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Toronto court to hear money-laundering case against Sarawak Governor's daughter

19.09.2017
Toronto court to hear money-laundering case against Sarawak Governor's daughter


BMF sues Canadian banks over ties to Sarawak Governor Taib Mahmud's daughter


(TORONTO, CANADA). A judge at the Ontario Superior Court of Justice has ruled that a sealed money-laundering case targeting a CAD 250 million real estate group linked to Malaysian politician Taib Mahmud will be heard in public. Taib Mahmud is the former Chief Minister and current Governor of Sarawak, a Malaysian state in Borneo. He is accused of having abused his power as a public official to enrich himself and his closest family members who own stakes in over 400 companies in 25 jurisdictions.

The court case was filed by a Swiss NGO, the Bruno Manser Fund (“BMF“), last June against the Royal Bank of Canada, Toronto-Dominion Bank, Manulife Financial Corporation and Deloitte & Touche. The case aims at gaining access to financial records of the Ottawa-based Sakto Corporation (“Sakto“) and is affiliated companies (“Sakto Group“) for a potential private prosecution. A first hearing took place in Toronto on 21 August 2017 under a sealing order that has now been lifted.

BMF is seeking a court order requiring the banks and auditors to disclose beneficial ownership information and records detailing the flow of funds from Malaysia into the Taibs’ Canadian real estate group. Never before has such an order – a so-called Norwich Pharmacal order – been granted to plaintiffs for the purpose of seeking to commence a privately instituted criminal prosecution.

Click here to watch a video statement by BMF director Lukas Straumann on BMF’s legal action against the Taibs in Canada

 

Millions of dollars of unexplained wealth

Sakto was incorporated in 1983 by Jamilah Taib Murray, the daughter of Taib Mahmud, with a gift from her father as start capital. An investigation by BMF found that the Taib family secretly channelled over CAD 29 million into Sakto during the company’s first ten years of operations. The secret funds are believed to be the proceeds of corruption.

Taib Mahmud was born in 1936 and has been a public official since 1963 when he became a minister in Sarawak’s first state cabinet after the independence of the former British colony. From 1968 to 1981, Taib served as a minister in the Malaysian federal government before becoming Chief Minister of Sarawak. During Taib’s tenure as Chief Minister from 1981 to 2014, over 90 percent of Sarawak’s tropical rainforests have been logged while the Taib family became immensely rich.

In 2010, Taib Mahmud said during an election rally that he had more money than he could ever spend and that all his children were taken care of. In February 2014, he was appointed Governor of Sarawak after a 33-year tenure as Chief Minister of Sarawak.

Last July, the Canadian Government’s National Contact Point for the OECD Guidelines for Multinational Enterprises recommended that the Taib family-controlled Sakto should implement the OECD’s guidelines which require multinationals to publish financial information as well as information on its shareholdership and internal structure.

 

Failure of public prosecutors to become active

BMF is going to court against the Taib family because of the failure of public prosecutors in Canada to investigate and charge Sakto for money-laundering. Since 2010, BMF has repeatedly alerted FINTRAC, the Royal Canadian Mounted Police (RCMP) and the Canadian government over the suspected flow of proceeds of crime from Sarawak to Ottawa.

In 2011, the RCMP replied to BMF that the RCMP “does not normally confirm or deny the existence of any criminal investigation.“ Former Finance Minister Jim Flaherty wrote to BMF that Canada “has implemented a strong and comprehensive anti-money-laundering and anti-terrorist financing regime that ranks in the top tier with respect to compliance with international standards.“

Despite this assurance, no steps were taken by Canadian law enforcement agencies against Sakto and the Taib family. In February 2017, BMF published an 85-page research report (“Safe Haven Canada“), which identified numerous money-laundering red flags in connection with Sakto’s business activities in Canada.

BMF has subsequently decided to envisage private prosecution of the Taib family in Ontario. The use of a private prosecution in a grand corruption case is a novel case for which no precedent can be found. BMF is being represented by experienced fraud lawyers Lincoln Caylor and Maureen Ward of Bennett Jones LLP in Toronto.

As a first step, BMF is attempting to get hold of financial information and beneficial ownership information on Sakto from the corporation’s banks and auditors. Under Canadian laws, private corporations are not required to publicly disclose their shareholders.

 

Over 2000 pages of evidence on Taib corruption

The court papers filed by BMF at the Ontario Superior Court of Justice comprise a Statement of Claim, a Factum, a Notice of Motion and an Affidavit by BMF Executive Director Lukas Straumann with 140 exhibits including books, video statements and over 2000 pages of records detailing Taib Mahmud’s abuse of public office and the massive enrichment of his closest family members.

The court papers filed by BMF outline how Taib and his closest family members became immensely rich using criminal methods, in particular:

a) Awarding lucrative timber licences and land leases for plantations to companies owned beneficially by either himself or family members

b) Requiring the payment of kickbacks in exchange for the awarding of timber contracts and land leases for plantations

c) Controlling and requiring kickback or bribe-payments in respect of the exporting, processing and transportation side of the timber business

d) Awarding lucrative public construction contracts to companies controlled by him and having the work completed at a fraction of the cost by other companies and

e) In at least one instance arranging for the Taib-family take-over of the largest public infrastructure company in all of Malaysia

The evidence presented by BMF in its legal action includes numerous documents on Taib businesses from public records in Canada and Malaysia, forensic accountants’ reports on Taib family enterprises but also books such as Money Logging by BMF director Lukas Straumann and video documents such as the Global Witness video Inside Malaysia’s Shadow state.

Special attention has been given to scholarly research on corruption in Sarawak such as the London School of Economics PhD thesis by political scientist Andrew Aeria, the University of Washington PhD thesis by economist David Walter Brown and the Princeton University PhD thesis by political scientist Michael L. Ross.

 

„There may be very significant criminal misconduct“

While the Ontario Superior Court has not ruled on the merits of the case yet, the language used by Justice F.L. Myers in his endorsement demonstrates that the court is taking the issue very seriously. Inter alia, the judge states:

„If the plaintiffs’evidence is correct, there may be very significant criminal misconduct being committed here in aid of corrupt foreign official(s). There may be no one else here who is interested in uncovering the truth whether it has to do with criminality here, corruption abroad that Canadians are facilitating, or deforestation and destruction of indigenous habitat and culture in Malaysia.“

BMF is currently preparing for the court hearing and is willing to do its best to obtain all available financial records in order to fully understand the origin of Sakto’s unexplained wealth in Canada and to potentially proceed with a criminal case for money laundering.

(20 September 2017)



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