(Subang Jaya, Monday): The Prime Minister, Datuk Seri Dr. Mahathir Mohamad, said today that "the present trend among opposition parties is to deliberately breach the law and invite action against them".
Mahathir cannot be more wrong as his description best befits himself, as when he acted mala fide and directed Petronas to violate its solemn legal obligation to pay five per cent oil royalty to the Terengganu state government so that the Barisan Nasional Federal Government could hijack the PAS Terengganu State Governmentís oil royalty as part of its political revenge against the people of Terengganu for voting in a PAS state government in the last general election.
In this instance, Mahathir deliberately broke the law and challenged the PAS Terengganu State Government to take action against him and the Federal Government. The question is who dare to go to the courts on this matter?
The legal position and rights of the Terengganu state government to five per cent oil royalty is crystal-clear and had in fact been acknowledged by the Federal Government and every Prime Minister and Finance Minister for the past two decades.
In 1974, Parliament passed the Petroleum Development Act 1974 to provide for the "exploration and exploitation of petroleum whether onshore or offshore" and vested in Petronas "the entire ownership in and the exclusive rights, powers, liberties and privileges in respect of the said petroleum, and to control the carrying on of downstream activities and development relating to petroleum and its products".
Section 4 of the Petroleum Development Act 1974 stipulates that "in return for the ownership and rights, powers, liberties and privileges vested in it" by the Act, Petronas "shall make to the government of the Federation and the government of any relevant State such cash payments as may be agreed between the parties concerned".
On 22nd March 1975, Petronas signed an agreement with all states including Terengganu spelling out the "cash payments" under section 4 of the Petroleum Development Act 1974.
In the agreement signed between Petronas and the Terengganu State Government in March 1975, "in return for the ownership and rights, powers, liberties and privileges in respect of the petroleum vested by the Government in Petronas", Petronas made the following commitments:
2. The cash payable under this Agreement shall be paid semi-annually. Payment for the first half-yearly period shall be made on or before the First day of September and for the second half-yearly period shall be made on or before the First day of March of the following year."
Only two years ago, on 23rd October 1998, Mahathir himself publicly acknowledged that the payment to the Terengganu state government was "royalty" and not "compassionate" or "goodwill" payment when he tabled the following report in Parliament:
How can Mahathir now disown his own public admission in Parliament on October 1998 that the five per cent payment to Terengganu was "oil royalty"?
Even the two-time Finance Minister, Tun Daim Zainuddin, publicly acknowledged Terengganu state governmentís right to oil royalty in his retabling of the 2000 Budget in the Dewan Rakyat on February 25, 2000, when the Economic Report 1999/2000 he retabled in Parliament said:
The 1978/1979 Economic Report said:
This is because the Petroleum Development Act stipulates that Petronas "shall be subject to the control and direction of the Prime Minister who may, from time to time, issue such direction as he may deem fit" (section 2) and that the Prime Ministerís direction "shall be binding" on Petronas (section 3).
Although the Prime Minister has the powers to issue directives to Petronas which is binding on the national oil corporation, the Prime Minister has no powers to issue a directive which is mala fide and bad in law as requiring Petronas to act illegally to break its solemn legal commitments to Terengganu - especially as every Prime Minister and Finance Minister in the last two decades had recognised Terengganu state governmentís legal right to five per cent oil royalty, including Mahathirís October 1998 budget presentation in Parliament and Daimís retabling of the 2000 Budget in Parliament in February 2000.
What Mahathir and the Barisan Nasional Federal Government had done in
deliberately breaking the law with regard to Petronasí legal obligation
to pay five per cent oil royalty to the Terengganu state government is
the latest and most serious blow to national and international investor
confidence, as it has aggravated increasing concerns about the devastating
erosion of the rule of law and the integrity of the government in Malaysia.