Malaysia

Canada is a ‘safe haven’ for Malaysian money launderers, says Bruno Manser Fund

The Swiss-based Bruno Manser Fund (BMF)¹ today (Wednesday) released a report in which it states that relatives of the former chief minister and current governor of the Malaysian state of Sarawak, Abdul Taib Mahmud, have millions of dollars of illegally acquired money invested in Canada.

The fund – a human rights and environmental organisation that champions the rights of the indigenous peoples of Borneo – calls on the Canadian authorities “to use all available legal and political means to resolve the question of the Taib family’s stolen assets in Canada”.

The 86-page report, entitled Safe Haven Canada, is written by Bruce Bailey, Johanna Michel, and Lukas Straumann (pictured left), who is the executive director of the BMF. The authors state that, since the early 1980s, the closest family members of Abdul Taib Mahmud have invested tens of millions of dollars “and potentially over 100 million Canadian dollars” in Ontario real estate, mostly in the Canadian capital, Ottawa.

The BMF says the report shows how the Taib family used real estate in Ottawa to launder major amounts of unexplained wealth.

According to the Safe Haven report, the Taib family channelled at least CAD 69.8 million, but possibly as much as CAD 150 million, of unexplained wealth into Sakto, a multinational real estate corporation based in Ottawa.

The Sakto Corporation says the assertions in the report are “false, malicious and sensationalised”.

Sakto was incorporated in 1983 by Taib’s daughter, Jamilah, and his brother, Onn Mahmud, and soon became one of the largest players in the Ottawa real estate sector. It is now headed by Jamilah Taib Murray and her Canadian husband Sean (Hisham) Murray.

According to BMF, the corporation now comprises at least 11 Canadian companies and 18 subsidiaries and associated companies in the United States, the United Kingdom, Australia, Malaysia, the British Virgin Islands, Hong Kong, and Jersey.

Sean (Hisham) Murray and Jamilah Taib Murray.

The BMF says that the Sakto group’s current real estate assets in Ontario exceed CAD 200 million, with its main asset being the Preston Square development in Ottawa.

In addition, the fund says, Jamilah Taib Murray and Sean Murray purchased and constructed private residences in Rockcliffe Park, Ottawa, and on Howe Island in Frontenac, with a current tax value in excess of CAD 15.2 million.

The Taib-Murray mansion in Ottawa.

“It seems impossible,” the Safe Haven report states, “that the Taib family could have acquired this amount of money, whose origins remain unclear, in a lawful way.”

The authors of Safe Haven Canada say: “Despite Taib Mahmud’s reputation as a corrupt leader, no efforts have been undertaken by the Canadian authorities or by the Taib family’s Canadian business partners to ascertain or question the origin of the enormous amounts of unexplained wealth invested in Canada.”

Sakto said in a statement: “Sakto Corporation is a reputable, local Canadian company whose officers, directors and shareholders are Canadian. The company is led by a local family known for being community supporters and philanthropists.

“The assertions made by this foreign activist group are false, malicious and sensationalised. The organisation’s rehashed and repackaged allegations have been found to be lacking in merit and never substantiated by any government or authoritative body.”

Sarawak, on the island of Borneo, has one of the highest rates of deforestation in the world and an extremely high rate of illegal logging.

In his book “Money Logging”, which was first published in 2014, Straumann lays out the facts about the massive plundering of Sarawak’s forests. He singles out Abdul Taib Mahmud as the kingpin of the Asian timber mafia. He shows that Taib’s family – with the complicity of global financial institutions – have profited to the tune of 15 billion US dollars.

Lawyers representing Taib and the Malaysian government attempted to block the books publication.

The BMF points out that, during Taib’s 33-year tenure as chief minister of Sarawak, the state lost more than ninety percent of its primeval tropical rainforests to logging and oil palm plantations.

“Numerous allegations of corruption, cronyism and conflicts of interest have accompanied Taib’s political career. Research by the Bruno Manser Fund has shown that the politician’s closest family members have become billionaires and acquired stakes in 400 companies in 25 jurisdictions,” the new report states.

In 2011, the Malaysian Anti-Corruption Commission (MACC) opened an investigation into Taib’s activities, which has never been officially concluded, the BMF points out.

“We are talking about a sophisticated long-term operation, which has allowed a corrupt politician’s family to launder huge amounts of money in Canada,” Straumann said. “The origin of these funds cannot be satisfactorily explained by the Taibs.“

Taib Mahmud, who is now 80 years old, publicly acknowledged in 2011 that he had provided his daughter with the initial capital for her real estate business, Straumann says. “He claimed he had received the amount as a gratuity upon resigning from the federal government in 1981.”

According to the new report, the Taib family have been helped to shield their Canadian assets from public scrutiny for more than thirty years because, under Canadian legislation, the shareholders and beneficial owners of private corporations are protected by privacy laws.

“The only conclusion we can draw from these facts is that anti-money laundering legislation and its enforcement in Canada are too weak to prevent foreign corrupt officials from laundering the proceeds of their crimes in Canada,” the report’s authors state.

“Canada provides a safe haven in which the fruit of foreign corruption can be enjoyed and a lavish lifestyle be led to the detriment of the citizens of the country of origin.”

As a signatory to the UN Convention against Corruption, Canada has an international obligation to fight corruption and money laundering by foreign corrupt officials and to assist in recovering stolen assets, Straumann says.

“We expect the Canadian government and judiciary to open criminal proceedings against Sakto and the Taib family and freeze all their unexplained wealth in Canada.”

Under Canada’s Criminal Code, it is forbidden to conceal or convert property that has been obtained anywhere in the world in a manner that “if it had occurred in Canada, would have constituted a designated offence”.

The new report shows how the Taib family used Canadian businessmen, such as Sean Murray, who is from a well-known Irish-Canadian family of architects, as the public face of Sakto while the Taibs retained the shareholdership and provided the group’s capital.

The BMF says that, by the end of its first business year, the Sakto Group had already acquired real estate valued at several million Canadian dollars.

The corporation became the centre of Taib’s international real estate imperium, with branches in England, the US, and Australia, the BMF says.

The Safe Haven report shows how Sakto grew extremely quickly despite continuous operational losses and a resulting capital deficiency that had risen to CAD 9.43 million by 1993.

SDC revenue and expenses in million dollars (CAD).

“Sakto’s secret of success was a continuous capital influx from its shareholders, the Taib family,” the authors state. These included Jamilah Taib and Onn Mahmud.

The new report states that, by 1993, the Taib family had invested at least CAD 29.8 million in the Sakto Group – CAD 28.8 million in loans and CAD 1.01 million in share capital. “The origin of these funds remains unknown and is believed to be linked to corruption in Sarawak.”

In 1996, the Taib family granted Sakto two further loans of CAD 20 million each, thus increasing the Taib family investments in Sakto to approximately CAD 70 million. “One of these loans can be traced back to the Taib family and two of their offshore companies, Sogo Holdings Ltd in Jersey and Richfold Investments Ltd in Hong Kong.”

In 1988, Sakto Corporation started to invest in a major office and apartment complex in Ottawa’s Little Italy, which cost an estimated CAD 146 million until its completion in 2003. Last month, Sakto, obtained the approval for the construction of another 24-storey building in Ottawa’s Preston Square, the BMF says.

Locations of Taib family properties in Ottawa.

 

Straumann says that Richfold Investments Ltd is intimately linked to Regent Star Ltd, a Hong Kong agent specialised in cashing in “fees” from timber merchants on behalf of the Sarawak chief minister’s brother. Sarawak was, in 1996, the world’s main exporter of tropical timber and control over the timber industry was concentrated in the hands of Abdul Taib Mahmud.

The BMF says that, in 2008, the Japanese National Tax Tribunal found that nine Japanese shipping companies had paid at least 1.1 billion yen (about US$9.7 million) to Regent Star on the basis of a 1983 “brokerage agreement” for the shipping of Sarawak timber.

The new report is not the first time that the BMF has highlighted the Taib family’s acquisitions in Canada. The fund first contacted the Canadian Money Laundering reporting office, FINTRAC, about the Taib family’s real estate holdings in Ottawa in 2010.

“In 2011, we wrote to the government and to the Royal Canadian Mounted Police,” Straumann said. “But nothing happened. This is why we are alerting the public, based on our new findings.”

The BMF, along with several Canadian NGOs, criticised the Canadian government and the Royal Canadian Mounted Police for their lack of action against Sakto.

In January 2016, the BMF filed a complaint with the Canadian National Contact Point for the Organisation for Economic Co-operation and Development (OECD), alleging that the Sakto group failed to comply with the OECD’s disclosure standards for multinational enterprises.

In March 2011, in the BMF publication Tong Tana (In the forest), the fund stated that “Jamilah Taib Murray and Sean Murray have managed to give a respectable touch to Taib’s criminal exodus of capital”.

BMF said at that time that Jamilah Taib Murray and Sean Murray controlled Ridgeford Properties in London, which specialised in luxury real estate; Sakti International Holdings in the US; and Sitehost in Australia, which owns and operates the Hilton in Adelaide.

In a 2015 report, the BMF alleges that Sitehost as well as Golborne Australia, Fordland Australia, and related companies on the Isle of Man and the British Virgin Islands have been used by the Taib family and their Australian business partners as vehicles for laundering the proceeds of corruption from Sarawak.

In July last year, Adelaide University bowed to pressure from conservation groups and removed Taib’s name from a plaza on its campus. The name of “Taib Mahmud Court” was changed to “Columbo Plan Alumni Court”. The BMF said that deleting Taib’s name was “a victory for civil society”.

In its new report, BMF has systematically analysed Sakto’s financial statements for their first ten years of operation, and Canadian land registry records.

“This evidence clearly shows a particular business model, which only worked because the Taib family continuously injected cash into the company,” Straumann said.

“For the first time we can say how much money was brought in by the Taibs and how much by commercial lenders. We are, for the first time, able to tell the whole story.”

The Safe Haven Canada report was researched by the BMF between August 2015 and March 2017. Research on property transactions was carried out by Bruce Bailey.

  1. The Bruno Manser Fund was founded by the Swiss rainforest advocate Bruno Manser, who has been missing since his last trip to Sarawak in May 2000.

Headline photo of Abdul Taib Mahmud courtesy of Sarawak Report.

 

Article updated on 31/03/2017.

Further update 3/4/2017:

The Bruno Manser Fund said today (Monday) that the Canadian trade ministry is about to dismiss the complaint it filed against the Sakto Corporation in January 2016, alleging that Sakto failed to comply with the OECD’s disclosure standards for multinational enterprises..

The BMF asked the Canadian government to compel Sakto to disclose its shareholders, beneficial owners, internal group structure, and all relevant financial information.

The fund says that, last October, an initial assessment by the Canadian government confirmed the breaches by Sakto. It says the trade ministry found that the complaint was “material to the guidelines and substantiated”.

Last week, however, the director-general of the Canadian Trade Commissioner Service and chairperson of the National Contact Point on the OECD Guidelines, Duane McMullen, informed the BMF that the case would be closed “because it would not contribute to the purposes and effectiveness of the guidelines”.

The BMF’s executive director, Lukas Straumann, said: “The Canadian trade ministry’s dealing with our complaint is a scandal.

“As a signatory to the OECD guidelines, Canada has committed itself to implementing these important international standards. What we are seeing now are Canadian officials who bow to corporate pressure and disavow their own duties.”

New update 6/4/2017

The BMF has asked for the OECD grievance procedure against the Sakto Corporation to be closed within thirty days and has urged the Canadian government to condemn the corporation for non-compliance with the OECD’s disclosure standards.

BMF’s legal counsel, Bennett Jones, has written to Duane McMullen asking that the Canadian government issue a material statement about Sakto’s “lack of good faith involvement” with the grievance mechanism.

The BMF is also asking that Sakto be excluded from Canadian government services “as a result of Sakto’s lack of willingness to comply with the OECD guidelines”.

Lukas Straumann says the Sakto Corporation benefits from a lax regulatory environment in Canada that allows shareholders to remain anonymous and tolerates non-compliance with OECD standards.

“Last week, a Transparency International investigation found that the Canadian real estate market is a major destination for illicitly gained funds.”

The BMF says it doesn’t want to enter into another fruitless round of consultations with Canada’s OECD National Contact Point, only to see its complaint “quietly swept under the carpet when everyone is on summer vacation”.

 

 

SUPPORTING CHANGING TIMES

YOU CAN SUPPORT MY WORK VIA THE PAYPAL OR GOCARDLESS BUTTONS ON THE TOP RIGHT-HAND SIDE OF THIS PAGE. DONATIONS AND PAID SUBSCRIPTIONS KEEP THIS WEBSITE GOING. THANKS.

 

Advertisements