MUST READ ARTICLE ! UMNO-Led Federal Government 's Fiduciary Irresponsibility for Trengganu's Oil-Money

From Anil Netto Blog: Read here for more

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Excerpts: Read here for more

by

Anil Netto

" ... Despite its oil wealth, Trengganu is one of the poorest states in the federation.

One of the key issues is how the Petronas oil royalties due to the state amounting to some RM1 billion annually should be spent - for the benefit of the people OR for vested interests.

In the past, the money was paid DIRECTLY to the state government and dispensed under its supervision.

But when Trengganu fell to opposition hands (Pas) in 1999, then prime minister Mahathir changed the rules. He couldn’t bear to see all that money going to an opposition-controlled state government.

The Establishment of Special Fund Financing Programme/ "Wang Ehsan"

Instead of the Petronas royalties (amounting to 5 per cent of oil extraction and sales) going directly to the Trengganu state government, they were now channelled to a FEDERALLY-administered Special Fund Financing Programme (the Fund), which was established in December 2000.

The money in this new Fund was euphemistically renamed “goodwill money” (wang ehsan).

(This Fund) was supposed to directly finance development programmes for the people of Terengganu, largely BYPASSING the State government.

There has been little accountability over how this money ("wang ehsan") has been spent and whether the projects really benefit the ordinary people.

The Treasury is supposed to make allocations out of the Fund /"Wang Ehsan" to various ministries (and via these ministries to federal agencies), financial institutions, and federal and state-level offices.

2005 Auditor-General's Report

According to the Auditor General’s Report 2005, the Treasury was supposed to create an Accounts Committee, chaired by the Treasury’s Chief Secretary, to administer the Fund. The Committee was supposed to comprise representatives from the Prime Minister’s Department (including the Economic Planning Unit), the Treasury, and the Finance Ministry.

The Auditor General (AG) said then that the Accounts Committee had NOT been set up.

Instead, a “Central-level Committee”, which appears less high-powered, was formed. This "Central-level Committee" , which includes representatives from ministries and implementation agencies, meets twice a year to discuss and approve allocations.

It is not clear who exactly is in this Committee. PM Abdullah must reveal the composition of this committee.

This Central-level Committee is supposed to evaluate projects and recommend to the Cabinet financial allocations for the various states.

But the AG said he found that allocations for the various states were NOT decided during the Committee’s meetings.

Instead, the “allocations were based on the approval of the Finance Minister and they were forwarded straight to the relevant state Menteris Besar”. The Finance Minister is of course the Prime Minister.

Would that explain why Abdullah Badawi is so keen on retaining Idris as MB?

In an article for Aliran Monthly, ‘Buying goodwill - RM4 billion worth of it’, I wrote back then that although the Auditor-General(AG) had said that the people had benefited from the Fund/"wang ehsan", his finding was NOT backed up by empirical evidence.

The AG conceded that, at the state level, “expenditure that should NOT have been financed from the Special Fund allocation had occurred and this had more or less jeopardised the objective of the programme”.

The AG also found that not all ministries, departments and agencies had submitted their quarterly expenditure statements as required. This meant the Treasury’s records related to the Fund were incomplete.

More seriously, there was NO evidence to show that the Treasury had taken follow-up action. He also stressed that all allocations should be approved by the Central-level Committee.

Arbitrary Management of the "Wang Ehsan" by the Federal Government

Reading between the lines, it seemed to me, that there was a lot of arbitrary discretion being exercised as to how the fund/"wang ehsan" was being administered – most likely to serve the interests of the ruling party while benefiting certain vested interests.

Return the Money to the State Government

The best solution is to return the royalties to the state governments. High-powered independent audit committees with opposition representation, reporting to the respective state assemblies, should be set up to ensure that such funds are used on projects that really empower the rural poor.

This will dispel the perception that this ‘goodwill money’ /"wang ehsan" is being used as a patronage tool to boost political ‘goodwill’ for the Barisan Nasional while also benefiting vested interests.

The MB Crisis

I would hazard a guess that the Agong, who is the Sultan of Trengganu, knows what is going on and is deeply concerned.

Here’s one intriguing question: If a new MB who is not the PM’s choice is sworn in, would the files of yet another state government disappear?

Even though Abdullah’s choice of MB has the backing of all the BN assembly members, would the weakened PM ram him through and risk having to face another state election in Trengganu?

This time, PAS and PKR, fresh from their successes on the west coast, could well pose a stronger challenge.

COMMENTARY

By Raja Petra Kamarudin in Malaysia-Today: Read here for more

The Control for Trengganu's Oil Money

Excerpts:

"... In the 1990s, a well-known Malaysian business magazine reported that Terengganu is the second richest state after Selangor but its rakyat are the second poorest after Perlis.

Terengganu is the second richest state, because of its black gold ie oil. But in spite of its black gold and in spite of it being the second richest state, its citizens are the second poorest and even Sabah, Sarawak and Kelantan are far ahead.

The Kelantan Menteri Besar, Tok Guru Nik Aziz Nik Mat, retorted that Kelantan may be poor compared to Terengganu, but its people are rich. “Kekayaan Kelantan di tangan rakyat,” said Nik Aziz. Kelantenese, Nik Aziz stressed, do not need to depend on the government. They will travel far and wide, even to Singapore, to earn their living. And they will send money back to the state to help prop up its economy.

Terengganu, however, is NOT like Kelantan. The people of Terengganu are NOT so stubborn or resilient.

In 1999, the Terengganu voters decided to give the state to the Opposition (PAS) for a change. A few months later, the federal government punished Terengganu by withdrawing its 5% oil royalty that it was entitled to under the Petroleum Development Act 1974.

The money, which at that time came to RM800 million a year, was handed over to Idris Jusoh, the head of Umno Terengganu, to manage.

From 2000 to 2004, Idris Jusoh managed the money as his personal petty cash.

The Terengganu voters realised that they could get their hands on what had now grown to RM1 billion a year only if they gave the state back to Umno.

And they did just that in March 2004 and Idris Jusoh was installed as the new Menteri Besar.

But while the state went back to Umno, the RM1 billion a year did NOT go back to the state.

The money remained in the hands of the Prime Minister's Department and control of the money shifted from Idris Jusoh to Wan Farid Wan Salleh, Abdullah Ahmad Badawi's Political Secretary, and Patrick Lim, whom Tun Dr Mahathir Mohamad calls Patrick Badawi.

Whether Umno or the opposition rules the state, the RM1 billion a year will still not go to the state but would instead be in the hands of two or three individuals, to be used and abused as they see fit.

The 2008 Election

On 8 March 2008, the Terengganu people wanted to hand the state back to the Opposition. Umno knew this and what was at stake was not just control of the state but control of the RM1 billion a year that came with it.

So thousands of Bangladeshi voters were 'imported' into Terengganu to ensure that Umno would be able to make a clean sweep of the state. And the hundreds of bus-loads of voters were escorted into Terengganu by police and army trucks to ensure that the opposition supporters would not be able to make any 'citizens' arrest' of phantom voters.

And so Umno, yet again, swept the state like it did four years before that in March 2004.

HRH Sultan of Trengganu

But one thing that Umno could not control is His Majesty the Agong who is also the Sultan of Terengganu.

Tuanku knows what is going on and Tuanku also knows how the cheating is being done to perpetuate Umno's rule in the state just so that the RM1 billion a year can continue to be manipulated, exploited, and abused.

And Tuanku sought legal advice on what the Federal Constitution of Malaysia and the Terengganu State Constitution have to say about the appointment of the political head of the state government. And so Tuanku rejected Abdullah's choice of Menteri Besar, Idris Jusoh, and instead made his own choice, Ahmad Said.

And a few well-known lawyers are ready to spring into action to defend Tuanku if the federal government decides to challenge Mat Said's appointment in court.

Ahmad Said, the Preferred MB by the Sultan

Mat Said is no pushover. When Eric Chia was heading Perwaja, he embarked on a housing project and started building the houses even before the Kemaman local council could approve the project. Mat Said stepped in and issued a stop-work order.

Eric Chia was outraged. He complained to Menteri Besar Wan Mokhtar Wan Ahmad and said that he reported direct to the Prime Minister and has carte blanche to do what he likes.

But Mat Said would not back down, Prime Minister or no Prime Minister.

He even went against his own direct boss, Wan Mokhtar. The law is the law and even the CEO of Perwaja, the Menteri Besar of Terengganu, and the Prime Minister of Malaysia are not exempted from obeying the law. This was just a YDP of the Kemaman local council but he took on the giants and refused to back down and finally won when the all-powerful Eric Chia was forced to halt construction until all his papers are in order.

Mat Said is a fighter. And even as a 'nobody' he stood his ground against an outraged Eric Chia who was foaming at the mouth while screaming the Prime Minister's name. No Chinese gangster or Menteri Besar or even the most powerful Prime Minister could shake him.

And that is the kind of Menteri Besar His Majesty the Agong would like as head of his state government.

The Future of Trengganu's Oil

Terengganu has only about four years left. According to Petronas, after 2012 there will be no more oil in Terengganu. Four years at RM1 billion a year is merely RM4 billion.

This RM4 billion will disappear in four years if Idris Jusoh is installed as Menteri Besar. And, in 2013,

Terengganu will revert to being just a fishing village like what it was in 1973 before they discovered oil.

Yes, it was a great 40 years. But the 40 years which started in 1973 will end before 2013 is out.

Terengganu can choose to allow Idris Jusoh to run the state and therefore allow the RM4 billion to finish by 2012 or they can instead ask Mat Said to run the state and ensure that the RM4 billion will last till 2020. His Majesty would rather choose the latter.

Trengganu Oil Money

Since the mid-1970s, Terengganu had been enjoying a 5% royalty on all the oil and gas extracted in the state. That is what is provided for under the Petroleum Development Act.

However, in 2000, this royalty was withdrawn and converted to Wang Ehsan (goodwill money). Suddenly, the RM800 million or so a year that Terengganu was supposed to get as its 5% share of the oil and gas revenue was transferred out of the state and into the hands of one man, Idris Jusoh.

In 2004, Umno, under the stewardship of Abdullah Ahmad Badawi, won back the state from the opposition. But the state did not win back its 5% oil royalty.

The Wang Ehsan continued and Idris Jusoh, who now became the Chief Minister, continued to single-handedly manage the fund. Even the State Economic Development Corporation (SEDC) and the Terengganu State Economic Planning Unit (UPENT) were left totally in the dark.

One man, Idris Jusoh, decided how the money was spent, and it is a lot of money.

(But) Abdullah Ahmad Badawi would not tolerate one man managing the state's coffers. He wanted Idris Jusoh's hands out of the RM800 million a year cash box.

Then Khairy Jamaluddin, Abdullah's son-in-law cum adviser, came out with a fantastic new 'umbrella concept', better than even Mahathir's. They wanted direct control of the money without Idris Jusoh deciding on how the money is spent.

Khairy Jamaluddin's 'Umbrella Concept" for Trengganu

And this is how they did it.

1. First they appointed Wan Farid, Khairy's 'running dog', as Abdullah's Political Secretary.
   
   
2. Then they appointed Wan Hisham, Wan Farid's brother, as the State Exco Member in-charge of tourism.
   
   
3. Then they gave Patrick Lim, Khairy's business partner, the sole monopoly of all state tourism projects.

Now the network is intact and Idris Jusoh has been cut off.

Patrick Lim's job is to create all sorts of state tourism projects at hugely inflated prices. He would then propose these projects to Wan Hisham, the man in-charge of tourism.

Wan Hisham would then pass them on to his brother, Wan Farid. Wan Farid would then pass them on to Khairy.

Idris Jusoh would of course be left out of the loop and he would only know about them when it was a fait accompli -- as the Malays would say, "Nasi sudah jadi bubur."

Khairy and his Cronies' Projects for Trengganu

They built 30 houses at RM1 million each on an island in the Trengganu River . They launched a RM300 million a year yacht race called the Monsoon Cup.

Hundreds of millions a year is being spent to 'attract tourists to Terengganu'.

It seems this year the amount of Wang Ehsan has shot up from RM800 million to RM1 billion -- so there is even more money to play around with.

The Power of Wan Hisham, Wan Farid, Patrick Lim and Khairy Jamaluddin With Trengganu's Money

To ensure that Idris Jusoh keeps his hands out of the cash box, Abdullah himself chairs the state meetings though he is the Prime Minister and not the Terengganu Chief Minister.

Of course, Idris Jusoh, being the Chief Minister, is allowed to sit in on these meetings though he has no say on what they propose.

Patrick Lim, though he is not in the government, is also allowed to attend these meetings.

Abdullah would then propose all sorts of tourism projects conjured by Wan Hisham, Wan Farid and Khairy. Details are of course not discussed; only the gist of things and the amounts involved.

Whenever Idris Jusoh raises any questions, he would be told to 'leave it all to Patrick Lim who knows what to do'. Idris Jusoh is not to involve himself in the details.

After awhile Idris Jusoh got quite pissed and tried to resist. One project that he knew nothing about was placed before him and he was told by Patrick Lim to sign the papers. But how could he sign the papers when he knew nothing about it and would eventually have to bear responsibility for it?

Patrick Lim walked out of Idris Jusoh's office and phoned Wan Farid who complained to Khairy. Within an hour Idris Jusoh received a phone call from Abdullah who ordered him to sign the papers, which he of course did straight away.

Patrick Lim's hold on Abdullah was apparent to all but somehow not to Idris Jusoh.

One day Abdullah visited Terengganu to chair the regular meetings on how to spend Terengganu's RM800 million (which is now RM1 billion because of the increase in oil prices).

Idris Jusoh fetched Abdullah from the airport but before his car could move Patrick Lim's car cut in front of Idris Jusoh's car and Abdullah got out of Idris Jusoh's car and got into Patrick Lim's car.

Idris Jusoh should have realised then who really runs Terengganu.

RM1 billion a year is a lot of money. This money, which should belong to Terengganu, is not going to the state. It is going to Wan Hisham, Wan Farid, Patrick Lim and Khairy. And Abdullah chairs the state meetings to decide how the money is spent. And Wan Hisham, Wan Farid, Patrick Lim and Khairy help spend the money. And they spend it all. And Idris Jusoh has no say in how it is spent. And if he refuses to sign the papers he will get a phone call from Abdullah.

Idris Jusoh will tell you that Khairy runs this country. And Khairy also runs Terengganu and manages its RM1 billion a year through Wan Hisham, Wan Farid and Patrick Lim.

And Abdullah chairs the Terengganu State meetings on behalf of Khairy and according to the plan on how Patrick Lim wishes to spend the RM1 billion a year.