How Taib's family could have hid their wealth

The family of Sarawak governor Abdul Taib Mahmud may have used a number of exempt private companies (EPCs) to hide their wealth from public scrutiny, according to the financial weekly The Edge Malaysia.

 

This is because EPCs are exempted from submitting its balance sheet when filing its annual returns to the Companies Commission of Malaysia (CCM).

 

Typically, according to the report, these EPCs linked to Taib’s family would invest in other companies, numbering at over 400 involving a wide range of industries.

 

“When the EPC receives dividends from its subsidiaries... the money trail disappears because EPCs are not required to file their financials.

 

“While there is nothing illegal in turning private companies into EPCs, a colony of them in Taib’s family empire indicates a downward shift in the financial transparency of directly owned companies,” according to the report.

 

The report is part of the weekly’s 11-page pull-out documenting Taib’s family businesses for its March 3 issue. A copy had been made available to subscribers in advance.

 

Taib was the chief minister of Sarawak for 33 years until his recent appointment as the state’s governor.

 

He had been accused of corruption and abuse of power, including leveraging on his position to enrich his family. Taib has consistently denied any wrongdoing.

 

Easy loans

 

In addition to not needing to submit the financial information to the CCM, the report notes that EPCs have another benefit - It can issue loans to its directors and people connected to them.

 

“Under Sections 133 and 133A of the Malaysian Companies Act (Act 125), an EPC is not prohibited from providing loans to its directors or persons connected to the directors, such as the directors’ spouses, parents, children, siblings and spouses of the children or siblings, making it easier for the family empire to source finance from the EPCs,” it said.

 

 An example of such an EPC, the report says, is Daya Syukra Sdn Bhd, which is equally owned by each of Taib’s four children, Hanifah Taib-Alsree, Jamilah Hamidah Taib, Mahmud Abu Bekir Taib, and Sulaiman Abdul Rahman Abdul Taib.

 

In turn, Daya Syukra has a 60 percent stake in KBE (Malaysia) Sdn Bhd, which issued RM34 million in dividends for the 2013 financial year. That means Taib’s children would have received RM20.4 million of that sum via Daya Syukra.

 

The weekly also notes that some of these companies were incorporated as far back as the 1990’s but acquired EPC status only recently, between 2012 and 2013.

 

“So was this a step to cover up some of the financial records published in the Sarawak Report in relation to Taib’s business empire?” The Edge queried, referring to an online news portal that has published several reports implicating Taib and his family.

 

Separately, the weekly estimates that Taib’s family collectively hold more than a RM2.1 billion stake in Malaysian public-listed companies.

 

The Taib family’s business activities run a full gamut of different economic sectors, including fisheries, real estate, telecommunications, Islamic travel, environmental consulting, energy, food and beverage, and non-profit groups.

 

What now?

 

Overseas, The Edge says there are over 40 companies linked to Taib’s family, but it had only been able to obtain financial information of four of these companies.

 

Nevertheless, the assets of these four companies alone amount to over RM800 million.

 

As for Taib himself, The Edge notes that the Sarawak state constitution bars both the governor and the chief minister from holding “any office of profit” and from “actively engage in any commercial enterprise”.

 

The weekly claims that Taib is a shareholder or director in at least five Malaysian companies.

 

These are: Demak Jaya Holdings Sdn Bhd (50 percent stake), Hamamorial Sdn Bhd (37.08 percent), Mesti Bersatu Sdn Bhd (17.39 percent), Pehin Sri Heritage Sdn Bhd (55 percent), and Ramah Jelita Sdn Bhd (stake not stated).

 

All of these except Ramah Jelita are also made EPCs just last year, the report says.

 

“Although Taib is now the Yang di-Pertua Negeri, a ceremonial role in the state, it does not mean he can now do business openly. This is because the governor is similarly barred from engaging in business.

 

“The question is, will his extended family slow down from now or will they continue to have a huge presence in the state economy?”The Edge queried.