Ottawa real estate company's ties to Malaysia questioned

By Matthew Pearson, The Ottawa Citizen

A Swiss NGO says financing for an Ottawa company’s high-profile real-estate projects comes, at least in part, from corruption in the Borneo rainforest — an allegation the company fiercely denies.

In an 86-page report released at a press conference on Parliament Hill last week, the Bruno Manser Fund says Sakto Corp., owner of Little Italy’s Preston Square development, grew quickly after it was founded in 1983 by Jamilah Taib Murray, despite continuous operational losses and a resulting capital deficiency that had grown to nearly $10 million by 1993.

The secret to the company’s success, the report alleges, “was a continuous capital influx” from its shareholders, the Taib family, which included Taib Murray and her uncle, Onn Mahmud.

Taib Murray, who came to Ottawa as a teenager to attend school, is the daughter of Abdul Taib Mahmud, a long-serving and powerful politician in Sarawak, Malaysia’s largest state.

Taib Mahmud, now 80, has long been dogged by controversy because, rainforest advocates say, Sarawak under his watch lost more than 90 per cent of its primeval tropical rainforest, one of the most biodiverse habitats in the world, to logging and palm oil plantations.

Meanwhile, in Canada, his daughter started her real estate business with an undisclosed amount of money she received from her father — money he says he received as a gratuity when he resigned from Malaysia’s federal government in 1981, according to the report.

“With the help of family and friends, we founded Sakto Corporation when I was in my early 20s. Teamwork, smart business choices and savvy negotiation skills enabled us to grow Sakto Corportation into the successful company it is today,” Taib Murray writes on her personal website.

Sakto Corp.’s current assets are estimated at $200 million, not counting its subsidiaries and related businesses in the U.K., the United States, Australia and Malaysia. It recently won Ottawa city council’s endorsement to add a 25-storey building to Preston Square.

The company responded to a list of questions the Citizen sent by email with a statement.

“Sakto Corporation is a reputable, local Canadian company whose officers, directors and shareholders are Canadian,” the statement said. “The company is led by a local family known for being community supporters and philanthropists.”

“The assertions made by this foreign activist group are false, malicious and sensationalized. This organization’s rehashed and repackaged allegations have been found to be lacking in merit and never substantiated by any government or authoritative body.”

Attempts to reach Abdul Taib Mahmud, who currently serves in the ceremonial role of governor of Sarawak, and Onn Mahmud, through his Singapore-based lawyer, were unsuccessful.

A January 1989 Citizen story characterized Sakto as a “firm that specializes in offshore investment in Canada.”

Up to that point, Sakto had only invested in residential properties, building up a portfolio of 450 apartments, condominiums and garden homes since the company was founded in 1983.

But the 1989 Citizen article said Sakto’s most ambitious project to date was the $45-million Commerce Plaza (known today at Preston Square), which took four years to put together.

“Taib Murray calls the three-tower retail-office complex a test of her abilities in the eyes of absentee shareholders,” the Citizen article said.

The Taibs have bought and built private residences in Ontario with a current tax worth that’s in excess of $15.2 million, including a mansion in Rockcliffe Park, says the report, citing Municipal Property Assessment Corp. valuations from 2012.

By 1993, the report says members of the Taib family had invested at least $29.8 million in the Sakto Corp. ($28.8 million in loans, $1.01 million in share capital). The report contends the source of these funds is unknown.

Three years later, the report alleges, the Taib family secured two mortgages of $20 million each on Sakto properties in Ottawa. One of the mortgages was registered for “Jamilah Taib” and the other for “Jamilah Taib, in trust.” It’s unclear why this was done, the report says.

There’s a further twist to the 1996 mortgage registered for “Jamilah Taib, in trust”: One of the lenders was an offshore company in Hong Kong controlled by Onn Mahmud, Taib Murray’s uncle. Its only known business activity, the report says, was to provide loans to the Sakto Corp. And it shared its offices, management and a shareholder with a twin company called Regent Star Ltd.

Regent Star’s only known business activity was to collect payments from Japanese companies that imported tropical hardwood from Sarawak when Taib Mahmud, says the report, “exerted unfettered control over the Sarawak timber business” as chief minister, minister of resource planning, and chairman of the Sarawak Timber Industry Development Corp.

In 2008, Japan’s national tax tribunal found that nine Japanese shipping companies had paid at least $1.1 billion yen (about $13 million Cdn) to Regent Star based on a 1983 brokerage agreement for the shipping of Sarawak timber, the report says.

The NGO’s allegation is that the payments were received “by the Taib family from the Japanese timber importers.”

“It appears likely that part of the $20-million loan provided to the Sakto Group in 1996 by Jamilah Taib in trust was money paid by Japanese timber importers to the Taib family through Regent Star,” the report says.

The NGO’s analysis of Sakto’s finances is divided into two periods in the report: 1983 to 1993 and 1994 to the present.

For the first decade, much was gleaned from audited financial statements for Sakto Development Corp. held on microfiche by a library in London, Ont. Much less is known about the company’s finances after 1994 because financial statements of non-public companies are usually private. The authors of the report say they also relied on land registry records and a number of public statements by company officials or associated businesses.

The Bruno Manser Fund is a charitable association in Basel, Switzerland, that works to protect the threatened tropical rainforests and rights of indigenous forest peoples in Sarawak. It was founded by Swiss rainforest advocate Bruno Manser, who disappeared in Malaysia in 2000.

Executive director Lukas Straumann, one of the report’s three authors, travelled to Ottawa for its launch. He was joined by representatives from Mining Watch Canada, Canadians for Tax Fairness and the Canadian Network on Corporate Accountability.

The report’s release was used by the groups to demand the federal government strengthen its anti-money laundering legislation and fulfill a campaign promise to create a new, independent ombudsperson to investigate complaints related to natural resource extraction.

In a written statement, International Trade Minister François-Philippe Champagne said the federal government “expects all Canadian firms to operate lawfully and according to Canadian values.

“We recognize there are always improvements to be made. We have met with the Corporate Social Responsibility Counselor to evaluate how to strengthen his role. We continue to meet with Canadian mining companies to discuss how to improve our practices and strengthen the Canadian brand abroad,” the statement said.

Straumann said his Safe Haven Canada report was carefully drafted based on public records he and fellow researchers were able to get their hands on. “We knew we had to do our homework,” he said.

Sakto, he said, has offered no explanation for where its money has come from and has successfully shielded its Canadian assets from scrutiny for more than 30 years because federal privacy laws protect the shareholders and beneficial owners of private corporations.

Straumann called the logging activities in the Borneo rainforest a “man-made tragedy” and added the indigenous people of Sarawak, despite being promised wealth and development, remain among the state’s marginalized poor. “They are not seeing the benefits,” he said.

The Bruno Manser Fund says it first alerted the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) of its concerns about the Taib family in 2010.

The NGO says the Taibs meet the definition of politically exposed foreign persons (PEFPs) due to Abdul Taib Mahmud’s role as head of government of the Malaysian state of Sarawak. The definition also applies to children, spouses and siblings.

Financial transactions with PEFPs are, by definition, high risk with regard to potential money laundering and require enhanced due diligence from financial institutions, the NGO says.

The NGO says neither the federal government nor the RCMP has ever officially investigated Sakto or taken any steps to freeze the company’s assets. In fact, the Attorney General of Ontario is among the provincial government agencies that rent office space from the company at Preston Square.

In a written statement to the Citizen, FINTRAC says it is prohibited under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act from “commenting on any information that it may have received or that it may have disclosed to its police, law enforcement or national security partners.”

The statement further adds FINTRAC is not an investigative agency and has no authority to pursue criminal charges. FINTRAC shares its financial intelligence “when it has reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence or a terrorist activity financing offence.”

A spokesperson for the RCMP would not comment on whether it has ever investigated Sakto. “I can say that generally, only in the event that an investigation results in the laying of criminal charges would the RCMP confirm its investigation, the nature of any charges laid and the identity of the individual(s) involved,” said Sgt. Harold Pfleiderer.

Taib Mahmud has been accused of corruption and abuse of public office. Between 1998 and 2007, the NGO’s report says, Taib family companies were granted land leases for nearly 200,000 hectares of state land worth several hundred million dollars by the Sarawak state government when Taib Mahmud was the minister in charge.

Although Malaysia’s anti-corruption commission opened an investigation into Taib Mahmud in 2011, a Bloomberg report from May 2014 cites a written reply the government agency sent in March 2014 to Malaysian members of parliament saying Taib, Sarawak’s former chief minister, wasn’t involved in decisions to award any project or land to his family members, according to the commission’s findings to that point.

(09/10 April 2017)

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