How much is Taib Mahmud worth?

(A report by Forests Monitor, UK)

Raja Petra Kamarudin

Politics, law and the logging industry

The influence of the logging industry on the politics and laws of host countries should not be underestimated, particularly with regard to obtaining licences to log and to forest policy more generally. There is often a mutually beneficial relationship between logging companies and political elites, involving the acquisition of large private wealth for both parties through bribery, corruption and transfer pricing, at the expense of public benefit through lost revenues and royalty payments and at the expense of social, environmental and indigenous communities' rights.

At the very least, these relationships equate to a conflict of interest; at worst, they suggest an institutionalisation of cronyism and corruption. In most cases, there is a fundamental imbalance of power between economic interests, the State and civil society over the control, use and exploitation of forests. The long-term consequences of this are logging at unsustainable rates for quick profit; illegal felling and illegal trade; disruption of successful local economies; social instability; environmental degradation; and social, cultural and political oppression.

The awarding of concessions and other licences to log as a result of political patronage, rather than open competitive tender, has been the norm rather than the exception in many countries. All too often, the identity of concession holders is surrounded in secrecy, as is the actual location of concessions. Occasionally, this information has been leaked from forestry departments or made available through unofficial channels.

Sometimes, the only information available is a list of the local concession holders rather than the identity of the ultimate owners and/or the sub-contractors who usually reap the rewards. In the case of Sarawak, for instance, the publication of a concession map became a political tool in 1987, when the present Chief Minister succeeded his uncle after an election campaign full of accusations of cronyism and corruption on both sides.

Trans-national logging companies, including Malaysian-based ones, often operate abroad through numerous private, locally-registered companies or as subcontractors to national concession holders. In this way, not only are each company's financial details difficult to track, but the actual links between operations (both nationally and internationally) are also obscured.

On paper, for example, the licence holders may appear to be separate entities. These practices have enabled companies to dominate the forestry sector of a country, for instance Papua New Guinea, or to circumvent maximum concession holding limits, such as those in Cameroon.

In countries which are now opening up their forests to timber exploitation (Guyana and Suriname, for instance), huge concession areas are sought by Malaysian and other trans-nationals. They put pressure on governments to issue logging licences over these areas despite the inadequacies of forestry departments to monitor operations effectively or to enforce legislation, despite indigenous and other local peoples' titles or claims to land and despite the lack of enough state forest to cover their requests.

Companies are not the only beneficiaries of patronage systems which facilitate the obtaining of concessions and other licences to log. Political elites—at both the national and local levels—also benefit through the receipt of funds and the support of wealthy patrons. Whilst these are inevitably difficult to prove, especially in a secretive licensing system, allegations of bribery and attempted bribery of government and community representatives have been made in Papua New Guinea and the Solomon Islands on several occasions.

The world's largest trans-national logging companies are headquartered in a number of home countries, including: USA, Japan, Germany, France, Finland, Sweden, Indonesia and Malaysia. Many have poor environmental and social records in their host countries. Malaysian-based companies have expanded both in size and in geographical spread over the last five years, and now represent a significant presence in the forestry sectors of a number of countries.

A national forest policy was promulgated in Malaysia in 1978, but forestry is managed by the separate state governments. Most tax revenue is collected by the national government, but state governments are allowed to collect land-related revenue, including timber export duties. These policies have encouraged state governments to maximise these revenues, in some cases to the detriment of sustainable forest management.

The development of export-oriented forestry industries in Sarawak first began in the 1950s, with the export of round logs and, to this day, log exports still dominate the state's timber interests. Log production has increased dramatically from 4.7 million cu m in 1970 to a peak in 1991 of 19.5 million cu m. In 1996 it was 16 million cu m, still double the rate recommended by an ITTO mission of 1990. Logging activities have continued at high rates and are widespread all over the state.

About 70% of Sarawak's land area has been licensed to logging companies.

The rapid expansion of the logging industry in Sarawak, including the rise of a few dominant players, is the result of co-operation between corporate leaders and politicians who have control over access to the forest resource.

The top politicians in Sarawak have long been awarding logging concessions to themselves, their families and their supporters. In the 1987 state election, the present Chief Minister, Datuk Patinggi Abdul Taib Mahmud, accused his predecessor of awarding 1.25 million ha of logging concessions worth RM22.5 billion to himself and his relatives. In retaliation, the previous Chief Minister, Taib's uncle, accused the incumbent of awarding 1.6 million ha to his own friends and family. Datuk James Wong holds at least 180,000 ha in logging concessions himself.

In 1992, a Malaysian academic institute published a detailed study of the relationship between loggers and Sarawak politicians and their families. A case study of Belaga district identified successive forestry ministers from 1966 to 1992, all of whom held shares in companies that had been awarded logging licences. The Lembahan Mewah timber licence, for instance, was 70% owned by the daughters of Rahman Yaakub, Chief Minister from 1970-81. The remaining 30% shares were held by the wife of Tajang Laing, state assemblyman for Belaga district.

Where politicians and their families hold concessions, they take no risk; they invest nothing in the logging operations and pay nothing for the logging licence itself. Some of the licence holders who subcontract logging simply collect a percentage of the income from logging operations as set out in the agreement made with the logging subcontractor.

Such connections between the political elite and logging companies persist to this day. Besides the fact that licensing decisions are made by the Chief Minister in his additional function as state Minister of Resource Planning, new legislation has been introduced that grants the Chief Minister alone the power to revoke timber concessions. No legal challenge to the revocation of licences is now possible and no reasons need be given. This ensures that anyone with a logging interest remains loyal to the Chief Minister or risks losing their licence. Such close connections between politics and timber exploitation means that there is little incentive to protect forests or to protect and enforce native people's rights.