Malaysia - Cast in Iskandar graft scandal growing

A corruption scandal in Malaysia's premier Iskandar Development Region in south Johor appears to be growing, with several foreigners said to be involved, including Singaporeans.

The anti-graft authorities have asked over 30 foreign witnesses to give evidence in an ongoing probe that has already seen several charges being filed in court against two persons this week, Malaysian press reported yesterday.

Utusan Malaysia, quoting sources, said the witnesses are from Singapore, Switzerland, Pakistan, India and Saudi Arabia.

The New Straits Times (NST), also quoting sources, reported that the foreigners were working hand in glove with officials of state-owned property developer Iskandar Investment (IIB) for hefty kickbacks for projects secured.

It claimed that these middlemen, who were sourcing for foreign investments, had contracts with several IIB subsidiary companies to secure commissions of up to 30 per cent of the project value.

Each side would get a share of this commission, a mechanism which the Malaysian Anti-Corruption Commission (MACC) reportedly described as a means to legalise corruption.

The NST said this had inflated the cost of some projects. Reports also say several more charges are expected to be filed next week, with those under investigation said to include a former official who held a top post in IIB, a "Datuk" businessman and several serving IIB officials.

"MACC is expected to recommend charges against a wide range of individuals, from IIB officers to runners and contractors," a source told the NST.

When contacted, MACC's director of investigations Mustafar Ali declined to confirm if more charges would be brought to court, or if any Singaporeans were being sought as witnesses.

If there was a need for the latter's evidence, he said, MACC would take the normal procedure of seeking the assistance of the Singapore authorities.

This week, two people were charged in relation to the scandal.

One was Mohd Amin Suhaimi, 52, the husband of ex-IIB chief executive Arlida Ariff. He was charged with three counts of soliciting and accepting bribes amounting to RM1.6 million (US$504,000) to help a company secure a school construction tender last year.

The other was former senior IIB vice-president Rostam Razali, 51, who is accused of disclosing information on the estimated tender price of a road project three years ago.

The allegations of graft first came to light at the end of last year, when an internal audit turned up irregularities.

According to local media reports, whistle-blowers and business partners had then complained about alleged kickbacks, inflated costs and questionable procurement procedures.

Allegations were also made about infrastructure projects being awarded to relatives of senior IIB executives.

Madam Arlida, who was seen as a competent technocrat, was replaced before her contract ended in December last year, but no reasons were given. She was, however, not implicated in the auditors' findings.

The high-profile IIB was set up in 2006 to undertake "catalyst developments" to spur further investments in Iskandar, which is to be a new driver of growth in Malaysia.

State investment arm Khazanah Nasional owns a 60 per cent stake in IIB, with the Employees Provident Fund and Kumpulan Prasarana Rakyat Johor each holding 20 per cent.

The Iskandar region, which is three times the size of Singapore, aims to leverage its proximity to the Republic by drawing a spillover of investments. Several major developments are slated to open next year, including a Legoland theme park.

Carolyn Hong

The Straits Times

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