Sarawak DAP questions use of state funds to repay debts of its subsidiaries

The Malaysian Insider

22 December 2015

Sarawak DAP today questioned the usage of the state's development fund to repay the debts of its subsidiary companies.

Its state leader Chong Chieng Jen also accused the state government of circumventing the scrutiny of the legislative assembly, adding that such move would made it difficult to determine if corruption was involved.

"In the case of 1Malaysia Development Berhad (1MDB), the federal government transfers valuable land to 1MDB for the company to sell and repay the debt but in the Sarawak’s case, it is a direct allocation of development fund for these subsidiary companies to repay their loans,” the Kota Sentosa assemblyman told a press conference today.

He said for projects that were directly financed from the development allocations in the budget, the government had to list out and be answerable in the state legislative assembly on the details of the projects.

"However, under this mode of financing – through a loan taken up by the state government – the state is circumventing the requirement to be answerable to the assembly on the details of the projects."

Since 2006, the Sarawak state government had, on average, allocated more than RM1 billion of its development fund into an account called “Government Contribution Towards Approved Agencies” trust account, including a sum of RM1.418 billion in the Budget 2016.

“The state government has been very secretive on the operation of this account and has evaded many questions asked by me since 2010,” Chong said.

It was revealed in recent state legislative assembly meeting that billions of ringgit in the said account were used to repay the loan taken up by the state government through five of its subsidiary companies, namely Sarawak Capital Assets Sdn Bhd, SSG Capital Resources Sdn Bhd, SGOS Capital Holdings Sdn Bhd, Equisar Sdn Bhd and Sarawak Technology Holdings Sdn Bhd.

The financial statements of the “Government Contribution Towards Approved Agencies” trust account from 2011 to 2014 were tabled in state assembly recently showed that the state government had borrowed a total RM1.7 billion and US$3.373 billion (RM14.5 billion) for the past 10 years.

He said though it was stated in the financial statements that the loans were “Grants for Financing Various Projects”, there was no mention on the details of the said “projects”.

“Because the projects are financed through loans of the Sarawak state government’s subsidiary companies, technically, the state was not accountable to the assembly on the fundamental question whether the projects actually exist.”

Chong said he would pursue this issue for as long as he was an elected representative.

“The only way by which the state government can stop me from asking the questions is to stop me from getting re-elected,” said Chong, who is facing charge of participating in Bersih 4 rally.

He faces disqualification as an elected representative if he is convicted.

Chong had been raising questions on the missing development fund which he described as the “budget black hole”.

The state government had taken the matter to court suing Chong for defamation. It is now appealing the case which was struck out by the High Court. – December 22, 2015.