The New York Times had published a story on 19th November 2014 highlighting the iron ore mining activities of a Chinese-owned firm listed on the Hong Kong Exchange, CAA Resources in Malaysia.
In the scandalous expose, the Executive Director of CAA Resources, Li Yang who is responsible for the activities of CAA subsidiaries in Malaysia revealed extensive corrupt activities in the Malaysian business environment involving local government politicians, including the award of royal titles. The New York Times wrote that:
…Mr. Li, the 27-year-old CAA chief and scion of a Chinese family that had grown wealthy in the mainland iron ore industry, immediately worked to build ties with local and national political leaders, as well as with Malaysian royalty.
“If you’ve got these two to support you, then you can do anything you want, because the natural resources are all controlled by them,” Mr. Li said.
Mr. Li, who owns 56 percent of CAA, said that he had paid for each of the ruling party politicians with indirect stakes in the mine to receive the royally granted title of “dato,” which roughly translates as “the honorable.” It costs about $100,000 to arrange each royal grant, he said.
Although anti-corruption groups have campaigned against such arrangements, particularly indirect stakes, Mr. Li said he was simply following common practices in Malaysia. A government-linked industry group in Beijing announced plans on Oct. 24 to introduce standards for Chinese companies in areas like labor rights, environmental protection and community relations.
While Mr Li’s allegations has embarrassed Malaysia internationally in the widely read New York Times, more importantly, it is a direct admission of his involvement with corrupt and reprehensible activities in the country.
We welcome the statement by the Malaysian Anti-Corruption Commission (MACC) head of investigations Datuk Mohd Jamidan Abdullah who said the commission viewed the allegations seriously and will seek to meet with Li Yang, the chairman and chief executive of Chinese-controlled CAA Resources who had detailed his dealings with an interview with the New York Times (NYT) recently.
However, beyond just the investigation by MACC which should proceed without fear or favour, the Terengganu, Pahang and Federal Government must take immediate action by withdrawing all approvals for the CAA Resources and its subsidiaries to operate in the country. The respective governments must demonstrate their resolve that Malaysia do not tolerate any form of corruption, what more from a company which blatant flaunts and publicises its corrupt activities in the media.
CAA Resources commenced its mining operations in December 2010 at the 1,359 sq km Bukit Ibam Iron Ore Mine in Pahang. In 2013, the company purchased the rights to prospect and mine in Bukit Besi, Terengganu.
Mr Li’s open admission of paying for “datukships” for local Barisan Nasional politicians, to build relationships with them and the royalty, involving millions of ringgit and calling them a “common practice” is sufficient justification for the Federal Government to terminate any Malaysia Investment Development Authority (MIDA) approvals, and for the respective state governments to withdraw permits for mining in the state.
Malaysia must demonstrate that it is not an “available-for-sale” banana republic, and prove that it does not welcome corrupt businessmen into the country. We are certain that CAA Resources is not the only country interested in prospecting and mining natural resources in the country. Instead, these opportunities should be made available to other companies, local or global, who will be more than willing to participate in any open tenders called for the exercise.