A RECENT opinion piece about Sarawak’s “financial black hole” has revived public interests on the alleged lack of transparency by the state government in terms of managing taxpayers money. Here’s a FAQ on what the whole issue is about.
Q: What is the genesis of this issue?
A: In the early 2010s, opposition lawmakers in the state had asked in the Sarawak state assembly about details on the “Contributions Towards Approved Agencies Trust Fund”. Contribution has been made by the state since 2006 to various corporations set up by the Sarawak government. This was disclosed during the state assembly meetings as the legislature’s approval was needed to channel the money. The opposition had kicked up a fuss because there was allegedly no oversight on how these private companies spent the money, which rightfully belong to Sarawak taxpayers.
Q: How much money has been channeled to these companies?
A: Based on publicly available information, including transcripts from DUN sittings and official documents, between 2006 and 2020, some RM22 billion had been allocated to these companies. These account for around 40 per cent of the state’s government’s annual development expenditure.
Towards Approved Agencies Trust Fund
Q: What’s wrong with channeling the money towards companies owned by the state government?
A: The opposition is worried about the lack of oversight as it involves public funds. The state government, after much pressure, has furnished the list of recipient companies but remains evasive on what the money was used for. Critics have drawn comparison between the manner in which these funds were allocated and 1MDB, also a company set up by the federal Ministry of Finance, that has been involved in misappropriation running into billions of ringgit.
Q: But is there anything to suggest wrongdoings so far?
A: State DAP chairman Chong Chieng Jen in 2019 had questioned why five companies have raised funds through bonds yet the state still disbursed billions for the repayment of loans. The companies are Sarawak Capital Assets Sdn Bhd, SSG Capital Resources Sdn Bhd, SGOS Capital Holdings Sdn Bhd, Equisar Sdn Bhd and Aquasar Capital Sdn Bhd.
Chong had said that the loans raised were USD350 million, USD800 million, USD800 million and Sukuk Fund (Aquasar Capital Sdn Bhd) of RM1.5 billion. The proceeds had been used for what purpose, it was not known.
Equisar Sdn Bhd, one of the recipients, was also undertaking the development of the Tanjung Manis Halal Hub. But the Auditor-General’s Report released in 2018 showed the company, which also undertook a project to transfer raw water to the hub failed to achieve its target and was of no benefit to the hub.
The funds have also been linked to alleged US$1.6 billion “under the radar” bonds underwritten by Goldman Sachs, the international banker implicated in the 1MDB scandal. it also made headlines when Global Witness, an international environmental and human rights NGO found impropriety linked to politically-connected personalities.
Q: What has the Sarawak government’s response been so far?
A: Sarawak Chief Minister Datuk Patinggi Abang Johari Openg has clarified in 2019 that the state government did not owe any international financial institutions any loans or bonds.
In a 2006 written reply to Chong in the state legislature, the then CM had said that the trust fund was set up to “improve our Budgetary process and accounting practices”. It was also for “carrying out or promoting any venture or undertakings of strategic interests in the state”. The written reply also clarified that the fund is managed by a committee chaired by the state financial secretary.
Q: Is this issue laid to rest now?
A: In Jan 2013, Chong headed a campaign to raise public awareness on this. He held a media conference “The Budget Black Hole – Where has our RM11 billion gone?”. Following this, the Sarawak government sued Chong for defamation. Chong had disputed the suit, saying that governments, unlike individuals or organisations, cannot sue for defamation. Following a protracted court case, the Federal court eventually ruled that governments can indeed sue.
The court case proper ie involving the Sarawak government’s suit against Chong is now back on track and more details surrounding the trust funds are expected to be revealed during the proceedings.