Recently we spoke to one of Taib’s key business partners in strict confidence. He explained to us what he described as the 10 main income streams that have turned the Chief Minister into a multi-billionaire over the past 30 years. In the process he gave us a fascinating insight into the business practices of Abdul Taib Mahmud.

They all involve the abuse of power, corruption and the exploitation of the people and environment of Sarawak. Our interviewee, who has done years of business with the Mahmud family, told us he believes that Taib is probably the richest man in South East Asia, having cashed in the Sarawak Rainforest.

Timber Licences– The Ministry of Forests issues timber licences for 5, 10, 15 years. It is the Chief Minister who decides the price and he demands money to issue them.

Cronies who deal with the Chief Minister are instructed to pay their bribes and kickbacks into foreign bank accounts outside of Sarawak, often in Hong Kong or Singapore in the early days.

The informant told us that, because the timber companies declare so little profit, very little tax is paid and hardly any of the money made from felling the trees came back into Sarawak.

Tonnage- On top of this, our informant told us, he charges the timber company a kickback of RM100 per ton of wood they log. This alone is worth RM2 billion a year, since for the last 30 years around 20 million tons have been felled each year.

Extending Timber Licences – Companies wanting to be listed on the Stock Exchange have a requirement that the expiry date for their assigned areas has to be at least 15 years, meaning they have to extend their licences.

They go to the CM who says “Ok can you see my brother Onn” [in the earlier period Onn managed Taib’s businesses in Sarawak and abroad].

Because the requirement by the KL Stock Exchange was 30% Bumi Shareholders the timber tycoon would invite a Taib family member of Taib’s choice to take these 30% of the shares for free!

But these family members are usually nominees – they sign a blank share transfer form and a blank director resignation form, which Taib takes and keeps in his safe or in the foreign bank’s safe deposit box. In this way Taib can make them resign whenever he likes and keeps ultimate ownership of the shares!

Achipelago Shipping- Using their control over the monopoly over timber export licences, handled by Onn Mahmud’s company Achipelago, the Mahmuds charged US$ 4.00 per cubic metre in kickbacks from the Japanese shipping companies.

Since 16 million cubic meters were exported most years, this was worth US$64 million a year (RM200,000,000).

Another insider has explained to us the system. The logs would be weighed going onto the ships and every ship’s tally would be recorded and sent to Onn Mahmud’s office manager in Hong Kong, who was Mr Shea Kin Kwok.

The Japanese shipping companies would pay the money into one of around six companies in Hong Kong. In 2007 the Japanese tax authorities fined a number of companies for undeclared tax on some of these payments to the Taibs.

Achipelago Shipping (2)- Agency fees from the shipping company. Achipelago had the monopoly of all documentation for shipping. One shipment would have to pay US$2,000 in agency fees plus other charges.

It would amount to US$10,000 (RM30,000) per ship per visit. All this of course just added to the cost to the buyers in Japan.

Onn Mahmud was only a nominee in this enterprise, we are told. Taib would give him 10%. The insiders say that Achipelago Shipping was the major ‘cash-cow’ for the Taibs. Onn had not wanted to take on the job of managing it at first, as he did not understand the potential, but in the end and it made the family billions in black money.

Privatisation of Government Companies- Taib corporatizes and then privatises state assets, selling them off to public listed companies, which are in fact majority-owned by the Taib family and nominees. Sarawak’s largest company CMS was formed in this way, it is mainly owned by Taib’s family and the Chief Managers are his son Abu Bekir and son-in-law Alwee Alsree.

According to our insider, the method is to pretend the state asset is losing money and decide to sell it. Before privatisation money is poured into up-grading the facilities and then it is corporatized. Then finally, it is ‘privatised’. He will make an offer from eg CMS to buy it and the negotiations all go on behind closed doors, where he represents the State of Sarawak as Finance Minister.

Taib makes a big play at the closing stages of the negotiations, when there is a meeting to make the final decision. He excuses himself on the grounds that he has an interest and leaves the meeting to be chaired by Jabu or George Chan, who waves it through.