DAP calls for establishment of commission of inquiry into the RM10.6 million Mistui kickbacks to Telekom Malaysia and blacklisting of Mitsui and NEC Corp from all contracts and tenders

Media Statement
by Lim Kit Siang

(Petaling Jaya, Tuesday): The announcement by Telekom Malaysia Bhd yesterday that it would investigate allegations that the company received about RM10.64 million  (300 million yen) in "kickback" money from Japan's Mitsui and Co in 1997  in respect of the award of a switchboard contract in 1996 is ludicrous and completely unacceptable.

How can a company which had been accused of receiving RM10.64 million Mitsui kickbacks be expected to conduct a thorough, independent and impartial inquiry into allegations about  its own wrongdoing and corruption?

Telekom Malaysia chief executive Datuk Wira Mohamed Said Mohamed Ali said yesterday that Telekom viewed the allegations seriously in line with its policy of transparency and accountability and that "If necessary, the company will seek the assistance of the Anti-Corruption Agency".

If Telekom Malaysia is serious and sincere about its policy of transparency and accountability, its first reaction to the Asahi Shimbun report last Friday about the Mistui kickbacks to Telekoms Malaysia should be a public  invitation to the Anti-Corruption Agency (ACA) to conduct a full investigation, offering full co-operation by opening up all its books and accounts for a full-fledged and no-holds-barred investigation.

Telekom Malaysia should have lodged a police report over the Asahi Shimbun report so that the ACA can immediately initiate investigations.

The report by Asahi Shimbun, an influential Japanese daily, that  the Mitsui kickbacks to Telekom Malaysia was funneled to the Malaysian side through a consultant firm in Malaysia, which turned out to be a dummy company, carries great credibility as its  source came  from the Tokyo Regional Taxation Bureau.

Asahi Shimbun  reported that in a syndicate with the high-tech giant NEC Corp., Mitsui landed orders from Telecom Malaysia in late 1996 for the switchboards with a total capacity of about 800,000 circuits.

The Japanese syndicate won the deal, estimated at more than 10 billion yen, by outdoing a number of European rival bids. The switchboards were delivered to Telecom Malaysia from 1996 to 1998.

Mitsui registered the kickbacks, paid in 1997 to the Malaysian agent under a consultant contract, as "commissions" which were construed as "losses", but the tax bureau determined that the payments were rewards for the orders and were categorised as taxable "entertainment fees".

Mitsui was also found to have paid a total of 100 million yen in similarily questionable payments to South Korea, Morocco, Jordan and Qatar in the name of "agent fees" and other items.

Asahi Shimbun reported that the tax bureau has fined Mitsui about 900 million yen in taxes and penalties for failing to report some 2.1 billion yen in income in three years to March 1998, including the 400 million yen kickbacks which were originally booked as losses.

In another report, the Kyodo news agency quoted sources close to Mitsui as saying the company often paid "commissions" to influential local people who provided information to its overseas agencies, upon winning contracts for projects.

However, the silence of the ACA on Asahi Shimbun  report of  the Mitsui kickbacks to Telekom Malaysia has raised anew public doubts about the professionalism, independence and integrity of the ACA when  only a week ago the ACA director general Datuk Ahmad Zaki was making front-page headlines about taking the fight against corruption to the private sector and when in the past, he had been so quick on-the-draw as over the allegations by former  Bank Negara assistant governor Datuk Abdul Murad Khalid  that former Deputy  Prime Minister, Datuk Seri Anwar Ibrahim had amassed a fortune of RM3 billion while in government through 20 "Master Accounts".

Zaki should explain why the ACA is suddenly treating the allegations of Mitsui kickbacks to Telekom Malaysia with "kid-gloves", dare not even give a public response, as if it is aware that there are certain territories where the ACA is clearly out-of-bounds whatever the public bombasts about the ACA wanting to take the fight against corruption from public to private sector!

DAP calls for the establishment of an independent  commission of inquiry into the RM10.6 million Mistui kickbacks to Telekom Malaysia in 1997 for the ACA has lost public confidence that it would have the authority to conduct a professional investigation into this case.

Telekom Malaysia should publicly support the establishment of an independent commission of inquiry not only in line with its policy of accountability and transparency, but to protect the good name of the country in the international marketplace and ask the  Cabinet at its meeting tomorrow to constitute such a inquiry commission.

The Minister for Energy, Telecommunications and Posts, Datuk Leo Moggie, should make a  statement on the allegations of Mitsui’s kickbacks to Telekom Malaysia as this happened under his watch  when he was re-appointed to the Ministry in  May 1995 after switching ministries with Datuk Seri S. Samy Vellu between 1989 to 1995.

Until the outcome of an independent commission of inquiry into the allegations of Mitsui’s kickbacks to Telekoms, both Mitsui and NEC Corp should be blacklisted from all contracts and tenders, not only in connection with Telekom but all other telecommunications contracts in the country.


*Lim Kit Siang - DAP National Chairman