Keeping It In The Family! – How Taib ‘The Godfather’ Corruptly Controls CMS

The Godfather – Evidence that Taib is the true main shareholder of CMS

New research by Sarawak Report has produced further proof that Taib’s claim that he “does no business in Sarawak“ is shockingly untrue.

To the contrary, we can name him as the ‘Godfather’ who blatantly controls most of the shares in Sarawak’s largest public company, CMS.

We can also show that he has further manipulated that power to produce maximum wealth for himself and his family, by ensuring that CMS does as much of its business as possible with other family firms.

This practice is against stock exchange rules, because it is at the expense of other shareholders and the wider public.

Mafia-style business boss

This matter is all the more disgraceful, because CMS is a conglomerate that Taib himself created by privatising key assets that used to belong to the State of Sarawak. As Finance Minister and Chief Minister he caused valuable state interests like PPES, Steel Industries Sarawak and PCMS to be sold for knock down prices to CMS and then engineered extraordinary ‘share-swaps’ with cheap companies belonging to his own family members. This enabled the Taibs to take control of the majority of CMS shares by 1996!

CMS continues to make its huge income from state monopolies and the massive public contracts handed to it (without proper open tendering) by Taib himself. By these means he has blatantly exploited his political power to enormously enrich himself.

““If I do business inside the country people will say I use my influence to enrich myself. So, we did it outside” [Taib Mahmud March 2011]

Thus, although the Chief Minister has admitted it would be corrupt for him and his family to be involved in Sarawak business, our revelations show that this is exactly what he does on a massive scale through CMS, exploiting his political role to act as the mafia business boss of the State.

Family line up, the top Management at CMS - (Front row from left) Hanifah Taib's husband, Sulaiman Taib, Abu Bekir Taib. (Centre back) Brother-in-law, Robert Geneid and son

Passing around the shares – and the top jobs!

Our most recent revelations are based on the publicly recorded movement of shares within CMS. These show how huge chunks of the company have been passed round Taib’s close family members, providing only one feasible explanation, which is that it is Taib himself who is controlling their ownership. To all intents and purposes, therefore, he created the company and he IS the owner!

To cement this control over the company, Taib has also made sure that his family members occupy all the key management roles. However, again he has shifted round these positions between close family members, once more revealing the pattern of ultimate control by him.

Onn Mahmud

No longer in favour! – brother Onn Mahmud is still worth billions

Public documents show how in the early years, while his children were still students, the largest shareholder and main Director of CMS was Taib’s brother Onn Mahmud.

Onn was Taib’s original key business proxy in Sarawak and abroad, until the brothers fell out in 2003. His name can also be found on all the documents relating to property companies linked to Taib’s children in Canada and the US and also to Taib related companies in Hong Kong.

According to research available at the London School of Economics, Onn acquired the family’s first 27% stake in the publicly-owned CMS in 1989 for an undisclosed sum. This followed a shadowy deal with the Sabah Economic Development Corporation, which was reported as a ‘share swop’ between Sabah and Sarawak, but turned out to be a private acquisition by Onn (the Sarawak’s Chief Minister’s brother).

According to CMS records, by April 2002 Onn, as Director and Group Chairman, owned over 30% of CMS shares. At that time Taib’s two sons Sulaiman and Abu Bekir (Deputy Group Chairman and Group Executive Director) also owned a further 12% each.

CMS Major Shareholders in 2002 – Taib’s brother and sons rule the roost

This gave the three relatives of Taib a controlling interest over Sarawak’s biggest company – a company that had grown exponentially due to favourable state contracts and the absorption of state companies on inexplicably good terms.

The sons take over

The real owner/controller of these shares, however, was Taib. The movement of jobs and shares in 2003, after Onn lost favour, show this clearly.

Family break up – Onn lost his job as Group Chairman at the same time as most of his shares are transfered or ‘sold’

The above CMS document shows that during 2003 Onn Mahmud went from being the largest shareholder to holding relatively few shares, while Taib’s sons acquired 44,925,102 shares during the same period.

Because of CMS official declarations, we know that those 44,925,102 shares were held through the company Majaharta, which was originally ‘owned’ by Onn Mahmud.

How did housewife Lejla manage to buy these shares off Onn to become the largest single shareholder of Sarawak’s largest single company?

The question therefore is why should Onn transfer such a valuable company as Majaharta, with so many CMS shares, to his nephews, rather than say to his own children or indeed selling the shares for a big profit? The answer, clearly, is that he only held those shares by proxy.

Leila becomes CMS’s largest shareholder

Even more significant is what happened to the remainder of Onn’s shares. Company reports show that these went straight to Taib’s wife Lejla!

Can we avoid the conclusion that when he could no longer hide behind his brother Taib opted to hide behind his own wife as the real shareholder of CMS!

Onn was replaced as Group Chairman by Taib’s younger son Sulaiman, the youthful car fanatic, who enjoyed his own period of favour as the simultaneous Chairman of the Taib controlled RHB bank, Deputy Tourism Minister and MP for Kota Samarahan.

CMS’s own Annual Reports (produced a year in arrears) illustrate the share transfers after Onn left in 2003.

Where Onn’s shares went! – CMS Annual Reports

Next the shares move from Taib’s sons to his daughters!

Taib did not leave his two boys in control such a huge chunk of the company for long however. Or is it that the young lads decided to be very generous to their sisters?

Subsequent records show that by March 2007 Majaharta had been transferred to a joint ownership by Hannifah Taib and Jamilah Taib. This left the 4 children with fairly equal shareholdings in CMS and Taib’s wife with an even larger personal share. Who alone could have been controlling all this?!

CMS top dogs for now – Abu Bekir Taib and son-in-law Alwee Alsree

Jobs changes reflect the same pattern. Taib said in his interview that making money depends on brains outside Sarawak. Inside Sarawak it depends on if you are related to Taib or his cronies.

In 2000 Singaporean, Syed Ahmad Alwee Alsree, married Taib’s daughter Hanifah. He then joined CMS 2004, straight into the position of Group General Manager – Human Resources.

By 2006 he was Deputy Group Managing Director and after Taib’s second son Sulaiman fell from grace he took over as Group Executive Director in 2008. He and second son Abu Bekir now pose as the main figureheads of CMS.

One should not forget the nice management job offered to Taib’s favourite sister Raziah’s 3rd husband, Robert Geneid, as well. He acts as Managing Director of CMS Premix.

Who can be controlling this succession of ever-changing management positions for Taib’s family members at the top of this public company? Again the only conclusion can be Taib himself.

Corrupt business management!

CMS is a public company with a duty to get best value for shareholders. It is also the recipient of State contracts for which it should also obtain best value. However, records show that overwhelmingly the management’s strategy has been to subcontract to companies owned by Taib family members instead. This has ensured that even more money goes to the Taibs at the expense of shareholders and the public.

The situation reached a crisis level in 2002, when an extraordinary meeting of shareholders was called to confront the issue of so-called ‘recurrent related party transactions’. The list of Taib family companies benefitting from longstanding contracts from CMS that was presented to the May 2002 EGM is jaw-dropping.

From that list we can see that over the previous year alone RM35million worth of business went through some 20 companies belonging to Taib family members. These companies, described as recurring business partners, included:

Achi Jaya Industries Sdn Bhd, Achi Jaya Holdings Sdn Bhd, Satria Realty, Asterix Incorporated Sdn Bhd, Insurepo Sdn Bhd, Wisma Printing Sdn Bhd, Sarawati Sdn Bhd, Centigrade Resources Sdn Bhd, Grogrow Sdn Bhd, Trans Dimension Sdn Bhd, Duta Bistari Sdn Bhd, Alpha Jelita Sdn bhd, Alpha Mantra Sdn Bhd, Alpha Wira Sdn Bhd, Mylink Communications Sdn Bhd, Bormill Line Sdn Bhd, Lanco Shipping Sdn Bhd, Hager Elektronik Sdn Bhd, Automobili Sdn Bhd, Bank Utama Bhd

These companies were providing CMS with such services as rental of buildings, property letting, shipping services, transportation, petrol, printing and stationary services, general trading, insurance consultancy, management services, radio and telecommunications services, consultancy services, computer hardware and software services and servicing cars!

Family members involved in these companies included sons Sulaiman and Abu Bekir, as well as brothers and sisters Onn Mahmud, Tufail Mahmud, Arip Mahmud, Puan Zaleha Mahmud, Datin Amar Fredahanam Bt Mahmud, Ibrahim Mahmud, Raziah Mahmud & Robert Geneid plus various wives and family members.

The vast majority of these wealthy transactions went through companies ‘owned’ by Onn Mahmud, although we can see that a considerable amount of property rental went through a company Satria Realty Sdn Bhd, which was until 1999 still publicly 55% owned by the Chief Minister himself !

Deals within the family

Unsurprisingly, the extraordinary meeting, called under Stock Exchange rules to review this outrageous situation, voted in favour of keeping these recurring arrangements with related companies. After all the Taibs controlled the majority of shares! To this day, despite recent attempts to cover up this in-trading, it can be seen from the Annual Report that the corrupt practice continues.

CMS current annual report – related party (family) transactions

Time to restore this money!

The above information, which is publicly available in company and stock exchange records, is quite enough for the MACC to issue a warrant for the arrest of Taib Mahmud. He and his family have not only done business in Sarawak, they have run Sarawak as a business along the lines of a family mafia, using his political power to extract virtually all the country’s wealth.

Meanwhile, just last week the Public Service Department’s director-general, Tan Sri Abu Bakar Abdullah, announced new measures to fight embezzlement. “If there are cases of missing government funds or properties, then an immediate internal probe should be conducted” he announced, and he said that those found taking money should be made to pay it back.

Top of the list should be Taib Mahmud who has stolen more from Sarawak than a million civil servants could do in ten life-times. - Sarawak Report