23 Nov 2013

Noble Gesture? How Taib Family Cashed In On Samariang While Poor Buyers Suffered

Noble Gesture? How Taib Family Cashed In On Samariang While Poor Buyers Suffered

This post is also available in: Iban, Malay

CMS's 'modular housing' was supposed to provide a low cost solution to the pledge to build homes for the poor in Bandar Samariang.

Our “vast land bank” – CMS’s ‘modular housing’ was supposed to provide a low cost solution to the pledge to build homes for the poor in Bandar Samariang.

Sarawak Report has investigated how members of the Taib family started cashing-in on the Bandar Samariang project, straight after the Chief Minister had placed the vast 5,200 acre site into the hands of his own company CMS.

The rip off has caused untold misery to poor house buyers, who have been left with sub-standard homes and little compensation.

Yet, Taib had promoted the Bandar Samariang project as a “noble gesture” by his family company, designed to assist poor families, desperate for low cost housing.

At the launch of the project in 1997 the Chief Minister announced that at least 3,000-5,000 new homes were needed in Kuching each year to address the problem of the homeless poor.

Bandar Samariang was supposed to provide 13,500 of these and during the same ceremony Taib’s brother Onn Mahmud, as Chairman of CMS, pledged all the low cost homes would be built within 5 years.

During the same ceremony the then Deputy Prime Minister, Anwar Ibrahim, praised CMS for what he described as a “noble project” to help the poor. Taib claimed most companies did not want to invest in the area and announced CMS expected to make “not much profit”!

But 15 years later a very different picture has emerged.

CMS expects to make RM474million in Bandar Samariang over next five years!

Clapped out already - poor materials and shoddy building work

Clapped out already – poor materials and shoddy building work

A decade after the completion deadline, only a fraction of the promised low-cost homes have yet been built, just 2,500 sor far.

Most of these are shabbily constructed and are already in an appalling state of deterioration.

Sarawak Report can demonstrate that the condition of these houses is directly owing to greedy attempts by Taib’s own relatives in charge of CMS, to cash in on the publicly financed project.

Meanwhile, far from avoiding profit, the company has coined millions out of selling off more expensive housing, shop lots and land in the area, which it now openly describes as a “vast undervalued development land bank“.

Given that Taib Mahmud’s original excuse for giving the land to his private company was that it was expensive to develop and other companies did not want to invest in the area, we ask how come CMS now describes the region as “undervalued”?

The [Property Development] Division has strong potential for long-term sustainable growth given the vast undervalued development land bank that is now being unlocked”, [CMS Annual Report 2012] 

In its latest Annual Report CMS proudly announces that its property division made RM60million revenue last year.  And over the next five years it expects to make a a cool RM474million out of Bandar Samariang!

So much for Taib’s claim that CMS was only interested in the project because they did not want poor people “to remain without houses” and so much for making “not much profit”!

RM474million – “Vast undervalued development land bank” handed by Chief Minister to his own family company! [2012 Ann. Rpt]

RM474million – “Vast undervalued development land bank” handed by Chief Minister to his own family company! [2012 Ann. Rpt]

 

Public subsidises boosting CMS profits

Shoddy and insubstantial.  Locals say internal walls are plaster board and asbestos

Shoddy and insubstantial. Locals say internal walls are plaster board and asbestos

The story of self-sacrifice and generosity by CMS unravels when one examines how Taib mobilised public finances to shore up his family’s property enterprise.

In the first place he made sure that the State of Sarawak’s Housing Commission placed an advance bid for the first tranche of 2,500 low cost houses to be built by CMS, in its handy joint venture with the Employee Provident Fund.

These were then sold on to buyers for a a substantial RM35,000 each, on the basis of loans from banks like the Mahmud family’s own Bank Utama.

Many have suffered under the harsh terms of these loans or have lost their homes because of delayed repayments.

Such victims include the owner of the house that served as a BN headquarters during the latest general election. Following the election in May the family was forced out say neighbours!

This family couldn't afford the repayments. So much for BN!

This family couldn’t afford the repayments. So much for BN!

Now, instead of targeting the hard-core poor, CMS’s Bandar Samariang project is clearly focused on high end housing and big profitable commercial enterprises.

The CMS sales teams are advertising in Sibu, Miri and other prosperous communities for houses selling little short of half a million ringgit.

What happened to the 11,000 houses still promised to Kuching’s poor?

What happened to poor local people?

Fancy houses, shops and big revenue – what happened to those poor local people?

 

Taib has also shored up the project by directing state investment in key infrastructure projects.

T11995These include the Federal Administrative Centre road which linked Bandar Samariang directly to the Sarawak River toll bridge and to the newly-built loop road running north-south through it.

The Borneo Post has also pointed out the completion of the road widening and upgrading works at Jalan Sultan Tengah to ease traffic congestion between Bandar Baru Samariang and Kuching.

What the State of Sarawak has signally failed to do, however, according to local people, is invest in proper public transport to the area.

The bus services to Kuching are useless, leaving locals stranded and dependent of cars they cannot afford.  This has not stopped BN ministers from criticising local people for being ‘profligate’ in buying cars and for pointing out there are satellite dishes on the roofs.

Locals retort that these satellite dishes were mainly given out as free promotions by Astro and no longer work, because they could not afford to take up the service long term.

Infrastructure of roads, but few buses for the poorer residents!

Infrastructure of roads, but few buses for the poorer residents!

 

Modular Housing debacle 

Most scandalous of all has been the Taib family profiteering from this public project.

Innovative 'Modular Housing'- CMS Ann Rpt 2000

Innovative ‘Modular Housing’- CMS Ann Rpt 2000

Sarawak Report has now investigated how various relatives running CMS appear to have enhanced their personal profits even further out of this vast enterprise funded by the state and carried out in the name of the poor.

We refer to the new Chief of the CMS Property Division in 1997, the Lebanese Australian, Robert Geneid - husband of Taib’s sister Raziah,

And we also refer to the Chairman of the company, Taib’s own brother, Onn Mahmud.

Geneid claims to have had a successful career in property development in his current website.

However, interestingly he does not refer to his 8 years as the Chief Executive of CMS’s ‘vast’ Property Development Division 1997-2005.

Not quite all about me - no reference to CMS's Modular Housing disaster!

Not quite all about me – no reference to CMS’s Modular Housing disaster!

Today, Geneid focuses only on his positions at the helm of his wife Razia Mahmud’s various ‘construction’ companies, which have received a series of major contracts and vast lands in Miri from her brother Taib Mahmud’s state government.

In reality these companies, which include Miri Properties, Kumpulan Parabena and Kumpulan Construction, lucratively sub-contract the work to other builders.

As one person linked to Kumpulan Parabena told Sarawak Report, “the company doesn’t even own a wheelbarrow!”.

However, back in 1997, when Geneid assumed his senior management job alongside other family members at CMS, he clearly saw the position as a major opportunity.

This was before the debacle over his ‘modular housing’ initiative and the apparent collapse of CMS’s drive to house Kuching’s poor.

All in the family - sons Abu Bekir and Suleman, brothers Arip and Onn, son in law Aziz Alwee and brother in law Robert Geneid

All in the family – sons Abu Bekir and Suleman, brothers Arip and Onn, son in law Alsree Alwee and brother in law Robert Geneid

Total Pride Sdn Bhd

The evidence trail goes back to the string of private companies, which Geneid and his wife operated out of offices based at 154-6 Jalan Sungai Pandingan in Kuching, at the same time as he was working at CMS.

According to our research, one of these private companies was called Total Pride Sdn Bhd, set up in 1997 at the time Geneid acquired responsibility for CMS’s ‘low cost housing’ initiative.

The shareholders of Total Pride included a company owned by a Lebanese relative of Geneid’s from Sydney, the developer Nabil Nazri Gazali; a company ‘owned’ by the secretary and nominee of Onn Mahmud (then Chairman and largest shareholder of CMS) and an off-shore company owned presumably by Geneid himself and his wife, called Blue Azure.

Whittaker Company was one of the Hong Kong companies run by Onn Mahmud.  Geneid relative Nabil Nazri owned Philbeach

Whittaker Company in Hong Kong was run by Onn Mahmud; Geneid’s relative Nabil Nazri owned Philbest Pty Ltd. Australia

Whittaker Company was one of the companies in Hong Kong ‘owned’ by Onn’s secretary Shea Kin Kwok, whereas Philbest Pty was owned by Geneid’s relative Nabil Nazri.

According to our information Total Pride bought a brand new invention from Nabil Nazri, which he had patented under the name of Modular Housing.

Modular Housing patent gained in 1998 and first sold to Total Pride

Modular Housing patent gained in 1998 and first sold to Total Pride

This invention was based on a fabric that was originally designed for caravans, we have learnt, and indeed another company was also set up at 154-6 Jalan Sungai Padingan, called Viscount Caravans Sdn Bhd at the same time.

Caravans or modular houses - same fabric ?

Caravans or modular houses – same fabric ?

However, the new Chief of CMS’s Property Development Division and his Chairman, Onn Mahmud, clearly had very grand plans about the exciting potential of this as yet untried method for producing cheap pre-fabricated paneling and roofs.  They decided it could marketed to CMS to build the thousands of cheap homes commissioned by the Sate Housing Commission.

The system was bought for RM48million from a company controlled by the Geneids, Onn Mahmud and Nabil Nazri.

The system was bought for RM48million from a company controlled by the Geneids, Onn Mahmud and Nabil Nazri.

Total Pride, built a factory to produce Nabil Nazri’s invented products on the Bako Road to Kuching and then managed to first rent the factory to CMS Property Development and then sell on the patent for RM48million to CMS.

The factory was then re-branded under the company CMS Modular Housing Sdn Bhd, which was soon promoting its new formula for making quick, cheap housing, amid great claims that it was guaranteed to last better than normal materials.

Could CMS Housing chief Robert Geneid and his boss and fellow shareholder Onn Mahmud have had any influence in the CMS decision to purchase this new construction idea from their very own company?

And, given the political influence of the Mahmud family, is it any surprise that the State Housing Commission was equally compliant in agreeing to purchase the untested product from CMS?

Significantly, back in at the launch ceremony for Bandar Samariang in 1977, Total Pride’s major shareholder, Onn Mahmud, was already advertising that CMS was planning an “innovative system” to fulfil its commitments for low cost housing.

In the same speech, recorded by the Borneo Post, Onn also repeated the promise that the 13,500 low cost housing units would all be built in five years:

“The first phase… will consist of low-cost houses totalling 13,500 units and this will be built within a span of five years. Once the first phase is completed, Onn is confident that it will be able to overcome the problem of the high demand for low-cost houses. All these houses would later be sold to the State Housing Commission (Perumahan), he said, adding that these houses would be built with an innovative system.He said the first 3,000 units were expected to be ready by mid 1999. [Borneo Post, May 21 1997]

But, at no time did either of these two top executives at CMS, both Taib family members, declare the blatant conflict of interest in selling their ‘bright idea’ for making cheap housing to the public company they were Directors of for millions of dollars.

Robert Geneid and Onn Mahmud sold the whole concept to CMS for millions of dollars.

Robert Geneid and Onn Mahmud sold the whole concept to CMS for millions of dollars.

From 1998 Robert Geneid set about promoting the ‘Modular Housing’ concept as CMS’s perfect solution for building cheap homes.

All details on modular housing have now been removed from the CMS site!

All details on modular housing have now been removed from the CMS site!

CMS Modular Housing made claims that its “innovative method” was a guaranteed, superior and best of all, extremely cheap method of rapidly building low cost housing.

Was this perhaps not a little foolhardy, given that the method was only just patented and had not been tested or tried anywhere else in the world?

Were Robert Geneid’s claims on behalf of the system not perhaps influenced by the fact that he had sold his factory and the entire process invented by his relative to his employers for RM48million?

Residents of Bandar Samariang soon found out that the raft of claims about the strength, resilience and water-tight nature of Nabil Nazri’s modular housing invention did not stand the test of reality, once they had started paying out for their quick build constructions.

In fact the units were flimsy and unsound and they did not hold together as promised.  The quick method construction didn’t even save CMS money either it turned out.  In 2006, a year after Robert Geneid had been eased out of his job as Chief of the Property Division CMS made this announcement:

The full story was not told

The full story was not told

Geneid and Onn Mahmud had sold a system that produced rotten housing for poor people at the expense of the State.

Even CMS lost money on this part of its business because of the self-serving decisions of its Directors.

But, the biggest losers were the poor people who bought into the sub-standard housing, paying more than they could afford for unstable constructions.

In Phase 3 of our story on Bandar Samariang we will expose the full, shoddy truth of the CMS Modular Housing system and how it failed the poor buyers, who were conned into paying hard earnings into CMS’s sub-standard, “low cost housing”.

Gerry built - with CMS Modular Housing 'Insil Roof'

Jerry built – with CMS ‘Modular Housing’ with flimsy ‘Insil Roof’