Sarawak Timber Giant Fined $40 m For Transfer Pricing Scam In PNG

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A major logging operator in Papua New Guinea has been charged a whopping K140 million [$40m] for tax evasion, Internal Revenue Commission (IRC) boss Sam Koim announced yesterday…. for engaging in illicit tax evasion, specifically through transfer pricing.

This amended assessment (tax bill) is a direct outcome of an extensive transfer pricing audit .. the Commissioner General, Sam Koim, revealed when announcing the outcome of the first of more than twenty audits initiated since he took office.

He said “the logging sector in PNG has long been suspected of involvement in tax evasion. Instead of turning a blind eye, we have initiated over twenty audits since I took office.”

PNG’s anti-corruption champion and now chief prosecutor, Sam Koim, did not name the logging company which has thus had its tax bill revised upwards.

However, Sarawak Report has been reliably informed that it is a subsidiary of one of the major Sarawak timber companies which have been operating in Papua New Guinea in exactly the way they operate back home, destroying millions of hectares of virgin forest.

According to Koim the so-called practice of ‘transfer pricing’ has explained in this particular case how it was that the company mysteriously made meagre profits from its logging operations and yet appeared to flourish and kept coming back for more.

The same scam has often been suspected in Sarawak over past decades where, likewise, the logging giants have appeared to have sold their laden cargoes of timber for a miserable profit and yet persisted with their destructive business.

In short, the company is said to sell to itself or an accomplice based somewhere like Singapore. At which point the ‘buyer’ then re-sells their dirt cheap bargain on the global market for a much higher price.

The taxman is only informed of the original sale meaning that the state and local folk receive little or no benefit from brutal extraction of their valuable resources.

Having dug into several transactions Koim clearly believes he has proven in this case that this was practice that was going on with this major Sarawak concern. He has another twenty cases under investigation involving largely the same handful of companies that first chewed up Sarawak and then invested in logging elsewhere.

It is high time that the federal authorities in Malaysia did the same thing with a rigorous deep dive into all the books of the so-called Sarawak Big Six timber companies who have so very unconvincingly been telling all and sundry that they have been charitably operating for very little profit for the past half century.

Any politicians who, unlike Sam Koim, have decided to take major donations for their campaigns and turn a blind eye instead ought to have plenty to worry about the moment such an investigation is launched in Sarawak.

It would appear that billions have gone missing and therefore billions are owed. What’s more tax evasion is a serious crime for which it is never too late to prosecute. Sarawak and Malaysia deserve recompense.

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