Global Witness - Inside Malaysia’s Shadow State

Excerpts from Global Witness 

This investigation provides undercover footage of the corruption and illegality at the heart of governance in Sarawak, Malaysia’s largest state, on the island of Borneo.

For over thirty years, Sarawak has been governed by Chief Minister Abdul Taib Mahmud, who controls all land classification, forestry and plantation licenses in the state. Under his tenure, Sarawak has experienced some of the most intense rates of logging seen anywhere in the world. The state now has less than five per cent of its forests left in a pristine condition, unaffected by logging or plantations and continues to export more tropical logs than South America and Africa combined.

The film reveals for the first time the instruments used by the ruling Taib family and its lawyers to skirt Malaysia’s laws and taxes. It shows how they cream off huge profits at the expense of indigenous people, and hide their dirty money in Singapore.

Taib and the local lawyers we approached denied Global Witness’s allegations of corruption. A summary of their responses is included at the end of the film.

http://www.globalwitness.org/insideshadowstate/

Personal Opinion

It is interesting how they structure the investment holding company in Singapore to bypass the laws in Malaysia. MAS and MOF issue this statement in response to the video:

"Contrary to what was claimed in the video, Singapore has to date provided fully the information requested by Malaysia for tax purposes."

"The two countries have had a good working relationship on tax matters, and continue to build on this relationship to strengthen cooperation."

"In addition, Singapore has designated a wide range of crimes as predicate offences to money laundering - including corruption, bribery and fraud. This is in line with the recommendations of the Financial Action Task Force."

"Singapore, therefore, has been and remains able to provide mutual legal assistance to the fullest extent permitted under our laws where there are requests from Malaysia."

The response by the Singapore authorities is pretty interesting. It is saying that they will provide full assistance to any country whom request data which is related to money laundering. However, the irony is that Chief Minister Taib controls one of the largest vote bank for the reigning Malaysian government and with the recent "Chinese Tsunami" of the Malaysian election, his position may be even stronger than ever, as BN has to rely on Taib for the votes to maintain power. So, the question is, will the Malaysian gov ever ask for the relevant data from the Singapore gov and destroy one of their most important assets? 

Will the banks who are in charge of managing the account flag out the associated accounts in response to the up coming June 30 deadline implemented by the Singapore government for banks to flag out and drop customers who were suspected of tax crimes? That will be an interesting development to watch out for.