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2010 Aug 26 - Allegations abound: are nepotism and corruption behind the Sabah coal plant?

Allegations abound: are nepotism and corruption behind the Sabah coal plant?

Allegations of government corruption and corporate kick-backs are swirling around a planned 300 MW Chinese coal plant in the Malaysian state of Sabah.

While the plan to build the coal plant in Lahad Datu Bay has come up against strong and unrelenting grassroots opposition, the federal government continues to largely turn a deaf ear to opposition, arguing that the energy plant is necessary to power Sabah and stop blackouts. However, critics say the coal plant—which is to be built on the edge of the Coral Triangle and 20 kilometers from Tabin Wildlife Reserve—will damage fish stocks with chlorine and thermal discharges, upend the lives of locals dependent on fishing, and devastate eco-tourism in the region. In addition, the coal plant goes directly against Prime Minister Najib Tun Razak's agreement at Copenhagen to reduce the country's carbon emission intensity by 40 percent by 2020.

Despite these clear concerns—and increasing opposition—sources who spoke on the condition of anonymity say the plant has continued to move ahead due to government nepotism, corruption, and kick-backs. In fact, sources say the federal government has already paid out nearly a quarter of the cost of the coal plant to the contracted company, China National Electric Equipment Company (CNEEC), and that at least one official has seen a significant kickback from this.

Woe to journalists

Malaysia is not an easy place to find answers about behind-the-doors government deals. In fact, finding answers in some situations can actually be against Malaysian law.

The circle denotes the coal plant. Tabin Wildlife Reserve is to the west, Semporna (Tun Sakaran Marine Park) is to the south. Map courtesy of Green SURF.
"Malaysia has some laws that make it almost impossible for journalists to find out stuff about people in power. Reporters here can be charged if they do get hold of info, and if it is published," a source told, adding that such charges fall under Malaysia's Official Secrets Act. A citizen can also be held for up to 60 days without seeing a courtroom if it's said they threatened national security, according to the Internal Security Act.

Newspapers are also tightly tied to the government in Malaysia. Under the Printing Presses and Publications Act, newspapers must be issued annual permits by the Malaysian Home Ministry. If a paper reports on something the government is unhappy with it can order the paper to close down within 24 hours.

"This is why investigative journalism is weak in Malaysia," another source explains.

When asked why Malaysian newspapers are ignoring these connections, another source stated simply, "No one dares".

Given the difficulty of obtaining information that the government doesn't want aired, Malaysians are often left with speculation, rumor, and hearsay to offer explanations behind their government's action. This is the case with the Sabah coal plant.

The coal plant will be built on the northern edge of Lahad Datu Bay. Photo by: Cede Prudente.
"It is like an open secret, but no one can confirm," a source who wishes to remain anonymous said.

Is corruption behind the Sabah coal plant?

Much of the current speculation centers around Tan Sri Leo Moggie, the chairman of Tenaga Nasional Berhad (TNB) and former MP for 30 years. TNB is the federal energy company which is pushing the coal plant. When a second location for the coal plant was rejected—the plant has been moved once before—Leo Moggie took out an ad arguing in several newspapers in Sabah arguing for a coal plant.

"The irony is he signed off simply as 'Leo Moggie.' there was no mention of him being the chairman [of TNB], or that TNB wanted this plant. This of course, raises questions."

Locals have been told that Leo Moggie received a sizable kickback from the deal with China National Electric Equipment Company (CNEEC) for the coal plant.

"It was speculated that a payment of RM 400 millions been paid upon agreement signed. Some said half of that amount had been kicked back to [Leo Moggie]. One minister said only 10 percent. God knows," a source says.

In addition to this allegation, sources say that the deal for the coal plant is aiding Leo Moggie's family.

"We suspect his family members control the import of coal from Kalimantan," said a source. According to published plans, the coal plant will be powered by mines in Indonesian Borneo.

Another source adds that, "I have heard also that his son, Michael Kallum Moggie, is involved in some coal mine deals in Kalimantan."

Several people contacted in connection with this story stated that while nepotism was officially frowned upon in Malaysia, it is commonly practiced.

To date Malaysian newspapers have not reported on any of these allegations. However, given that Leo Moggie is a board member of the New Strait Times, Malaysia's biggest newspaper, this is perhaps not surprising.

Sources also say that the Malaysian government has already paid China National Electric Equipment Company (CNEEC) 400 million Malaysian ringgit ($125 million) in order to build the power plant.

"They probably signed it thinking that the project would be approved. Coal is after all listed in the country's five-fuel policy," said a source.

Yet the price of the coal plant continues to rise. When first proposed it was estimated a RM 1.1 billion then RM 1.3 billion for the second site, and now RM 1.7 billion. When asked why the plant had jumped RM 400 million from one site to the next, the sources had different answers. One said the rising price of raw materials was largely to blame, while the other said the money was used "[by the government] for buying favors or supports, even speculated for the [Barison Nasional, Malaysia's ruling party] campaign of last election."

To date, many details of the project remain obscured by government and corporate silence. No one knows if the total cost includes the cost of building a transmission line, or the route this transmission line will follow, though it could very possibly cut through rainforest. While the coal will be supplied by TNB Fuel Supplies, officials have also not shared which coal mines in Kalimantan will supply the plant or how long they plan to export coal from Indonesia. Environmentalists fear that if the plant goes ahead, it will spur coal mining in Sabah's own backyard, upending the state's last pristine ecosystems.

According to local activists, it doesn't have to be this way. Compelled by social, environmental, and economic concerns, the organization Green SURF (Sabah Unite to Re-Power the Future) recently hired the Renewable and Appropriate Energy Laboratory (RAEL) at the University of California Berkeley to conduct an energy audit for Sabah. The audit found that power from either biomass or hydropower could provide the same power at a competitive price with coal. Geothermal and solar were slightly more expensive, but greener options.

However, if the allegations of government corruption are true—and we may never know for certain—then convincing the government to pursue a different course may prove next-to-impossible even for the most impassioned activists.

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Malaysia preparing to take big step backward on energy policy

(08/13/2010) I write to you as a deeply concerned and saddened citizen of Malaysia. For most of the 45 years of my life, I have been proud to be Malaysian. Recently, I have become heartbroken to be Malaysian. I am profoundly grateful to write this with the support of both my local communities in Sabah, Malaysian Borneo and California, U.S.A., and a larger world community. That said, I take full ownership of and sole responsibility for the views articulated in this letter; I express them from my stand as a mother, an earth citizen and a leader.

Environmental assessment for Borneo coal plant riddled with errors

(08/03/2010) The Detailed Environmental Impact Assessment (DEIA) for a proposed coal plant in Sabah is full of holes, according to activists with the organization Green SURF (Sabah Unite to Re-Power the Future), which opposes the plant. The official environmental report from Lahad Datu Energy lists species not endemic to Borneo, mistakes the nearest ecosystem to the coal plant, and confuses indigenous groups. Even more seriously, the DEIA leaves out information on the coal plant's specifics and possible 'green' alternatives.

Fishermen express doubts about coal plant overlooking their fishing grounds

(06/13/2010) Local fishermen in the Malaysian state of Sabah are uncertain of their future, if the government pushes ahead to build a 300 megawatt coal power plant. They have been told they will be moved from their current seaside village to one deeper inland, and while the coal plant will provide manual labor work in its building stages, the fishermen express doubt about the impacts over the long-term effects of the coal plant on their livelihood. "Someone mentioned that maybe we have to move to Sungai Merah, which is quite far from our village. We are also worried because Sungai Merah is not next to the sea like [our village] is," local fishermen, Ali Hia, told Green SURF and Save Sandakan members—two local organizations opposed to the coal plant—who recently visited the seaside village of Kampung Sinakut, site of the proposed coal plant.

Photos reveal paradise-like site for coal plant in Borneo

(05/21/2010) With the world's eyes on the environmental catastrophe in the Gulf of Mexico, many are beginning to ponder the rightness of not just America's, but the world's dependence on fossil fuels. Yet large-scale fossil-fuel energy projects continue to march ahead, including one in the Malaysian state of Sabah on Borneo to build a 300 MW coal plant, which has come under fierce opposition from locals (already the project has been forced to move locations twice). The newest proposal will build the coal plant, as photos below reveal, on an undeveloped beach overlooking the Coral Triangle, one of the world's most biodiverse marine environments, with transmission lines likely running through nearby pristine rainforest that are home to several endangered species, including orangutans and Bornean rhinos.

Analysis shows Borneo can say 'no' to coal power

(03/17/2010) Plans for a coal power plant in the Malaysian state of Sabah in northern Borneo have run into stiff opposition. Environmentalists say the coal plant could damage extensive coral reef systems, pollute water supplies, open rainforests to mining, and contribute to global climate change, undercutting Sabah's image as a 'green' destination. The federal government contends that the coal plant is necessary to fix Sabah's energy problems. However, a recent energy audit by the Renewable and Appropriate Energy Laboratory (RAEL) at the University of California Berkeley shows that pollution-intensive coal doesn't have to be in Sabah's future.

Malaysia and China agree to $11 billion deal to build mines, dams in Borneo

(01/13/2010) Malaysia and China today agreed to am $11 billion deal that will turn a vast area of Sarawak, a Malaysian state in northern Borneo, into an industrial corridor for mining and energy development, reports The Financial Times.

Coal plant could damage rainforest reserves, coral reefs, palm oil plantations in Malaysian Borneo

(12/20/2009) A proposed coal-fired power plant in Malaysian Borneo could damage the region's world-renowned coral reefs, pollute air and water supplies, open Sabah's biodiverse rainforests to mining, and undermine the state's effort to promote itself as a destination for "green" investment and ecotourism, warn environmentalists leading an effort to block the project. The scheme, which is backed by the federal Tenaga Nasional Berhad and state energy company, Sabah Electricity Sdn. Bhd, has faced strong opposition and already been forced to re-locate twice since it was conceived more than two years ago. The 300-MW plant is now planned for a coastal area that is situated in the middle of the Coral Triangle/Sulu Sulawesi Marine Ecoregion, an area renowned for astounding levels of biodiversity.

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SAPP Policies

SAPP's 17 point Manifesto - Sabah deserves better in terms of more equitable distribution of opportunities, in social, economic and infrastructural development and a better quality of life. [BM][Chinese]

SAPP's Economic Plan for Sabah - SAPP aims to achieve economic prosperity and financial self-reliance for Sabah. Version in [BM] [Chinese]

SAPP's Land Reform Policy - To promote and protect the rights and interests of local natives and other citizens in Sabah [BM][Chinese]

On Oil Royalty - SAPP is not giving up its struggle for more oil royalty payment for Sabah.

SAPP's Eight (8) Points Declaration - Whereas our mission is to establish a trustworthy govt and a progressive ...

SAPP's 14 point memo in 2006 - Time for Direct Preventive Actions

SAPP Constitution (booklet)

Our Sabah..

Books on ....
RCI Report on Immigrants in Sabah
The Birth of Malaysia
Malaysia Agreement Article 1-11
The Original Agreement of Malaysia
Heroes of Kinabalu 神山美烈誌
Schedule 9 of the Federal Constitution

more on ...
Twenty points safeguard
20 Perkara
Illegals & IC issues
Bernas Monopoly
No to coal-fired plant
Sabah Gas pipeline
3 million acres oil blocks ceded
The Formation of Msia & Devt in Sabah
Proclamation of Msia 1963...details
Restore Sabah's right to appoint JCs,
Ex-minister: Review 20-point
Supply Sarawak power to Sabah...
Sedition Act 1948
Continental Shelf Act 83 (1966)
Petroleum Development Act 144 (1974)
Petroleum Oil Agreement (1976)


SAPP bid to discuss Sabah claim rejected
Take action against anti-Malaysia elements
Call for Philippines Consulate in Sabah
Get the RM1 billion and solve the QEH debacle
SAPP's objection of coal-fired plants in Sabah
SAPP: Explain the RM 601 loan to KL company
The missing billion ringgit "special grant"
SAPP on SEDIA Bill 2009
SAPP supports the call for the abolishment of Cabotage Policy
Probe illegals having Mykad also
Political Autonomy for Sabah
Sabah Schools still awaiting share of RM30 million
Special fund: Eric wants ACA probe
Oil royalty: SAPP not giving up
Scrap Bernas monopoly on rice
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