Norwegian CEO in corruption controversy in Malaysia

Last week several different media brought the story of how the Penan people of Sarawak, a Malaysian state on Borneo, had written a letter to King Harald V of Norway, asking him to pull home one of his subjects. The subject is Torstein Dale Sjøtveit, a Norwegian citizen who is the CEO of Sarawak Energy, the Malaysian firm that is building several dams in the state of Sarawak. The hydroelectric projects are controversial because they require the forced displacement of indigenous communities and will flood large tracts of rainforest.

Now the Norwegian CEO has found himself in the middle of another controversy about corruption in the East Malaysian state of Sarawak. According to a report released today by Swiss NGO, Bruno Manser Fund, Sarawak Energy awarded contracts worth RM680m (US$226m) to three companies closely linked to the family of Sarawak Chief Minister Abdul Taib Mahmud.

“The extent of conflict of interest in Sarawak’s energy sector is shocking”, said Bruno Manser Fund director, Lukas Straumann. “It is particularly disturbing that the Taib family is directly benefiting from the displacement of indigenous communities.”

All the contracts were allegedly granted during Sjøtveit’s tenure as CEO of Sarawak Energy, a company that is wholly owned by the state of Sarawak. The alleged beneficiaries of the contracts are Sarawak Cable, Cahya Mata Sarawak (CMS) and Naim Holdings.

Sarawak Cable, a cable and wire manufacturer is chaired by Taib’s son Mahmud Abu Bekir Taib, who is also the company’s largest shareholder. It received three contracts for power transmission lines linked to Sarawak Energy’s hydropower projects, worth RM237m (US$79m). In 2010, Sarawak Energy sold its profitable subsidiary, Sarwaja Timur, to Sarawak Cable, securing the Chief Minister’s son another RM13m (US$4.3m) in public contracts.

“Mr. Sjøtveit should step down immediately for unduly favouring the Taib family and also his superior, the Chief Minister’s cousin. We are calling on the Malaysian Anti Corruption Commission, MACC, and on Norway’s Økokrim to investigate these contracts and expect prosecutors to implement the relevant anti-corruption legislation.”

Taib Mahmud has been Chief Minister of Sarawak, Malaysia’s largest state, since 1981. In June 2011, Malaysia’s Anti-Corruption Commission opened an investigation into Taib over allegations of corruption and abuse of office. The investigation is still ongoing.

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