Posted by Sarawak Report on Friday, February 24th, 2012
Taib Mahmud and Australian High Commssioner Miles Kupa, who has worked to help secure the mysterious O M Holdings deal
As the Ukit people perch pitifully on the edge of the waters that drowned their homes, Taib Mahmud has moved swiftly to maximise his own personal profit from the Bakun Dam.
A series of astonishing deals are now being processed, all designed to ensure that his own family companies get enormous kickbacks, in the form of business contracts, as foreign investors move in.
There has been no public tendering for these contracts, which include recent deals with the companies O M Holdings and Asia Minerals and a proposed ‘joint venture’ with Rio Tinto Alcan. In fact they have all been negotiated on behalf of the State of Sarawak by Taib himself, primarily for his own benefit!
Dodgy deals that pour money into CMS
The attraction for these foreign smelting ventures is the prospect of dirt cheap electricity from Bakun and, of course, the amazing tax breaks that Taib has arranged for companies involved in the so-called SCORE investments (Taib’s planned industrial zone).
However, it should be remembered that Bakun was financed, under BN pressure, from the civil service pension funds of Malaysian government workers.
The cheap electricity deals mean a lower return for these civil service pensioners, so their loss is proving a major gain for the multi-national ventures, in which Taib has taken a huge stake.
Likewise, the tax breaks organised by Taib, mean that little income will be coming back from these ventures into the Sarawak state economy for very many years.
Taib’s companies, on the other hand, will of course be among the main beneficiaries of those tax breaks, as they earn hundreds of millions in state sponsored construction and in their joint venture projects with the big multinational smelters!
One major concern of opposition politicians about this whole series of extraordinary mega-projects, is what provision is being made to provide jobs and training to the local people, who now face the destruction and further pollution of their lands from all this development?
Taib has already made clear that he plans to find the majority of the workers from abroad. He has granted his own companies CMS and Naim Cendara the publicly funded contracts to build camps for these workers and then to construct a huge township of 5,000 homes to house them and their families.
Is he really content to turn the whole of Sarawak into a money-making venture merely for himself and foreign businesses? Apparently he is!
O M Holdings – another Joint Venture with CMS!
This leads Sarawak Report to question the extraordinary involvement of the Australian High Commissioner, Miles Kupa, in supporting and facilitating several of these blatantly corrupted deals.
We have already documented Kupa’s enthusiasm for Taib’s negotiations with Rio Tinto Alcan to invest 60% into a multi-billion dollar aluminium smelter venture.
Taib has granted the entire project to a RM2.00 company owned by his own family firm CMS, which therefore stands to make billions in easy profit when RTA buys in!
Why Kupa would seek to encourage this development, especially given the fact that RTA are simultaneously proposing to close their existing smelter in Kupa’s own backyard in Tasmania. Thousands of Australian jobs are threatened if RTA makes the move to Sarawak!
We can now demonstrate that Kupa has shown equal support for what he has described as an “Australian company”, O M Holdings, which has likewise signed a deal with Taib’s CMS, in order to get permission to build a vast manganese smelter under the SCORE project.
The High Commissioner even acted as a VIP guest in Kuching earlier this month to celebrate the signing of a Power Purchase agreement between O M Materials (Sarawak) and SEB, ensuring more dirt cheap electricity for foreign smelter projects over the next 10 years.
O M Materials (Sarawak) Sdn Bhd, is the vehicle that O M Holdings has agreed to set up as a joint venture with CMS (80% OM Holdings 20% CMS) in order build a US$450 million manganese smelter in Simalaju.
So, once again CMS, which has no expertise in smelting has effortlessly acquired a massive share of a multi-million dollar SCORE project! One is bound to ask what CMS has brought to the deal, apart from the vital political support of Chief Minister/Finance Minister/Planning and Resources Minister, Taib Mahmud, of course!
KKB Builders Sdn Bhd
Indeed on the very day that the Memorandum of Understanding was signed between O M Holdings and CMS, July 7th last year, another interesting deal was signed. O M Holdings simultaneously awarded a RM70million contract to the company KKB Builders to do the earthworks on the site.
According to reports in the Star Newspaper:
“OMH said the award of the earthworks package was critical and a pre-requisite to its power purchase agreement (PPA) negotiations withSyarikat Sesco Bhd (owned by Sarawak Energy Bhd) to supply 500MW of power from the 2,400MW Bakun hydroelectric dam to the smelter”.[Jack Wong, Star]Can this critical ‘pre-requisite’ be linked to the fact that KKB Builders Sdn Bhd is a subsidiary of KKB Engineering Bhd, which is almost entirely owned by CMS?
In fact KKB has done massively well all round from SCORE, thanks to Taib. The enthusiastic Executive Director, Kho Pok Tong, has confirmed their first contract was the RM296million Samalaju water supply scheme, funded of course by the taxpayer.
But, he has also gone public declaring that he is expecting many more jobs from the “hive of activities in Samalaju from 2013 onwards”. Not only has the O M Holdings contract duly come through, but Kho says “KKB is now embarking on a pre-qualifying process for Australia’s Rio Tinto Alcan projects”.[KKB sees busy weeks ahead, Bursa Stock exchange forum]
KKB is also expecting a slice of the action from the Asia Minerals manganese smelter project and is even confident of getting work on a planned deep sea port for Samalaju. The company is also, of course, in preliminary talks with Japanese and American firms looking to invest in SCORE!
Can anyone imagine that KKB would have so dominated the contracts being given out by SCORE if it was not actually owned by the Taib family?
O M Holdings is not an Australian company!
So we repeat the query as to why Australia’s High Commissioner has been so hard working in his support for the corrupted bid on behalf of O M Holdings?
He has made at least two recent visits to Kuching to promote the deal?
His own explanation came in a speech quoted by Bernama in July 2011, in which he called O M Holdings an “Australian company”!:
“We can also look to the significant investment in Sarawak by Australian company, OM Holdings, to build a major manganese smelter with local partners under the Sarawak Corridor of Renewable Energy (SCORE) initiative,” [Miles Kupa, July 2011, Bernama].In fact O M Holdings is not an Australian company, although it makes constant reference to the fact that it is listed on the ASIC stock exchange. O M Holdings is actually a company that is based in Singapore and incorporated in Bermuda.
Because it is incorporated in Bermuda it avoids local taxation and it is also impossible to know who really controls the company. This is because Bermuda is a well-known off-shore tax haven that specialises in concealing shareholders and profits.
Samling is likewise based in Bermuda, meaning that these vast enterprises that have received such enormous concessions from the State of Sarawak, in fact give very little back to the people in the way of taxes or re-investment.
Concerns over corporate governance at O M Holdings
O M Holdings does have a manganese mine in Australia and is interested in smelting the product in Sarawak on the way to potential markets. But, why has Miles Kupa not taken note of the many concerns and questions surrounding this company, which caused the head of the Australian Shareholders Association to pen the following concerns in The Australian Newspaper last year, about the corporate governance of O M Holdings:
“Under OM’s share ownership structure, 20 holdings represent 87 per cent of the company…the Australian Shareholders Association is interested because this case highlights significant corporate governance issues causing loss in shareholder value. The executive chairman is the founder, who with his wife (also an executive), controls 20 per cent
On examination of the corporate governance issues in OM, it appears that principles embodied by the ASX Corporate Governance Council seem to have been bypassed with little consideration. For instance, the chairman should be independent; the board should be majority independent; the audit committee should be entirely independent; and the remuneration committee should be chaired by an independent director and comprise a majority of independent directors.
None of these conditions have been met, which causes one to ask the question, why not?” [Vas Kolesnikoff,chief executive of the Australian Shareholders' Association]
With so little prospect that O M Holdings’ proposed smelter plant will benefit ordinary Australians, why has Mr Kupa lobbied on behalf of Chairman Ngee Tong Low and this deal so extensively?
In fact, signs are that this is an enterprise that benefits China more heavily than Australia. O M Holdings has very close ties with China, which is working hard to take a larger stake in Sarawak’s raw materials and extend its control over the state by offering huge loans to build further dams for Taib’s SCORE projects!
The commercial folly of investing in a manganese smelter at a time when such smelters are closing across the world, because of low prices for the metal has also been raising eyebrows. O M Holdings has had to raise some $450 million US to pay for the venture, but look at its recent share price!
The likely benefits of this manganese smelter project to Australians and Sarawakians are therefore obscure. There are major environmental and pollution concerns and while big businesses are managing to get cheap electricity deals there is little sign of ordinary folk seeing lower bills as a result of Bakun.
Yet, anyone can see how well Taib Mahmud and his family firm stand to do out of the construction work and the offer of a 20% of the business!