12 Nov 2011

Top US Economist Jeffrey Sachs Was ‘Cultivated’ and ‘Influenced’ To Become a ‘Champion’ of Sime Darby – Exclusive!

Top US Economist Jeffrey Sachs Was ‘Cultivated’ and ‘Influenced’ To Become a ‘Champion’ of Sime Darby – Exclusive!

This post is also available in: Iban, Malay

Professor Jeffrey Sachs of The Earth Institute, Columbia University – a ‘champion’ of Sime Darby?

Sarawak Report has uncovered shocking documents, which detail a deliberate and orchestrated campaign by the Malaysian Oil Palm giant, Sime Darby, to court and seduce one of the world’s most celebrated economists into becoming an ‘Ambassador’ for the company.

Jeffrey Sachs is the Professor of Sustainable Development at New York’s Columbia University and was listed by Time Magazine as one of the 100 most influential people in the world.

As Head of the University’s Earth Institute, Special Adviser to United Nations Secretary-General Ban Ki-Moon and former Director of the United Nations Millennium Development Goals, Sachs is famous for his initiatives on reducing world poverty.

Horizon to horizon – Sime Darby’s HQ for its plantations between Miri and Bintulu

Yet, despite the World Bank’s decision to ban further lending to large scale palm oil plantations, because they have been shown to INCREASE poverty, Sime Darby believe, according to these documents, that they have converted Jeffrey Sachs into a valuable ‘champion’ for their company and for Malaysia’s palm oil industry.

Our evidence shows that Sime Darby,  Malaysia’s largest oil palm company,  hired the disgraced PR outfit FBC Media to ‘cultivate’ and ‘influence’ this key opinion former, so that they could  use him as a ‘Third Party Endorser’ in the numerous newspaper advertisements and TV programmes they commissioned to promote their palm oil business.

Professor Sachs praises Sime Darby and the Malaysian Government’s initiative on sustainability in a full page Advertorial in the Herald Tribune, next to CEO Musa Hitam and an ad for Iskandar

For example, in this Herald Tribune full page advertisement Sachs authored a guest piece back in 2008, praising the Malaysian Government and Sime Darby for their supposed initiatives on sustainable development.  Alongside, is a second feature by Sime Darby CEO, the former Deputy PM Musa Hitam, and also an advertisement for Malaysia’s development zone, Iskandar.

There is no indication as to who financed the advertisement or whether Professor Sachs received any form of payment.  However, we can demonstrate that his Earth Institute has just received a half million dollar donation from Sime Darby towards its projects and that Sachs has personally accepted family trips to Sime Darby’s Carey Island plantation, where he was transported in the company’s private jet.

As part of his substantial write up for the advertorial the professor endorses Sime Darby’s eco-credentials:

“Some promising steps have been taken by Malaysia in recent years, which may set a powerful example for the rest of Asia… The government is working closely with leading companies, such as the palm-oil giant Sime Darby, which have recognized that long-term environmental sustainability is vital to the business interests of serious, law-abiding companies with long-time horizons” [Int Herald Tribune, 20/06/08]

Destructive giant

Yet, the eco-claims of Malaysia, Sime Darby and Iskandar are, of course, highly questionable.  The Iskandar part of the advertisement carries the slogan ’Growing In Harmony With Nature’.  However, that project has controversially destroyed one of the last remaining mangrove areas on mainland Malaysia and displaced the indigenous Seletar people, the region’s last sea nomads, from their fishing grounds, which are now depleated and polluted by the development.

Cleared for mono-culture – Sime Darby has 47,000 hectares under cultivation in Sarawak

Likewise, Sime Darby, which is controlled by the Malaysian Government, is the world’s largest palm oil company and its vast plantations have destroyed huge areas of Sarawak’s coastal peat forest in the region between Miri and Bintulu and elsewhere.

Apart from the environmental destruction of Borneo’s valuable rainforest, these plantations have alienated lands from local tribes and communities and most of the resulting jobs are poorly paid and have been handed increasingly to immigrant workers and not local people.

Sime Darby’s latest controversial activities have moved outside of Sarawak, where it has planted 47,000 hectares, into Liberia in Africa, where native communities are protesting that the company has been taking their ancestral lands and causing them hardship.

Moving to Africa - Sime Darby is currently up to its old tricks displacing native communities in Liberia. So much for sustainable development.

Indeed, just last month the Liberian Government fined Sime Darby US$50,000 for non-compliance with the terms and conditions of their permit. So, it appears that the company is not so law-abiding after all.

Incentives?

The intervention by Sachs was doubtless well-intentioned.  However, exclusive documents obtained by Sarawak Report prove that FBC believe they had succeeded in their campaign of  ’cultivating’ and ‘influencing’ him and others into becoming one of the useful ‘tools’ they were able to offer their clients for their PR campaigns.

Sachs has appeared in numerous promotional articles and TV programmes commissioned by Sime Darby from FBC, before that company was exposed for its illegal PR activities earlier this year.  These programmes included Third Eye on BBC World and CNBC’s World Business Programme.

In a pitch made by FBC to Sarawak Chief Minister Abdul Taib Mahmud for the multi-million ringgit contract to promote SCORE (Taib’s pet development project) the PR company brags that their successes for Sime Derby included:

“The cultivation of influential ‘ambassadors’, such as The Earth Institute’s Jeffrey Sachs or Dr Reza Azmi, of wild Asia, leading  voices on environmental issues”

“Cultivation of influential ‘ambassadors’ such as The Earth Institute’s Jeffrey Sachs” – FBC’s ‘Track Record with Sime Darby’

Embarrassing

Such claims can only be embarrassing for Jeffrey Sachs, particularly in the light of the fact that only last year Sime Darby was included in The Earth Institute’s prestigious “Corporate Circle” of companies, described as “dedicated to sustainable development”.

Sime Darby's $500,000 donation to the Earth Institute's Corporate Circle projects on joining last year

The Institute, of which Sachs is the Head, explains “We promote opportunities to join the Earth Institute in building strong links between corporate sustainability and holistic sustainable development”.

At the same time Sime Darby provided a half million dollar donation to support The Earth Institute’s Tropical Agriculture and China programmes.[Our Donors]

Given the claims by FBC, Professor Sachs may now have to consider whether such support and the huge financial gestures he has accepted on behalf of his Institute were merely a cynical ploy on Sime Darby’s part to ‘cultivate and influence’ him as part of the company’s well-funded campaign to counter a mass of environmental criticism about the destructive nature of their business?

‘Corporate Greenwash’

FBC’s presentations make clear that their objective for Sime Darby was to ”counter negative perceptions surrounding the Palm Oil Industry”, through “managing and influencing the news agenda” and “sophisticated corporate messaging within an editorial framework”.

Under one section entitled “Palm Oil’s Sustainable Future: Myth or Reality?” they lay out in detail how they plan to spend a good chunk of the industry’s millions on altering world perception:

“Palm oil…remains surrounded by controversy with its production methods triggering fierce debate and harsh criticism from the ‘green lobby’…..The following slides outline FBC’s production strategy for producing editorially credible content for placement on international, pan-regional broadcasters, helping re-set the debate around palm oil and its sustainability and initiating a wider, more objective dialogue”.

Their presentations also make clear that their strategy was to “cultivate Sime Darby ‘champions’” and “target organisations and opinion formers” who could be quoted in their articles and films.

“]
Targetted opinion-formers – Jeffrey Sachs was top of Sime Darby’s list [FBC Power Point Presentation

FBC go on to explain that their promotions, which posed as objective journalism, would create the appearance of balance by featuring critics, who would then be over-ruled by more sympathetic voices to their clients.

"To keep the reporting balanced, we will interview NGOs leveling criticism at the industry, but then getting responses from the key players in palm oil production from countries such as Malaysia, where sustainable certification is promoted and forest conservation efforts are underway".  [FBC Media Presentation]

The strategy, eplains FBC, is to present Sime Darby as a well-meaning company striving towards ‘sustainability’ by making all the right gestures… and also all the right friends.  They call it “Moving the Perception Needle’ to create an ‘Environmental Reputation’ for Sime Darby.

Greenwash agenda - disguising the destructive reality of the oil palm business with Green PR about 'sustainability efforts'. Such campaigns do not come cheap, but Sime Darby and Taib Mahmud were prepared to pay!

Sime Darby was paying FBC millions of ringgit to conduct this illegal PR campaign, known as ‘Greenwash’, which is all about perception rather than reality.

Compromised?

Fun for the family? ‘World Sustainability Expert’ Sachs tours Sime Darby’s showcase Carey Island. Pity he did not have time to come and see the destruction of Sarawak

Given this calculated and well-funded agenda and the widespread knowledge about the dangers of ‘Greenwash’ campaigns, one might question the wisdom of Professor Sachs in accepting a family tour for himself, wife and two children to Malaysia and India in 2008, escorted in the Sime Darby private jet.

Our researches have revealed that, throughout the trip to Sime Darby’s showcase plantation on Carey Island, Sachs and his family were accompanied by a then employee of the PR agency APCO, Razi Rahman, which was working for the Malaysian government at the time and continued to have close links with FBC Media.

Sime Darby’s newsletter recorded the event and explained how the Carey Island Managing Director headed a reception team at the airport which then proceeded to show the Sachs family round.

Unfortunately, the Professor did not appear to realise that he was the prime target of an expensive PR effort, which was being ultimately paid for by the people of Malaysia.

Sarawak Report has researched a number of subsequent appearances by Jeffrey Sachs on FBC programmes for CNBC and the BBC, some of which raised eyebrows among those concerned about genuine sustainable development.

Positive programming, masquerading as genuine reporting

Just last June Sachs appeared on FBC’s World Business Programme for two consecutive weeks providing a set piece interview on global warming and sustainability.  At the same time he appeared numerous times in a BBC programme Third Eye, focusing on the ‘world food crisis’.

The show painted a picture of imminent catastrophe and starvation if more palm oil was not grown.  It also presented a positive picture of the impact of palm oil on Malaysia:

“Third Party Endorser” – Sachs appears on BBC’s Third Eye for FBC Media

“The growing trade in palm oil is providing much needed income to poorer farmers in Malaysia, where living standards are rising.  It is also giving jobs to poor people who once owned no land” The programme explains and it features a Malaysian small-holder who is represented as a typical palm oil producer!

By taking part in the programme, Sachs was made to appear to endorse this positive message.  However, such claims would not satisfy many poor people in Sarawak, where most of the palm plantations are run by enormous companies like Sime Darby or owned by members of Taib’s family and cronies. In Sarawak it is the poor people who have had their native lands grabbed and handed to plantations, not the other way around.

Job lot – same interview different channel! FBC got two interviews for CNBC out of the Sachs interview, plus the BBC Third Eye.

As for jobs, the plantations prefer to bring in immigrant workers paid as low as RM 8 a day, leaving the locals unemployed.  Likewise, those so-called cooperatives run by SALCRA have in fact delivered a pittance in profits for the poor small farmers, since most of the money seems to have been ‘lost’ by the manager of the state-led enterprise, Deputy PM Alfred Jabu!

Few people in Sarawak would therefore recognise the story being painted by FBC Media of people being made better off by palm plantations.  Rather, they would understand the findings of the World Bank, which concluded that large scale palm plantations make the local people poorer, because they lose their lands to big plantation businesses, like Sime Darby.

However, BBC’s Third Eye programme on palm oil, which was produced and scripted by FBC as a supposedly objective documentary ,closely followed the strategy  below, laid out in FBC’s proposal documents for the Malaysian Palm Oil Industry:

“The programme will put a particular focus on small farm holders – to emphasise the often overlooked fact that these constitute the majority of players in an industry too often associated to large corporate interests…… We should take the Malaysian example as a sign to reassess many assumptions about the environmental impact of industry in the developing world, and remember that our well-meaning sentimentality can have profoundly negative consequences for people trying to work their way out of poverty.”

Anyone in Malaysia knows that FBC’s assessment is not true.  The majority of the industry is owned and run by rich people…. like Taib’s family.  Yet, Jeffrey Sachs, who appeared throughout the programme, was blatantly used to re-enforce the Sime Darby message, having been allocated the role of a so-called “Third Party Ambassador” or “Third Pary Endorser” for the company.

Sachs cultivated as a ‘Third Party Endorser’?

World-wide corruption through Greenwash millions

Our evidence shows that Professor Sachs was not the only apparently unwitting ’tool’ of Sime Darby.  Others too have been pawns of the palm oil industry’s strategy of cultivating third party champions.  By allowing themselves to be ‘cultivated and influenced’ in this way, these highly-regarded ‘ambassadors’ have done no service to the genuine poor of Sarawak and Malaysia, whom they claim to be trying to help.

FBC's 'One Square Mile' for BBC World was paid for by Taib as one of the PR opportunities to present his government in a good light. The programme presented a picture of a government trying to help the people and ignored the logging, land grabs and plantation problems.

To the contrary they have merely performed a highly funded service for the rich land-grabbers, who are behind the destruction of the environment that these ‘sustainability gurus’ claim they are trying to save.

Likewise, the television companies which queued up to provide a platform for these FBC sponsored programmes, because they came so cheaply.

They should remember that their cheap programming has come at great expense to the desperate communities of Sarawak, who deserve honest reporting about their plight, and also to the tax-payers of Malaysia, who have funded FBC to the tune of millions of ringgit for this deceptive PR.

BBC, CNBC, CNN and all the global broadcasters who regularly carried biased programming by FBC media to promote big businesses and the Malaysian and Sarawak State Governments, should all now come to Sarawak and fully report on the real problems behind the destruction of the Borneo Rainforest and the suffering of its people.

Political corruption, big agri-business and lawlessness are the problems that need to be identified and addressed.  Instead we got Greenwash.

  • Money Laundering 101

    Sime Darby/UMNO Goons also notorious in using BN PRS Dayak Ali Baba 5 Percent partner name in disguise as the Bakun dam project Joint-Venture consortium which eventually suffering huge losses

    No surprise why Sime Darby can easily get the Julau area Dayak lands since the Dayak Ali Baba is the MP for Julau and under Land Development Ministry approval (all BN PRS Dayak Goons Traitors)

    So UMNO Cronies and BN PRS Ali Baba of course help each other lah in Debolotment, Looting etc. even it’s Dayak killing fellow Dayak

    Nevertheless Dr Mamak also happy to see Sime Darby’s Bakun failure since Dr Mamak goons TPK Global Upline / Ekran group (the original Bakun dam crook) being snubbed big time for the subsequent infra work Bakun dam project (Dr Mamak version of lesser of two evils, eh?)

    ___________________

    Bursa Malaysia-General Announcement

    Reference No SD-110721-D2FB2

    Company Name : SIME DARBY BERHAD

    Stock Name :SIME

    Date Announced :25/08/2011

    Type :Announcement

    Subject :P ROVISION OF FINANCIAL ASSISTANCE

    Description:

    Sime Darby Berhad (“Sime Darby” or “the Company”) had, on 27 February 2008 announced that it had, during the quarter ended 31 December 2007, issued a Corporate Guarantee of RM1 billion to Sarawak Hidro Sdn. Bhd. (“Sarawak Hidro”) to guarantee the due performance, execution and completion of the CW2 Package for the main civil works for the Bakun Hydroelectric Project by the Malaysia-China Hydro Joint Venture (“MCH JV”).

    Sime Darby had also announced that it had, during the quarter ended 31 December 2007, issued a Letter of Indemnity to the Directors of Sarawak Hidro to indemnify them from all consequences, liabilities, damages or losses which they may suffer as a result of their agreeing to Sarawak Hidro providing financial assistance to the MCH JV.

    Sime Darby wishes to announce that, to-date, the said Corporate Guarantee and Letter of Indemnity have not been withdrawn or cancelled.

    Sime Darby has an effective interest of 35.7% in the MCH JV. The parties to the MCH JV and their interests therein are as follows:-

    i. Sinohydro Corporation (30% of the MCH JV)

    ii. the Sime Joint Venture (70% of the MCH JV), comprising:-

    a. Sime Engineering Sdn. Bhd. (51% of the Sime Joint Venture)

    b. Edward & Sons (EM) Sdn. Bhd. (5% of the Sime Joint Venture)

    c. the WMAI Joint Venture (44% of the Sime Joint Venture), comprising:-

    aa. WCT Engineering Berhad (25% of the WMAI Joint Venture)

    bb. MTD Capital Berhad (25% of the WMAI Joint Venture)

    cc. Ahmad Zaki Resources Berhad (25% of the WMAI Joint Venture)

    dd. Syarikat Ismail Ibrahim Sdn. Bhd. (25% of the WMAI Joint Venture)

    Sime Engineering Sdn. Bhd. is an indirect wholly-owned subsidiary of Sime Darby.

    The following parties in the MCH JV have given counter guarantees and indemnities to Sime Darby, proportionate to their respective interests in the MCH JV:-

    i. Sime Engineering Sdn. Bhd.

    ii. Sinohydro Corporation

    iii. WCT Engineering Berhad

    iv. MTD Capital Berhad

    The abovementioned Corporate Guarantee and Letter of Indemnity issued will have no material financial impact on the Sime Darby Group unless they are called upon.

    This announcement is dated 25 August 2011.

    ________________________

    Bursa Malaysia-General Announcement

    Company Name :SIME DARBY BERHAD

    Stock Name :SIME

    Date Announced :30/05/2007

    Type : Announcement

    Subject : Provision of financial assistance in the ordinary course of business

    (Announcement pursuant to Practice Note No.11/2001 Paragraph 3.1)

    Contents :

    Sime Darby Berhad (“Sime Darby”) had, on 28th February 2007, announced that it had during the quarter ended 31st December 2006, issued a Letter of Guarantee and Indemnity to Sarawak Hidro Sdn. Bhd. (“Sarawak Hidro”):-

    i. to guarantee the due repayment of a RM200 million additional advance payment (“the Additional Advance”) granted by Sarawak Hidro to the Malaysia-China Hydro Joint Venture (“MCH JV”); and

    ii. to indemnify the Directors of Sarawak Hidro from all consequences, liabilities, damages or losses which they may suffer as a result of their agreeing to provide the Additional Advance to the MCH JV.

    Sime Darby wishes to announce that, to-date, the said Letter of Guarantee and Indemnity has not been withdrawn or cancelled.

    The Additional Advance was granted by Sarawak Hidro to the MCH JV to be used towards the completion of the Works as scheduled under the Bakun Hydroelectric Project.

    Sime Darby has an effective interest of 25% in the MCH JV. The parties to the MCH JV and their interests therein are as follows:-

    i. Sinohydro Corporation (30% of the MCH JV)

    ii. the Sime Joint Venture (70% of the MCH JV), comprising:-

    a. Sime Engineering Sdn. Bhd. (51% of the Sime Joint Venture)

    b. Edward & Sons (EM) Sdn. Bhd. (5% of the Sime Joint Venture)

    c. the WMAI Joint Venture (44% of the Sime Joint Venture), comprising:-

    aa. WCT Engineering Berhad (25% of the WMAI Joint Venture)

    bb. MTD Capital Berhad (25% of the WMAI Joint Venture)

    cc. Ahmad Zaki Resources Berhad (25% of the WMAI Joint Venture)

    dd. Syarikat Ismail Ibrahim Sdn. Bhd. (25% of the WMAI Joint Venture)

    Sime Engineering Sdn. Bhd. is a wholly-owned subsidiary of Sime Engineering Services Berhad, which in turn is 70%-owned by Sime Darby.

    The following parties in the MCH JV have given counter indemnities to Sime Darby, proportionate to their respective interests in the MCH JV:-

    i. Sime Engineering Sdn. Bhd.

    ii. Sinohydro Corporation

    iii. WCT Engineering Berhad

    iv. MTD Capital Berhad

    The abovementioned guarantee and indemnity provided will have no material financial impact on the Sime Darby Group unless the guarantee and indemnity are called upon.

    This announcement is dated 30th May 2007.

    _____________________________

    A. Maklumat Syarikat: :

    Company Name : EDWARD AND SONS (EM) SDN. BHD.

    Address : BLOCK 5, 2ND FLOOR LOT 2495 & 2496 BOULEVARD COMMERCIAL CENTRE

    Postcode 98000

    Town : MIRI

    State: SARAWAK

    Telephone: 082-424506

    B. Maklumat Pendaftaran :

    CIDB :

    i) No Pendafataran : 1960417-SR001109

    ii) Tarikh Luput Pendaftaran : 29-01-2006

    ii) Gred : G7

    D. Maklumat Ahli Lembaga Pengarah:

    Bil Nama Warganegara Jawatan

    1.YB JOSEPH SALANG AK GANDUM MALAYSIA PENGARAH

    2.STANLEY AJANG BATOK MALAYSIA PENGARAH

    G.Modal Berbayar / Modal Terkumpul :

    a.Modal Dibenarkan (RM):

    b.Modal Berbayar / Modal Terkumpul (RM): 3,000,000.00

    H.Maklumat Projek:

    Bil Tajuk Tarikh Anugerah Nilai (RM) Klien

    1. RM

    2. Projek Menurap Jalan-Jalan Di Skim Penempatan Bakun, Sungai Asap, Belaga, 25-07-2002 RM 18,009,368.00 JKR SARAWAK

    3. Proposed Marudi Water Supply – Phase 11 Civil Engineering Works 01-11-2000 RM 11,528,618.10 JKR SARAWAK

    4. Construction, Completion & Commissioning Of Booster Pumping Station Including M&E Works, R.C. Reservior & Access Road, Supply & Delivery Of Pipes, Pipelaying & Other Associated Works, Bekenu Water Supply Phase III, 21-09-2000 RM 8,800,000.00 JKR SARAWAK

    5. Prop. Mlng Canteen Renovation / Extension On Lot 29, Block 20, Kemena Land District, Bintulu, Sarawak 13-10-1998 RM 1,565,319.60

    6. CN 589106 – Prov. Of Minor Const. Services For Erb West Metering & SJPM Tie-In To Erb West Project, Sabah. (L) 15-05-1997 RM 952,817.00

    7. Provision Of Minor Onshore & Offshore Const. Services For Samarang Field (Samarang Modifcations – Kinabalu Tie-In Works) 09-01-1997 RM 12,892,343.00

    8. Road & Estate Maintenance Services- Miri/Lutong (Road Const./Repair), Serawak. (L). 03-10-1996 RM 3,056,312.00

    _____________________

    A. Maklumat Syarikat: :

    Company Name : LINGKARAN LUAR BUTTERWORTH (PENANG) SDN. BHD.

    Address : NO. 52, 1ST FLOOR JALAN SS 21/58 DAMANSARA UTAMA

    Postcode 47400

    Town : PETALING JAYA

    State: SELANGOR

    B. Maklumat Pendaftaran :

    CIDB :

    i) No Pendafataran : 1981224-SL050264

    ii) Tarikh Luput Pendaftaran : 13-07-2009

    ii) Gred : G7

    D. Maklumat Ahli Lembaga Pengarah:

    Bil Nama Warganegara Jawatan

    1.DATO’ MOHD HUSSAINI BIN HAJI ABDUL JAMIL MALAYSIA PENGARAH

    2.DATO’ YEOH OON CHENG MALAYSIA PENGARAH

    3.DATO’ ZAINI BIN ISMAIL MALAYSIA PENGARAH

    4.Y.B. JOSEPH SALANG ANAK GANDUM MALAYSIA PENGARAH

    5.NAZRI BIN AWANG HAD MALAYSIA PENGARAH

    6.TAN SRI DATO’ DR AWANG HAD BIN SALLEH MALAYSIA PENGARAH

    7.STANLEY AJANG BATOK MALAYSIA PENGARAH

    G.Modal Berbayar / Modal Terkumpul :

    a.Modal Dibenarkan (RM):

    b.Modal Berbayar / Modal Terkumpul (RM): 93,000,000.00

    H.Maklumat Projek:

    Bil Tajuk Tarikh Anugerah Nilai (RM) Klien

    1. Membina Dan Menyiapkan Jalan Lingkaran Luar Butterworth Package 3 & Package 4 RM

    2. Rekabentuk, M & M Projek Penswastaan Jln Lingkaran Luar Butterworth, Pakej 1B – Pemb. Jambatan Sg Prai & Jln Tuju (L) 02-08-1999 RM 275,926,851.10

    3. Rekabentuk, M & M Projek Penswastaan Jln Lingkaran Luar Butterworth, Pakej 1B – Pemb. Jambatan Sg Prai & Jln Tuju 02-08-1999 RM 275,926,851.10

    _____________________

    Bakun: Project is commercially viable

    The Star, Tuesday, 27 November 2007.

    KUALA LUMPUR: The Bakun hydroelectric dam is a commercially viable project, said Synergy Drive Bhd president and group chief executive Dato’ Seri Ahmad Zubir Murshid.

    This was especially true with the high price of crude oil, he added. Crude oil per barrel has almost touched US$100 per barrel on the Nymex for January delivery.

    “Gas prices follow crude oil prices closely and half the country’s power is generated by gas, about 40% by coal and less than 10% by hydroelectric sources,” Zubir said.

    He also said power generated by hydroelectric means was proven to be cost efficient and stable. Unlike coal, it was a sustainable and renewable form of energy source.

    Besides consolidation in the company’s plantations and property development divisions, energy would play an important role to Synergy Drive’s growth strategy in enabling it to develop recurrent cash flows in the medium to long term.

    “With Bakun operational, revenue stream from the division would increase substantially from what we’ve derived so far from our Port Dickson power plant and another power plant in Thailand,” Zubir said.

    On the cost-efficiency of Bakun, he said the company had approached consultants and at the same time was talking to Tenaga Nasional Bhd (TNB) on the power purchase agreement (PPA).

    Zubir cautioned that the rates would be competitive at 2012 prices, without compromising on major stakeholders’ expectations as well as the company’s internal hurdle rates. Two of the major stakeholders in Synergy Drive are Permodalan Nasional Bhd and the Employees Provident Fund.

    “Our foray into the power sector is for the long term, therefore our agreement with TNB must be balanced out based on a long-term relationship,” he said, adding that each PPA generally lasted 30 years.

    Zubir said the company was committed to delivering the first 800MW from Bakun by 2013.

    Peninsular Malaysia – Power Demand & Supply graph

    On financing the undersea cable component of the Bakun project, he said Synergy Drive as a group was in an enviable financial position not to incur high borrowings due to sufficient cash reserves and the high crude palm oil prices.

    “But we’re not resting on our laurels, we’re developing Bakun because palm oil may be the flavour of the month so we need to derive other earnings stream to maintain our revenue targets and Bakun fits perfectly,” Zubir.

    He said while the company was known as an established plantation player, the energy division would play a significant role in boosting and diversifying its earnings as it had been identified as one of the group’s core businesses.

    “We’re a local-based conglomerate with a global reach,” Zubir said, adding that 50% of its revenue was derived from overseas.

    _____________________

    Dr M: Responsibility for Sime Darby losses should be shared

    The Star, Wednesday May 19, 2010

    PETALING JAYA: Tun Dr Mahathir Mohamad has claimed that the cost overruns in the Bakun project were almost RM1.8bil and said the responsibility for the Sime Darby fiasco should be shared.

    “The Bakun hydro project was given to Sime Darby and a Chinese partner at RM1.8bil. Now, the CEO has been dismissed because of cost overruns in the project, amounting to RM900mil.

    “But I believe, and Sime Darby can correct me, the overruns are more than that because the Government has already compensated Sime Darby with about RM700mil.

    “So the total cost overruns would be almost equal to the bidded price of RM1.8bil. The price has been doubled,” Dr Mahathir wrote in his blog, chedet Wednesday.

    “How come the bid is so low? I would think the engineers would know that they would not be able to build at RM1.8bil. Who are the consultants in Sime Darby? How come they okayed such a low cost for the project?” he asked.

    He said the responsibility for the overruns should be shared: “Is it only the CEO who was responsible? Who are the others who were involved with the project and failed to see that the cost overruns were very high and the project has been delayed by almost three years.

    “I think responsibility should be shared. I was told of this cost overrun and delay three years ago,” Dr Mahathir wrote.

    Meanwhile, Sime Darby chairman Tun Musa Hitam told a news portal Wednesday that he would quit if required to, in wake of the conglomerate’s huge first-quarter losses.

    “When I have made my own assessment, if necessary, yes, I am prepared,” he said.

    He added, however, that it was up to the shareholders to decide whether board members should also be made to resign.

    Last week, the board asked president and group CEO Datuk Seri Ahmad Zubir Murshid to take a leave of absence, prior to the expiry of his contract in November this year.

    This came after Sime Darby reported RM964mil in cost overruns from projects, including the Bakun dam project, racked up during his tenure.

    Prime Minister Datuk Seri Najib Razak said last week there would be no cover-up of any weaknesses or losses at Sime Darby.

    The cost overruns were discovered by a board work-group assessing the corporate governance and performance of Sime Darby’s energy and utiliies division.

    _________________________

    Bakun cost over-runs: Sime Darby claims extra RM700 mln for Bakun

    Borneo Post, 11 May 2010

    KUCHING: Malaysia’s multinational conglomerate involved in plantations, property, industrial, motors, healthcare as well as energy and utilities Sime Darby Bhd (Sime Darby) has put in a claim of RM700 million from the government in relation to the Bakun project, an addition to an earlier claim of RM708 million.

    In its research report, CIMB Investment Bank Bhd (CIMB Investment) remained negative on this issue because in the past the group had a briefing to refute potential cost overruns on this project as well as the revelation of a substantial cost overrun when the project was 96 per cent completed.

    The research house also pointed out if the claim was approved, the total cost of the civil works portion of the project would rise to RM3.2 billion from RM1.8 billion, adding that part of the additional costs could have been due to claims by the mechanical and engineering contractors.

    It added that under the terms of contract, Sarawak Hidro Sdn Bhd (Sarawak Hidro), the owner of the project had the option to impose on the civil contractors led by Sime Darby, a back-to-back claim made by the mechanical and electrical contractors.

    In addition, CIMB Investment said that Sarawak Hidro had the right to claim up to 20 per cent of the original project cost from the contractors due to the late delivery of the project. As such, the maximum amount for late delivery worked out to be RM360 million for the Sime Darby-led consortium.

    In total, the research firm noted the additional loss from the project could be as high as RM1 billion but the loss could be contained at RM300 million if the additional submitted claims of RM700 million were approved and all other claims against the company were dropped.

    In addition, it gathered that the handover had been further delayed to December this year from an earlier deadline of June, which meant the project was 36 months behind schedule.

    Furthermore, the quantum of additional loss that the Sime Darby-led consortium had to account for in its upcoming results would depend largely on the government’s willingness to reimburse the additional costs uncovered by the group and waiving all the late-delivery charges that it was entitled to for this project.

    However, there was an indication that the group was only willing to absorb RM300 million or 15 per cent of total estimated cost overruns of RM1.7 billion.

    Nevertheless, the research house said it was unclear if this was on top of the RM364 million it had provided earlier in the middle of 2006.

    Additionally, its view was that the government was unlikely to absorb all the new cost overruns as it attributed these to the poor management of the project and doing so might set a poor precedent for future government projects.

    CIMB Investment highlighted that based on its estimates, the group might have to write off potentially between RM107 million and RM227 million from this project due to its 35.7 per cent share of the project, resulting in a four per cent to 8.4 per cent cut to its current year earnings estimates for Sime Darby.

    However, it still retained its earnings forecast, which did not include the potential loss from Bakun, as the losses were still to be confirmed.

    It remained concerned about the issue as it would negatively impact the sentiment in the stock and investors’ confidence.

    Furthermore, it also remained unclear if the government had relieved the consortium of the obligation to pay late delivery charges.

    On a related note, although the research house liked the efforts put in by the group to improve efficiency at its various core divisions, these were likely to be overshadowed by the revelation and the handling of the Bakun issues, which would dampen near term earnings momentum.

    Although the stocks price over earnings valuation might be more attractive than its peers, it was offset by earnings downside risks due to the Bakun project.

    It maintained its RM9.70 per share target price based on a 10 per cent discount to its sum-of-parts value.

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    Sime Darby Plans RM100 Million Oil Palm Plantations In Sarawak’s NCR Land

    Bernama, July 09, 2009

    SARIKEI, July 9 (Bernama) — Sime Darby Plantation Sdn Bhd is set to invest an initial RM100 million to develop oil palm plantations on Native Customary Rights (NCR) lands in Julau, about 55 kilometers from here.

    Its Plantation Agency and Consultation head Mohd Helmy Othman Basha said the project would cover an area of about 20,000 hectares.

    “This is is our first project in Sarawak and incidentally on the state’s Native Customary Rights land.

    “The project will be in a joint ventureship with landowners from 109 longhouses in three areas namely KJD/Lower Julau, Sungai Julau/Sungai Pitoh and Merurun/Meluan/Entabai,” he told reporters on Thursday.

    Representing the landowners at the joint venture agreement signing ceremony at a community hall here was the Land Custody and Development Authority (LCDA). Present was State Land Development Minister Datuk Sri Dr James Jemut Masing.

    Helmy said the preparatory work would begin after Sime Darby had done and submitted the Social and Environmental Impact Assessment report to the authority concerned.

    “We expect to begin in a month’s time after this. However, we are very pleased that so far there have been very positive responses from the landowners concerned.

    “But we will continue to explain the joint ventureship concept further and to more others. Let the people have very clear understanding for them to appreciate and accept, and for us to proceed smoothly,” he said.

    In the joint venture, Sime Darby will hold 60 percent equity while the landowners 30 percent and LCDA 10 percent.

    Helmy said the target was for Sime Darby to develop around 50,000 hectares in Sarawak and another 50,000 hectares in Sabah.

    In a speech earlier, Dr Masing told people in the area not to doubt Sime Darby’s ability.

    “We are looking at a very well established and leading multinational conglomerate which has about 100 years experience in developing not only oil palm but also rubber plantations in Sabah and the Peninsular.

    “Sime Darby too has more than 560,000 hectares under oil palm plantations in the country and in Indonesia,” he said.

    “I am very optimistic of the success of this joint venture provided the landowners concerned give their fullest co-operation to Sime Darby and LCDA which is looking after their rights and interests,” he added.

    Dr Masing said a representative chosen from among the landowners would be appointed to sit on the joint venture’s board of management to keep them informed on any latest developments.

    He said the landowners would stand to gain as through the plantation they could find jobs and business oportunities and receive dividends and bonuses when the crop is harvested.

    At the same time, he said, they could enjoy better infrastructure facilities like roads as the company would have to build more roads into the interiors affected.

    “Best of all, each individual landowner will know the exact size and location of his or her land which will be officially recognised,” he said.– BERNAMA

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    Sime Darby to develop plantations on Sarawak’s NCR land

    The Edge Financial Daily, December 8, 2009

    KUALA LUMPUR: SIME DARBY BHD’s unit, Sime Darby Plantation Sdn Bhd, has acquired the entire stake in Nature Ambience Sdn Bhd from Common Enhance Sdn Bhd for RM16.82 million in a move that will allow it to develop oil palm plantations in Sarawak on native customary rights (NCR) land.

    In a statement yesterday, Sime Darby said: “The acquisition will enable the Sime Darby group to develop oil palm plantations in Sarawak under the state government’s new concept of development for NCR land, in conjunction with Sarawak’s Land Custody and Development Authority (Pelita) and the natives holding native customary rights in the land.

    “It is the intention of the group to adopt a differentiated approach to cultivate the NCR land, which is to be developed pursuant to the NCR joint-venture agreement, in compliance with the relevant guidelines issued by the Roundtable on Sustainable Palm Oil.”

    It added Nature Ambience, which was incorporated in December 2008 and would be principally involved in oil palm cultivation and palm oil production, had on Oct 2, 2009, been granted approval from Sarawak’s ministry of land development to invest in or develop 26,211ha of NCR land in Kapit and Julau in accordance with the state government’s new concept of development on NCR Land.

    Sime Darby said in the approval letter, the state’s ministry of land development had asked Pelita to issue a formal offer letter to Nature Ambience incorporating the basic terms and conditions to be entered into between relevant parties, the NCR joint-venture (JV) agreement, subsequent to the confirmation of interest by Nature Ambience.

    It said the JV was expected to be between Nature Ambience, as a JV vehicle, Sime Plantation and Pelita’s subsidiary, Pelita Holdings Sdn Bhd, acting for itself and as trustee for the natives holding the rights in the NCR land.

    Under the NCR land development scheme, the equity structure of the JV held by the investor, landowners and trustee would be 60:30:10, it added.

    Meanwhile, Sime Darby said the scheme was an effort by the Sarawak state government to bring together the landowners with their land and the private sector with its capital and expertise to develop the land for commercial farming on a joint-venture basis, for the benefit of both parties.

    “The objective of the NCR land projects is to turn idle NCR land into productive commercial assets and enhance equitable economic wealth distribution in the state,” it said.

    It said the development of the land involved the merger of contiguous plots of NCR land into one parcel of land, with the agreement of the landowners. A leasehold title would then be issued to the land in favour of a JV for a period of 60 years or two planting cycles.

    As consideration for the use of the land, the NCR landowners would be allocated a 30% equity in the JV company, with Pelita acting as trustee, in addition to its own 10% equity interest in the JV, it said

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