Wednesday, May 1, 2013

Malaysia Sarawak’s RM4.9b bonds banker Goldman Sachs facilitating corruption, says Global Witness

Taib was cast into the international spotlight after Global Witness released a video documentary alleging the state Barisan Nasional chief to have received millions of ringgit in kickbacks over land deals

Goldman Sachs Inc has been flayed for underwriting RM4.87 billion (US$1.6 billion) in bonds for Sarawak’s energy corridor projects and ignoring alleged corruption in the East Malaysian state by activist group Global Witness.

However, the global investment banker has denied any mistakes in underwriting bonds for the Sarawak Corridor of Renewable Energy (SCORE) project, which won it the ‘Bank of the Year 2012’ award by International Financing Review Asia for “breaking with tradition to win new business in difficult conditions”.

Continue Reading..

“Goldman Sachs is at serious risk of facilitating corruption by doing business with the Sarawak State Government. If you drew up a list of the most corrupt regimes in the region, this one would be near the top,” said Alex Helan, a campaigner at Global Witness, in a statement here.

“Goldman Sachs either failed to do proper checks on its clients, or it did them and failed to highlight the risks to prospective buyers of the bonds. The bank has some serious explaining to do,” the statement said.

Global Witness also said the investment bank declined to comment on specific allegations.

But the bank’s Asia Pacific corporate communications managing director Edward Naylor, told them: “We perform the same consistently high global standards of due diligence in connection with all securities offerings.”

According to Global Witness, Sarawak used offshore companies to issue bonds and borrow large sums of money from international investors.

The move, described by an analyst as “unusual” and “under the radar”, is used to fund projects under SCORE, including the Tanjung Manis Halal Hub (TMHH).

Established by the Sarawak government, TMHH aims to convert 77,000 hectares of pristine mangrove forest into an integrated halal hub which processes and exports palm oil and other agricultural commodities.

Global Witness claimed that there are irregularities and conflicts of interests in TMHH involving its executive chairman Norah Abdul Rahman, who is also Sarawak Chief Minister Tan Sri Abdul Taib Mahmud’s cousin.

TMHH’s official investment brochure showed that government-linked company Tanjung Manis Food & Industrial Park Sdn Bhd was responsible for the project and managing “land bank and development capital”.

Another company, Tanjung Manis Investment Corp Sdn Bhd was named as the recipient of “business capital funds” and delegator of “management contracts”, said the activist group.

Global Witness claimed the former is not “government-linked” since its company records did not show any equity of government in it, while the latter did not even exist.

“A sophisticated organisation like Goldman Sachs should have picked up on this in a matter of hours if it had done meaningful due diligence,” said Helan.

Recent media reports in April revealed that a Sarawak government bond managed by Goldman Sachs was mispriced by RM480 million from its value of RM2.4 billion.

According to KiniBiz news portal, Sarawak will end up paying a much higher interest charged in the next 15 years from this misprice, which can go up to RM680 million extra.

Taib was cast into the international spotlight last month after Global Witness released a video documentary alleging the state Barisan Nasional chief to have received millions of ringgit in kickbacks over land deals that have denuded the Borneo state.

The video, titled “Inside Malaysia’s Shadow State”, showed dealings by Global Witness’ undercover investigators with Taib’s cousins and several other intermediaries to acquire thousands of hectares of forest land, which the group said would displace thousands of indigenous people living there.

Taib had since challenged Global Witness to debate him on the issue of illegal land deals in Sarawak, an offer that the organisation has agreed to on several conditions.

Related Posts with Thumbnails

Latest Malaysia News