Religion vs Greed - New Tabung Haji Scandal Looms Over The PN Government? EXCLUSIVE

Religion vs Greed - New Tabung Haji Scandal Looms Over The PN Government? EXCLUSIVE

One of the most depressing backward steps during the past days of the coup coalition government has been the unseemly rush by the supposedly humble and religious party, PAS, to extract what more they can out of Malaysia’s diminished natural resources – despite global scientific concern about the consequences of extinction and climate change.

On March 13th, Sarawak’s Borneo Post reported a triumphant declaration by the as yet unconfirmed new ‘Minister of Plantation Industries and Commodities’, PAS’s Mohd Khairuddin, that he plans to end the moratorium on further logging and conversion to oil palm plantations promoted by the Harapan government, which was seeking to engage with European markets concerned by Malaysia’s record of reckless environmental destruction in recent years.

This is the same Kuala Nerus MP, who brushed off criticism of his high living before the last election, saying that PAS Islamic party MPs (who represent some of the most impoverished people in the land) have every right to lavish and expensive lifestyles.

When bailed out (after feckless state spending) by the Harapan federal government just before their coup, his fellow party leaders in Kelantan made it their first priority to buy a fleet of top of the range (non-muslim) Mercedes cars for them to drive around in with money intended for staff salaries and services.

There been little surprise that this ‘religious’ party made a bee-line for the various environment posts as the rivalling parties carved out deals over cabinet positions. The two PAS controlled state governments (Kelantan and Terengganu) have spent the last two years cavilling at federal attempts to restrain the rampant greedy and destructive logging of their remaining state forests and blatant abuse of the established rights of the indigenous peoples who live there.

The Minister for the Environment is none other than the Deputy President of PAS, Tuan Ibrahim, and the Deputy Minister of Agriculture is also from the party.

Saddest of all for Sarawakians who voted for change at GE14 has been to see the new Puncak Borneo MP, Willie Mongin (now Deputy Minister of Plantation Industries and Commodities) defecting and now supporting his new PAS boss in the rush to announce plans to get right back to logging and rolling out more of the mass plantations that have created environmental disaster in the state.

The duo promised to ‘increase production and plantation areas’ in defiance of Malaysia’s existing high value European customers with all their tiresome sustainability concerns and claimed that they can drum up new markets, in such places as the Middle East instead – a region in need of biofuel?

All this before this government can even be confirmed in office. Mongin, a PKR defector, is clearly thrilled to have a deputy minster’s post (and official car and all the rest) as his reward for selling out his constituents. However, for him to have acted as a key enabler for this coup coalition government consisting of bigoted PAS, crooked UMNO and Taib henchmen is an extraordinary betrayal. He has so far refused to come out in the media to give a proper account of himself for whatever excuses he may claim to have.

The fact is Malaysia is presently facing the consequences of an over-saturated oil palm business faced with contracting demand, plummeting prices and far stricter sustainability criteria from the most valuable European markets on environmental grounds.

It means the PAS led grab to convert yet more forest and peatland into loss making plantations, primarily because ‘someone’ stands to make vast profits chopping down the remaining timber, will do enormous economic damage to Malaysia.

Yet the grandly titled ‘Deputy Minister of Plantation Industries and Commodities’, Willie Mongin, is going to help them in Sarawak. And the Taib family, who have been pushing to cash in on massive licences they corruptly handed to themselves, will thank Willie for his betrayal of native landowners who thought he was on their side.

Another Tabung Haji scandal?

Against such a background it is perhaps of little surprise to discover the government-backed pilgrimage fund is right at the centre of the latest eco-scandal about to be highlighted by NGOs.

Sarawak Report has sighted leaked information from a damning report on malpractices by the fund’s plantation arm, Tabung Haji Plantations (THP), which has caused a number of documented problems in Sarawak, Sabah and Kalimantan on the island of Borneo.

However, the latest scandalous transgression, which has been apparently only been recently discovered, is in the state of Pahang – in the form of a massive plantation development initiated by the fund in 2014 at the height of the Najib government.

According to the documentation, over 8,000 hectares of protected forest was de-gazetted by the state authorities in one of Pahang’s most famous beauty spots, the Yong Forest Reserve, which is directly adjacent to Taman Negara National Park. Leaked reports, including one from the timber certification auditor SGS, show the given purpose was to convert the land for yet more oil palm – the licence holder being Tabung Haji Plantations.

Indeed a total 11,592.54 hectares in the Yong Reserve is cited to be converted from ‘natural forest to forest plantations’ which are actually oil palm say NGO investigators.

By 2015 complaints began to roll in that the area was being dramatically cleared. It is now evident that despite cutting back on its wider plantation business, which has been losing money during the market collapse, THP is continuing to invest its fundholders’ money in rolling out this new plantation on forest land, which appears to violate several of the agreements for sustainable palm oil which buyers from Tanbung Haji Plantations have signed up to with European partners.

The question forest NGOs are asking is why this massive, rule-breaking project continues to be supported by THP at what can only be enormous cost to the fund and its investors, despite the fact that the bottom has fallen out of the saturated palm oil market?

THP has been selling off several of its existing plantation interests as fast as it can  over the past year elsewhere to cut hundreds of millions of ringgit worth of losses, so why has it mysteriously continued to invest pilgrims’ savings in planting up this brand new deforested area in Pahang which will not even be productive for years to come?

Investigators who discovered the existence of the project late last year told Sarawak Report that this de-gazetting of permanent forest, clear-felling and present plantation by THP is a clear transgression of agreed environmental standards on sustainability and yet THP claims it is a sustainable producer and holds a Malaysian Palm Oil Certification.

THP is currently a significant provider of crude palm oil to key suppliers for the European market, such as Sime Darby and Wilmar, who pledge to these major clients that their sources abide by agreed environmental standards, which include not sourcing from areas planted in zones deforested since 2013:

“We discovered the development in September, but it is only recently we have worked out how huge this area is, a vast 12,000 hectares in three projects in Pahang*. They are already in deep financial trouble, so we cannot understand why THP would invest so much money in such a controversial plantation. They are already in deep financial trouble, trying to sell off other plantations, they will be blocked out of the international market if they act this way”” one NGO observer has told Sarawak Report.

Indeed, evidence from an environmental impact report from the approved timber accreditation body SGS (based in Switzerland) implies that originally far more land, as much as 21,513.08 hectares*, had been earmarked for de-gazetting and clear fell destruction under the project.

And, in a further apparent violation of terms agreed by Malaysia’s Timber Council, there is no sign of any attempt to ‘off-set’ the de-gazetting by designating other areas for protection, which is the rule for any timber harvested from formerly gazetted areas post-2015 – the so-called ‘Recovery Liability Compensation Scheme’. Neither, say NGOs, was any social, conservation and economic cost-benefit analysis conducted for the above areas as required by the standard.

Logging campaigners say although the practice provides an easy loophole for Malaysian actors to plunder valuable remaining forests whilst replacing them with degraded areas of little natural value, that requirement ought to have been fulfilled.  However, in the Pahang case not even this gesture has apparently been attempted to replace the damage from this brand new plantation project.

 “It is as if this company thinks because they are protected by the government and because they represent sensitive investors, the pilgrims, they can get away with ignoring the rules and the suppliers will not hold them to account. But, those suppliers will themselves be held in violation.” the NGO observer continued.

“The violation with buyer’s policies is THP’s role in driving deforestation for oil palm. THP have accumulated liability by clearing (peat) forest in Kalimantan and Sarawak since December 2013. Selling off their assets does not diminish their liability for the thousands of hectares cleared by or on behalf of THP subsidiaries. The Pahang project exposes the group to even greater liability. Given THP’s financial troubles, the question arises how this Government Linked Company – that ultimately reports to the Federal government – hopes to sustain itself in the international market place?”

Tabung Haji comes under the direct purview of the Prime Minister’s Department. However, the concern is perhaps less that its may consider itself ‘untouchable’ but rather that it is vulnerable to political pressure and abuse, given that Najib, who is himself from Pahang, is on record for exploiting the fund to cover up 1MDB amid other suspicious investments.

Sarawak Report has also viewed a copy of the Environmental Scoping Information (ESI) report for the THP Pahang project.  It confirms that ‘the Project site is located in Yong Forest Reserve’ in which ‘there were several components considered as an environmentally sensitive area (ESA)‘. Nevertheless, thanks to a string of licences granted by the state planning authority mainly between 2015-2017, the entire forest permitted to be clear felled and converted into the plantation and the question is why?

Mysterious purpose?

The reasons given in the ESI report, published just this year, seem wholly unconvincing given the bottom has fallen out of the palm oil market and THP itself has been losing money hand over fist. The ESI Statement of Need alleges that, despite these circumstances, there is a need for the extra plantation in this environmentally sensitive area and makes the further extraordinary claim the plantation will be “environmentally sustainable”:

STATEMENT OF NEED

The oil palm industry forms the economic backbone of Malaysia and continues to face new challenges in the face of globalization. The growth of the palm industry in Malaysia has been phenomenal. From mere 400 hectares planted in 1920, the hectarage increased to 54,000 hectares in 1960. Since then many more areas have been opened up for oil palm cultivation, either from virgin jungles or from the conversion of plantations that originally supported rubber or other crops….

Among the beneficial aspects of the project are:

  •  The Project is aimed to stimulate economic development and subscribe towards fulfilling national policies under the Eleventh Malaysian Plan (2015-2020) ….;
  •  The Project will support palm oil mill operations and other related downstream industries;
  •   It will provide and increase job opportunities amongst the population i.e. business opportunity and employment in agricultural sector;
  •  .. The project will transform a forest into a plantation site which will be environmentally sustainable;
Leaked report provides unconvincing justification for the deforestation of the Pahang Yong Reserve

Leaked report provides unconvincing justification for the deforestation of the Pahang Yong Reserve

The document also claims that the plantation will bring jobs for local youths to return to the area, yet as Malaysians are aware, most palm oil workers are imported migrants from other countries.

Royal Command?

So were there other incentives that drove the decision to de-gazette a forest reserve, log out the timber and then cause THP to invest huge sums of money in a new plantation at the very time it is divesting of loss making existing plantations elsewhere?

It might be relevant at this point to remind that former prime minister Najib, currently facing multiple kleptocracy charges, has his seat in Pahang and is known to have cultivated an extremely close relationship with the then sultan of the state (now deceased) whose son is the present Agong.

Forest campaigners say although wider information is still lamentably lacking about who is behind the project, the ESI report reveals certain important facts.

Firstly, that THP was not granted the logging rights to the area, although no mention is made as to who did benefit from the highly lucrative timber licences made possible by the decision to clear the land:

“The logging activity is not involved in this proposed development. The project proponent should inform in writing declaration they are only allowed to enter the project site after logging activity is completed.” [ESI report – “Proposed Oil Palm Plantation Development on 8,094.43 Hectares (20,001 Acres) Land on PT4951 – PT4955 and PT4987 – PT4991 in Mukim Tembeling, District of Jerantut, Pahang Darul Makmur”]

Secondly, that whilst the Mukim Tembeling plantation is being developed (i.e. invested in) by THP Agro Management Sdn Bhd, the actual ‘land owner and Project Proponent’ is a  subsidiary company called Deru Semangat Sdn Bhd.

Company research has revealed that THP is only the 55% shareholder of Deru Semangat, the other shareholder is the second son of the former Sultan of Pahang and younger brother of the present Agong of Malaysia with 45% of the private company.

Doing business chopping down 'Permanent Forest Reserves' in his state?

The son of the former Sultan and brother of the present Agong doing business chopping down ‘Permanent Forest Reserves’ in his  state?

Given the low level of public information available on the massive project Sarawak Report therefore believes the public should be informed exactly who was given the licences to log the valuable timber on this land and exactly how the costs of the investment in the subsequent plantation have been shared out between Tabung Haji and the family of the Sultan of Pahang?

There are also unfortunate conflicts of interests that need to be addressed in the light of this hitherto unpublicised involvement by the brother of the present King of Malaysia in this major project licensed by his own state authorities of Pahang.

The recently removed Pakatan Harapan government’s pledge to halt all new palm oil plantations and to halt further deforestation clearly created problems for the major enterprise, which will now be eased, for example, by the overturning of such policies by the as yet unconfirmed administration appointed by the King.

Sarawak Report is therefore bound to point out that the Agong, who controversially appointed the new prime minister, despite the absence of any significant support amongst MPs, appears to have had a family interest in the arrival of a government that has immediately pledged to reverse policies that were creating problems for his palm oil venture.

On the face of it he needs to demonstrate that he was not motivated by personal interest  by at the very least ensuring his family produces full and transparent details of its financial involvement in the project, which currently are missing. In particular, how much is being invested by the pilgrim savers of Tabung Haji and how much by the brother to his majesty and how are profits to be divided?

The State of Pahang should also publish exactly who gained the timber licences for the felling of the de-gazetted forest reserve, which will have made huge profits for as yet unknown but possibly interested parties?

Tabung Haji – a pilgrims’ fund or a piggy bank for powerful players in Malaysia?

This latest questionable investment by the hard-pressed pilgrims’ fund would seem to represent just the latest in a string of scandals indicating that this fund, raised from the savings of devout muslims wishing to pay for a pilgrimage to Mecca has too often been cynically abused as a piggy bank for powerful figures, particularly the Pahang MP, Najib Razak, who still faces mass kleptocracy charges from his tenure as prime minister.

It is established that Tabung Haji was used by Najib’s government to purchase outrageously inflated plots of public land, which were originally gifted to 1MDB, in order to cover payments owed on billions stolen by himself and others. The pilgrimage fund paid out hundreds of millions of ringgit from people’s savings for land given free to 1MDB.

When challenged on the mark ups in 2015 (the same year the THP plantation went into action) Najib claimed the Tabung Haji purchases were a bargain and the fund would sell  on at a profit within a month. Yet the plots remain unsold and the loss has been to ordinary pilgrims, whose money is supposedly protected by the government oversight of Tabung Haji.

Thanks to the installation of ‘PM8′ Najib, who was booted out at the last election, is now back part of the ruling administration as one of the leading figures of UMNO.

Likewise, over past months Sarawak Report has also reported how the fund (along with the Employee Provident Fund, also controlled by government) has handily ignored the market to buy out huge numbers of shares in the Sarawak Taib family company CMSB belonging to the governor’s son Abu Bekir, thereby boosting the price of the company which had collapsed with the advent of a ‘reforming’ government in 2018.

It begs the question whether this government-managed and ‘protected’ fund has really been run in the interests of pilgrims or for the rich and powerful in Malaysia?

Indeed, way back in January 2016, Sarawak Report exposed a devastating warning by the then Governor of Bank Negara that the fund faced bankruptcy owing to its frequent use to invest in and bail out non-profit-making crony ventures – one might say in true, traditional Malaysian style of the sort the newly installed coup coalition fondly intends to return.

The report by Zeti Akhtar Aziz warned back in 2016

 “the worrying financial situation at Lembaga Tabung Haji… will make it difficult in the future for the LTH to play an effective role in helping Muslim pilgrims to perform their Haj” [translation]

This latest Pahang plantation scandal raises grave questions as to whether the same pressures are causing poor investment decisions by the fund.

And to increase the woes of Tabung Haji Plantations Sarawak Report has received devastating further information from a leaked report that shows a slew of other violations by the company, which campaigners say should see it struck off from qualifying as a viable and sustainable producer for western markets:

“Tabung Haji Plantations have broken numerous environmental regulations in Sarawak, Sabah and Kalimantan, which we have reported to our industry networks and suppliers, but so far nothing has been done about this rogue supplier. Now there is this scandal in Pahang.”

One informant says it is likely the powerful support of the Malaysian government and religious connotations of the fund have protected THP so far, in that suppliers in the region have sought to overlook glaring sustainability violations. However, they say the destruction of the Yong forest reserve is a matter key suppliers cannot ignore.

Never mind, say the new PAS Ministers of the Environment and their Sarawak helper, as there are other less fussy regions of the world who will apparently pay top dollar instead for Tabung Haji’s dirty product.

That remains to be proven, however Malaysia’s coup coalition clearly doesn’t care about climate change or God’s creations, let alone what people voted for – not if there is money to be made by powerful players now they have joined them.

*This article has been amended from an earlier posting containing an error over the shareholding of Deru Semangat Sdn Bhd.

*Figure updated: NGOs say SR’s original figure over 8,000 hectares underestimates the actual size of the combined project areas.

*Originally SR suggested a larger area

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