17th February 2000
Mitsui and Co.
Allegation of 300 million yen Mitsui kickback to Telekom Malaysia - Request for correspondence between Mitsui and Tokyo Regional Taxation Bureau over the issue
This is in connection with the Asahi Shimbun report last Friday (11th February 2000) that Mitsui and Co. had paid about 300 million yen (US$2.8 million) as kickback to Telekom Malaysia in return for its purchase of telephone switchboards.
Asahi Shimbun quoted the Tokyo Regional Taxation Bureau as the source for its report that the money was funneled to the Malaysian side through a consultant firm in Malaysia, which turned out to be a dummy company.
It 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 estimated at more than 10 billion yen outdoing a number of European rival bids. The switchboards were delivered to Telecom Malaysia from 1996 to 1998.
Asahi Shimbun reported that 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 is believed to have 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.
Although Mitsui has denied the allegations of kickback to Telekom Malaysia, it is noteworthy that a Mitsui spokesman in Tokyo had admitted that the company had paid a penalty to the Japanese taxation bureau although he declined to comment on the reasons for the payment.
The Anti-Corruption Agency (ACA) had issued a statement late on Tuesday that a senior executive from Mitsui & Co Ltd from Japan will turn up at the the ACA headquarters yesterday to assist in the investigations into the alleged 300 million yen kickback to secure the Telekom Malaysia Bhd contract.
However, the senior executive from Mitsui & Co. Ltd. did not show up to assist the ACA.
Mitsui’s Kuala Lumpur branch general manager for Regional Strategy and Planning Division, Masahito Nagata was reported in the press today as saying that his office was unaware who the senior executive was, that it had not heard anything from its headquarters and that "Basically, this is between our headquarters in Tokyo and the local agency (ACA)".
This is most unsatisfactory and unacceptable as such evasiveness and prevarications by Mitsui, both in Tokyo and Kuala Lumpur, do not inspire confidence that it is committed to the principles of accountability, transparency and the OECD (Organization for Economic Co-operation and Development) convention to wipe out and criminalise international business corruption entered into by the Japanese government in 1996.
Mitsui and Co. should make it very clear that it is opposed to all forms of trans-national bribery and convince Malaysians that is prepared to fully co-operate to make itself accountable and transparent in the allegations of 300 million yen kickback to Telekom Malaysia by making public all relevant documentation connected with the issue.
It is for this reason that I am writing to request for the correspondence between Mitsui and Tokyo Regional Taxation Bureau over this particular issue.
The publication of the correspondence between Mitsui and Tokyo Regional Taxation Bureau will be able to clear the name of Mitsui about the allegation of 300 million yen kickback to Telekom Malaysia and resolve the controversy once-and-for-all if there is no truth whatsoever in the Asahi Shimbun allegation.
If the Asahi Shimbun allegation is true,
Mitsui should not just pay penalty to the Tokyo Regional Taxation Bureau
but should make adequate recompense to the Malaysian people, as in paying
out 300 million yen to the Malaysian people for the advancement of an information
society, together with the firm undertaking that Mitsui would not be involved
in such kickbacks in future.
Lim Kit Siang