Is Labuan going to be a tax haven for the corruption money and ill-gotten gains of politically well-connected Malaysians?

Speech by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in the Dewan Rakyat on Friday, June 22, 1990, on the Offshore Companies Bill 1990

Is Labuan going to be a tax haven for the corruption money and ill-gotten gains of politically well-connected Malaysians?

This is the first of the present batch of six Bills to make Labuan a tax haven. Before I proceed further, I note that we have before the House today nine Bills and two Motions (one by DAP MP for Kota Melaka, Lim Guan Eng, to confer citizenship to the 300,000 red identity card-holders who fulfill the citizenship conditions, and a second one by the DAP MP fro Bukit Bintang, Lee Lam Thye, to refer the Deputy Human Resources Minister, Datuk K. Pathmanaban to the Committee of Privileges for falsely accusing him of conniving and colluding with a foreigner, Terry Collingsworth, to get Malaysia’s GSP status removed and falsely claiming that Lam Thye had been photographed with Collingsworth in their joint effort on the GSP issue).

Parliament must not be treated as a stamp or a factory just to pass Bills even if there is no adequate time for meaningful debate

If the Government expects Parliament to deal with nine Bills and two Motions in one day, then it has utter contempt for MPs regarding Parliament as a more rubber-stamp.

I want to protest in the strongest possible terms at such contempt shown by the Government for Parliament. MPs must insist on their right to debate thoroughly and extensively on every Bill brought to the House.

MPs should not be told as if they are school children that the time-table for them today is to pass nine Government Bills, failing which they could not go home.

I call on all MPs to assert their basic right to have adequate time to debate government Bills presented before the House. They should not be told that they have to cut short debate on any Bill, just because there are nine Bills on the Order paper for today’s final sitting of Parliament.

I understand that in 1988, during the debate on the Internal Security Act (Amendment) Bill, MPs were given 3 minutes each to participate in the debate because it was late at night already. This is most ridiculous and shameful, making a complete mockery of Parliament as the highest legislative chamber in the country. MPs should never be told that they can have only three minutes to debate important issues of the country.

If there is only time for MPs to debate and pass four or five of the nine Bills today without depriving the right of MPs for a full and thorough debate, then let us pass only four or five Bills, and leave the rest of the Bills unpassed. If the Government wants to have the other Bills passed, then it should have extended Parliamentary sitting to Monday and Tuesday – and this could still be done.

I hope that the Chair would not ask MPs to cut short their debate on Bills because we have nine Bills to pass. Who say we must pass nine Bills today? The Government must attend to the needs of Parliament, and not Parliament attending to the needs of Government.

I give notice that DAP MPs will protest every time there is any attempt to undemocratically and unfairly cut short debate on any Bill, merely on the found that we have nine Bills to pass today, for otherwise Parliament will be reduced to a mere factory just to pass Bills!

Before we discuss the legislative proposals to make Labuan a tax haven, we must first reconsider Labuan status as Federal Territory.

DAP calls on Federal Government to make a substantial ex-gratia payment to Sabah in return for the gifting of Labuan to Federal Government

Recently, former Sabah Chief Minister, Datuk Harris Salleh, said he had been misled into handing over Labuan to the Federal Government. Harris Salleh expressed his regret that Labuan had not progressed as much as he had expected under the Federal Government.

A Daily Express ‘Personality’ feature on Harris Salleh on 3rd June, 1990, carried this paragraph:

“Speaking from his Penthouse suite at Gaya Centre Building here, recently, Datuk Harris likened Prime Minister Datuk Seri Dr. Mahathir Mohamed as a father who had been asked to help look after his ‘son’ (Labuan). “Later, when you found that he had mistreated your son, you definitely wanted to have your ‘son’ back..” he said, in response to criticisms that he had chosen to regret his decision to hand Labuan to the Federal Government.”

The legitimacy of Labuan being cut out of Sabah and handed over to Federal Government remains a primary bone of contention to the people of Sabah, for it was an act without popular support and mandate of the people of Sabah, as it was the sole decision of one person who arrogated to himself dictatorial powers.

If the Federal Government is keen on developing Labuan into a tax haven, this could be done regardless of whether Labuan is Federal Territory or part of Sabah.

I call on the Federal Government to take heed of the deep-seated discontent of the people of Sabah over the Labuan issue, and to take measures to remove these discontents, either by returning Labuan to Sabah, or alternatively, make a substantial ex-gratia payment for the development of the people of Sabah in return for gifting in return for gifting of Labuan to Federal Government.

Is the obscene haste to push through these six Labuan bills because the Barisan Nasional has doubts as to whether they could become law if general elections are held first?

We have six Bills before the House to turn Labuan into a tax haven, namely Offshore Companies Bill, Labuan Trust Companies Bill, Offshore Banking Bill, Offshore Insurance Bill, Labuan Offshore Business Activity Tax Bill and the Income Tax Act 1967 Amendment Bill.

These are very complex and complicated Bills, with the Offshore Companies Bill running into 260 pages with 149 Sections.

What is the need to rush through these six Bills today, without giving MPs as well as the public adequate time to study these complex and complicated Bills?

Is the obsence haste to push through these six Labuan bills because the Barisan Nasional Government has doubts as to whether they could become law if general elections are held first?

We have grave doubts that the Offshore Companies Bill can control and supervise the administration and operation of the offshore companies, when even under the Companies Act, so much irregularities and illegalities are allowed to take place without effective government intervention.

Call on the various regulatory authorities to hold public inquiries before approving the $1.23 billion RENONG deal to ensure that it is not against the public interest

The greatest illegality of recent corporate history is none other than the $1.23 billion RENONG deal, turning a modest-sized property company into one of the biggest investment-holding concerns in the region, with controlling interests in eight publicly-listed companies, namely Bank of Commerce Bhd., New Straits Times Press (M), Hume Industries (M) Bhd., United Engineers Malaysia, Kinta Kellas, Time Engineering Bhd., TV3 and Cement Industries of Malaysia Bhd. (CIMA).

The Renong deal is an elaborate corporate exercise by the UMNO Baru to raise funds for the coming general elections, as it has been estimated that the Renong deal could generate about $500 million in cash for the UMNO Baru general elections ‘war chest’ – which needs about $1.5 billion to fight the next general elections.

This is why although the Prime Minister, Datuk Seri Dr, Mahathir Mohamed, had in February accused the Opposition of getting funds from foreign sources, he dropped the subject when all the Opposition parties challenged him to establish a Royal Commission of Inquiry to investigate into the funding of all political parties, especially UMNO Baru, MCA, Gerakan and MIC.

The Renong deal is clearly illegal as it involves transactions in companies of deregistered UMNO, including Fleet Group Sdn. Bhd., Hatibudi Nominees Sdn. Bhd. and United Engineers (M) Bhd., which should be held by the Official Assignee.

In mid-May, in response to a Semangat 46 statement that it was considering legal action for a court order to stop the sale of Fleet Group and Hatibudi Nominees Bhd. to Renong Bhd., the Finance Minister, Datuk Paduka Daim Zainuddin, said there was no point of a court order to stop the sale as the Official Assignee ‘had already effected the sale.’

Daim said that an injunction would be inappropriate as the sale had already gone through, although an injunction to stop the sale might be done if Fleet Group and Hatibudi had been sold.

What Daim said actually contradicted a statement by Bumiputra Merchant Bankers Bhdd. (BMBB) who are the adviser to the Renong deal to make UMNO Baru the chief vehicle to assume control of the vast corporate properties of the deregistered UMNO.

On 3rd May 1990, the general manager of BBMB, Yap Chee Keong, was reported by the New Straits Times as explaining why he had not dealt with the Official Assignee. Yap said: “Why should the Official Assignee be involved? You are asking (this) based on the assumption that the Fleet Holdings’ assets are still held by the Official Assignee.”

Here we have two versions: Daim’s version that the Official Assignee had effected the sale of Fleet Group and Hatibudi to Renong, and Yap’s contradictory version that the Official Assignee was not involved in the Renong deal.

The public has a right to know the truth of the Official Assignee’s role in the Renong deal.

Three public interest questions are involved here. The first public interest questions is the propriety and legality of the Renong deal when the several companies should be held by the Official Assignee because of the deregistration of UMNO.

The second public interest question is the relationship between political parties and business. It has been said that apart from Malaysia, no political system in the region has developed such sprawling and deep corporate inroads into a nation’s company, with the country’s dominant party controlling the links. This will breed rampant corruption and abuse of power in high political places.

The third public interest question is the propriety and legality of the Renong deal to generate funds for the billion-ringgit UMNO Baru general elections campaign fund.

The Renong deal may be in the best interest of UMNO Baru but it could be clearly against the public interest. For this reason, I call on the various regulatory bodies to hold public hearings before approving the Renong deal, for the onus must be on the UMNO-owned and UMNO-controlled companies like UEM, Fleet Group and Hatibudi, and even the UMNO Baru leaders, to justify why such a merger and conglomeration of such diverse interests linking up the printed and electronic mass media, construction, engineering, manufacturing, banking and party politics can be in the public interest.

What is the true story behind the sale of KSM’s 28.9 per cent stake of MPHB to Kamunting Corporation Bhd.?

The failure of the regulatory authorities to ensure that the regulations and requirements of the corporate law are observed is not confined to UMNO-owned or UMNO-controlled companies. It is also prevalent in MCA-owned or MCA-controlled companies.

In fact, the scandal of the sale of the KSM’s 28.9 per cent stake of MPHB to Kamunting Corporation Bhd. has become the fuse for the on-off, on-off power struggle between the Ling Liong Sik and Lee Kim Sai forces for control of MCA. This is a separate scandal from the 19.7 per cent stake in MPHB shares owned by the 50,398 KSM-MPHB Investment Fund unitholders, for whose interest, I had to go to MCA Headquarters to face MCA Rambos, like the Parliamentary Secretary to the Ministry of Health, Chua Jui Mng, who headed a group of rowdies to break up the meeting.

In today’s press today, a few MCA state and branch leaders are demanding the full story of the MPHB-Kamunting scandal, as to why Liong Sik decided to accept the Kamunting offer for KSM’s 28.9 per cent stake in MPHB during the Bentong by-election in ay last year, when there were better offers from others.

In fact, the Kim Sai forces are going round the country alleging that Liong Sik had received an astronomical donation from Kamunting in the region of $50 – $60 million which had not been fully accounted foe in the MCA accounts.

When you have corporate scandals involving political parties, then this will end up in political scandals as well, like the appointment of David Yeo as Senator, an unknown to MCA leaders except to the MCA President, a mysterious but important figure in the life of Liong Sik.

The MCA is now rife with rumours about scandals in top party leadership, about top MCA leaders up to Ministerial level, being involved in the Hong Kong Ka Wah Bank scandal, owing some $40 million for both principal and accumulated interests, and who had to be bailed out by some unidentified bailed.

There is of course the KSM-MPHB Investment Fund scandal where the MCA President was caught lying when he denied that three companies were interested to buy an bloc the 19.7 per cent stake of the MPHB shares.

Too many inside his own party, the MCA President has merely become a nominee of Kamunting Corporation Bhd and the MCA taken over, lock, stock and barrel by Kamunting.

Why is the Attorney-General dragging his feet in the prosecution of Magnum Corporation?

The government seems to have a soft spot for corporate offenders, especially if these corporations are linked to the ruling parties. In 1988, Selangor DAP leader, Wee Choo Keong, lodged a police report against Magnum Corporation Bhd. for spiriting away $32 million through a company, Serita Development Sdn. Bhd., for the use of the MCA.

Wee Choo Keong received a letter from Bukit Aman CID some time last year that the police had already completed their investigation papers and that these had been handed to the Attorney-General’s Chambers together with a recommendation for prosecution.

A few days ago, Wee Choo Keong received a letter from the Head of C.I.D., Datuk Zaman Khan, informing him that his department had completed investigations into the $32 million scandal.

Via its stake in Multi-Purpose Holdings Bhd., Kamunting had an almost 40 per cent stake in Magnum. It is an open secret that the Kamunting chief, T.K.Lim, is a close pal of the Attorney-General, Tan Sri Abu Talib Othman, and that both take overseas holidays together.

I want to ask whether the reason the Attorney-General has not acted on the police recommendation for prosecution of Magnum for its $32 million scandal in the Serita Development Sdn. Bhd ., is because of the close relationship between Tan Sri Abu Talib and T.K.Lim? Has T.K.Lim become immune to the law?

Pathmanaban had twice admitted that he did not have any photograph showing Lam Thye and Collingsworth together in one picture

With this background of corporate-cum-political scandal, I must ask whether Labuan is going to be a tax haven for the corruption money and ill-gotten gains of politically well-connected Malaysians.

It is no use enacting corporate laws, whether for inshore of offshore companies, when the environment is one of utter disregard of the ethics of corporate and public conduct.

It is very difficult to expect honesty, probity and integrity in the corporate world, when political leaders many of whom are so involved in business in Malaysia, do not set a good example of honesty and integrity.

We see an excellent in the House this week, where the Deputy Human Resources Minister, Datuk K. Pathmanaban could openly and publicly accuse the DAP Deputy Secretary-General and MP for Bukit Bintang, Sdr. Lee Lam Thye, of conniving and colluding with the American, Terry Collingsworth to get Malaysia’s GSP status removed, and even of having been photographed with Collingsworth for this purpose.

In actual fact, Pathmanaban does not have such a photograph. He admitted to me both on Monday and Tuesday at the Parliament lobby that he did not have a photograph showing Lam Thye and Collingsworth in one picture, but have two separate photographs, showing Lam Thye and Collingsworth separately with Harris Solid State workers.

Yet Pathmanaban had the cheek to continue to maintain every day in the House that he had the photograph, and to continue to suggest that Lam Thye was anti-national and a near traitor. If a Deputy Minister could tell such a bare-forced lie, how can we expect honesty and integrity in public life, whether in the political or corporate world?

It is clear that the Barisan Nasional is not concerned about the GSP issue but only wants to make use of the issue to lay party politics. I know that at the pre-Council meeting of the Barisan Nasional MPs on June 10, the Prime Minister instructed Barisan MPs to go all out to attack the DAP on the GSP issue. Pathmanaban had led this attack with lies and falsehoods, joining the ranks of Barisan leaders who are certified liars.