance Minister, but he was also the Umno Sabah head. And this difference of RM250.00 per cubic metre or RM100 million was supposed to be paid as kickbacks to Umno Sabah. And Umno Sabah, not Chief Minister Kah Kiat, was the Boss calling all the shots in Sabah.The funny thing though, Umno Sabah did not see one Sen of the money. So, again, we shall have to ask: WHERE DID THE MONEY GO? Whose pockets did the money go into?On 4 December 2001, Kah Kiat sent Dr Mohd Fowzi the final letter. In this letter Kah Kiat confirmed the meeting they had in his office ‘some time ago’ in the presence of Tan Sri Khalil and Musa Aman.The ‘arrangement’ (to sell logs way below market price) between the three companies and Yayasan Sabah, said Kah Kiat, was sealed “long before any of us were here, except for Musa Aman”.
“Musa Aman and I agree with Rintisan Bumi (M) Sdn Bhd’s opinion that the price should be increased 10% from the RM50.00 base price as this is the real selling price,” added Kah Kiat.On the issue of ‘opportunity loss’ raised by Dr Mohd Fowzi, Kah Kiat replied that this issue is not relevant because if the price was increased and the companies are not able to pay this price increase this would mean there would be no income for the state so there would be no opportunity loss.What Kah Kiat means by this is not clear, but then it was not meant to be clear anyway. What he was probably trying to say is there would only be an opportunity loss if the companies made money and if they did not because the price is too high then there would be no opportunity loss.Makes sense to you?One very important point to note is the part in Kah Kiat’s letter which says: The ‘arrangement’ between the three companies and Yaysan Sabah was sealed long before any of us were here, except for Musa Aman. What Kah Kiat means is that Musa Aman struck the deal on the sale of logs some time back when neither Dr Mohd Fowzi nor Kah Kiat were in office yet, so they should not question or torpedo the deal.Then Kah Kiat instructs Dr Mohd Fowzi to replace Terus Pelangi Sdn Bhd with PINAWANTAI SDN BHD. But the reason for this was not explained. How could then Kah Kiat say ‘the arrangement between the three companies and Yaysan Sabah was sealed long before any of us were here, except for Musa Aman’ when this is a NEW arrangement?Anyway, Dr Mohd Fowzi was removed soon after that and forced into retirement, his only crime being trying to ensure that the state follows government procedure in giving out logging concessions and trying to ensure that the state did not loss RM100 million. But Musa Aman could not afford to have anyone who ‘fights back’ heading Sabah’s cash cow that is not that cash rich anymore by the looks of it.And who are all these people behind Rintisan Bumi (M) Sdn Bhd, Teras Selasih Sdn Bhd, Terus Pelangi Sdn Bhd and Pinawantai Sdn Bhd and is it true that they are linked to Rais Yatim?That will be the subject of our next report Where did the money go? (part 5)
Where did the money go? (part 3)
Where did the money go? (part 2)
Where did the money go? (part 1)
posted by Gundohing at
10:15 PM
0 Comments
