Canadian court to hear case about alleged money laundering by relatives of Malaysian politician

By Annette Gartland on September 20, 2017

A judge at the Ontario Superior Court of Justice in Canada has ruled that a financial disclosure case related to alleged money laundering by relatives of the former chief minister and current governor of the Malaysian state of Sarawak, Abdul Taib Mahmud, will be held in public.

The case, brought by the Swiss-based Bruno Manser Fund (BMF)¹, targets the multinational real estate corporation Sakto, which was incorporated in 1983 by Taib’s daughter, Jamilah, and his brother, Onn Mahmud, and soon became one of the largest players in the Ottawa real estate sector.

A first hearing took place in Toronto on August 21 this year under a sealing order that has now been lifted.

The case will establish a precedent on financial disclosure for private prosecutions.

The BMF alleges that Taib’s relatives have millions of dollars of illegally acquired money invested in Canada.

It is suing three Canadian banks and the professional services firm Deloitte in a bid to gain access to financial and beneficial ownership information about Sakto and its affiliated companies for a potential private prosecution.

Deloitte is a UK-incorporated multinational with its operational headquarters in New York in the US.

Under Canadian laws, private corporations are not required to publicly disclose their shareholders.

The Sakto Corporation, which is reported to be worth about C$250 million (about US$200.5 million), is now headed by Jamilah Taib Murray and her Canadian husband Sean (Hisham) Murray.

Sean (Hisham) Murray and Jamilah Taib Murray.

According to the BMF, the Sakto Corporation now comprises at least 11 Canadian companies and 18 subsidiaries and associated companies in the United States, the United Kingdom, Australia, Malaysia, the British Virgin Islands, Hong Kong, and Jersey.

The executive director of the BMF, Lukas Straumann, says the BMF is going to court against the Taib family because of the failure of public prosecutors in Canada to investigate and charge Sakto for alleged money laundering.

“Since 2010, BMF has repeatedly alerted FINTRAC, the Royal Canadian Mounted Police, and the Canadian government over the suspected flow of proceeds of crime from Sarawak to Ottawa.”

In 2011, the Royal Canadian Mounted Police (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 the BMF, stating that Canada had implemented a strong and comprehensive regime against money laundering and the financing of terrorism “that ranks in the top tier with respect to compliance with international standards”.

Straumann says that, despite this assurance, “no steps were taken by Canadian law enforcement agencies against Sakto and the Taib family”.

In March this year, the BMF released a report that it says shows how the Taib family used real estate in Ottawa to launder major amounts of unexplained wealth..

In the report, entitled Safe Haven Canada and written by Bruce Bailey, Johanna Michel, and Lukas Straumann (pictured left), the authors state that, since the early 1980s, Taib’s closest relatives have invested tens of millions of dollars “and potentially over 100 million Canadian dollars” in Ontario real estate, mostly in the Canadian capital, Ottawa.

The fund – a human rights and environmental organisation that champions the rights of the indigenous peoples of Borneo – called on the Canadian authorities “to use all available legal and political means to resolve the question of the Taib family’s stolen assets in Canada”.

Taib is himself accused of having abused his power as a public official to enrich himself and his closest relatives, who own stakes in more than four hundred companies in 25 jurisdictions.

According to the Safe Haven report, the Taib family channelled at least C$69.8 million, but possibly as much as C$150 million, of unexplained wealth into the Sakto Corporation.

The Taib-Murray mansion in Ottawa.

The report’s authors state: “It seems impossible that the Taib family could have acquired this amount of money, whose origins remain unclear, in a lawful way.”

They wrote: “Despite Taib Mahmud’s reputation as a corrupt leader, no efforts have been undertaken by the Canadian authorities or by the Taib family’s Canadian business partners to ascertain or question the origin of the enormous amounts of unexplained wealth invested in Canada.”

The Sakto Corporation says the assertions in the report are “false, malicious and sensationalised”.

The corporation said in a statement: “Sakto Corporation is a reputable, local Canadian company whose officers, directors and shareholders are Canadian. 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 sensationalised. The organisation’s rehashed and repackaged allegations have been found to be lacking in merit and never substantiated by any government or authoritative body.”

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The BMF case that has just been unsealed was brought in June this year against the Royal Bank of Canada, the Toronto-Dominion Bank, the Manulife Financial Corporation, and Deloitte & Touche.

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,” Straumann said.

In July this year, the Canadian Government’s National Contact Point for the Organisation for Economic Co-operation and Development’s Guidelines for Multinational Enterprises recommended that Sakto should implement the OECD’s guidelines that require multinationals to publish financial information as well as information on its shareholdership and internal structure.

More than 2,000 pages of evidence

The court papers filed by the BMF at the Ontario Superior Court of Justice comprise a Statement of Claim, a Factum, a Notice of Motion, and an affidavit by Lukas Straumann.

There are 140 exhibits, including books, video statements, and more than 2,000 pages of records detailing Taib’s alleged abuse of public office and massive enrichment of his closest family members.

It is alleged that Taib and his closest relatives became immensely rich using the following criminal methods:

awarding lucrative timber licences and land leases for plantations to companies owned beneficially by either Taib or members of his family;
requiring the payment of kickbacks in exchange for the awarding of timber contracts and land leases for plantations;
controlling and requiring kickbacks or bribes in the export, processing, and transportation of timber;
awarding lucrative public construction contracts to companies controlled by Taib and having the work completed at a fraction of the cost by other companies; and,
in at least one instance, arranging for the takeover by the Taib family of the largest public infrastructure company in Malaysia.

Alleged criminal misconduct

Straumann says that, while the Ontario Superior Court has not yet ruled on the merits of the case, “the language used by Justice F.L. Myers in his endorsement demonstrates that the court is taking the issue very seriously”.

Justice Myers stated: “If the plaintiffs’ evidence is correct, there may be very significant criminal misconduct being committed here in aid of corrupt foreign official(s).”

Illegal logging

Sarawak, on the island of Borneo, has one of the highest rates of deforestation in the world and an extremely high rate of illegal logging.

In his book “Money Logging”, which was first published in 2014, Straumann lays out the facts about the massive plundering of Sarawak’s forests. He singles out Abdul Taib Mahmud as the kingpin of the Asian timber mafia. He shows that Taib’s family – with the complicity of global financial institutions – have profited to the tune of $US15 billion.

Lawyers representing Taib and the Malaysian government attempted to block the book’s publication.

The BMF points out that, during Taib’s 33-year tenure as chief minister of Sarawak, the state lost more than ninety percent of its primeval tropical rainforests to logging and oil palm plantations.

The Safe Haven Canada report was researched by the BMF between August 2015 and March 2017. Research on property transactions was carried out by Bruce Bailey.