Blame The Media! – Sabah State Government Launches Cover-Up Over Carbon Cowboy Deal

1 “Incomplete”, “illegal”, “inequitable”, “absurd”, “unfair” were some of the extraordinary words used by the Sabah Attorney General last week to describe the so-called Nature Conservation Agreement, signed up to by her own Chief Minister and Deputy Chief Minister, as she plainly sought to backtrack on the commitment worth an estimated $80 Billion in carbon credit assets belonging to the state.

The explosive press statement released by Nor Asiah Mohd Yusof singled out Sarawak Report for ‘inaccuracy’ after we published the full details of the controversial NCA, which had been kept secret (according to its own confidentiality terms) since being signed last October.

Yet documents now submitted to the Sabah High Court and obtained by Sarawak Report show the agreement that we published was indeed genuine and claims that it was only a ‘provisional’ arrangement are not borne out in the text of what was signed.

The Conservator of Forests had objected to legal attempts by the private company Hoch Standard Pty Ltd to keep the papers secret and submitted a copy in his own disclosure papers responding to a civil case lodged on behalf of Sabah’s native communities.

In her press statement the AG sought to imply that the agreement remains conditional and part of an incomplete process.  She declared it was a “non-binding framework” that remains “unenforceable” and “impotent” by virtue of several details having yet to be resolved and in the absence of due diligence having been performed.

The AG then went on to claim in what is in effect a damning indictment of the existing deal that the entire NCA remains subject to a major exercise in scrutiny by her legal office.  Listing all the areas (including matters such as consultation and native rights) that are unresolved, she further stated that the entire document is subject to an as yet unpublished “addendum” apparently due to be added at a later date.

As such, the statement by Sabah’s top legal officer appears to represent an attempted cover up of a disastrous commitment entered into by the state and a blatant bid to walk back a signed agreement that was initialled on each and every page by the Chief Minister, Deputy Chief Minister (DCM), Conservator of Forests and the representative of Hoch Standard Pty Ltd, namely Stan Lassa Golokin who is an associate of the DCM.

Indeed, shortly after the document was signed, representatives of HSPL had sought to hawk Sabah’s carbon credit potential at the COP climate change conference in Glasgow, declaring that under the agreement they were entitled to do so. It was this immediate attempt to merchandise Sabah’s these rights that first brought the existence of the deal to public notice, say campaigners.

The present move by the AG to undo that commitment suggests that a raging political battle has now broken out behind the scenes with the DCM Jeffrey Kitingan having defended the deal as late as last Sunday, when he together with Stan Golokin had given a three hour press conference supporting it as major opportunity for Sabah.

At no point during that press conference did the two men refer to the NCA as being provisional or non-binding as was to be announced by the Attorney General just hours after Sarawak Report published the ‘strictly confidential’ terms on Tuesday. To the contrary they upheld the agreement as a done deal even though it was passed in secret, without consultation and has never been raised or debated in the State Assembly.

When later challenged in December Kitingan held up the agreement in the Sabah Assembly but refused to disclose its contents. He later is said to have implied that the matter had therefore been debated
When later challenged in December Kitingan held up the agreement in the Sabah Assembly but refused to disclose its contents. He later is said to have implied that the matter had therefore been debated!

Mystery Benefaciary At The Heart Of The Row

The most significant elephant in the room during this growing row is the mystery over who stands to benefit from the ‘proposed’ agreement, given the identity of who actually owns Hoch Standard Pty Limited (HSPL) remains undisclosed. Under the terms of the agreement HSPL stands to earn a staggering 30% of an estimated US$80 billion worth of future profits.

Jeffrey Kitingan’s associate Stan Lassa Golokin has acted as the representative of HSPL, however the shareholders of the Singapore-based special purpose enterprise is a mysterious BVI entity called Lionsgate, whose ownership is not stated in the agreement signed by the Sabah government leaders.

Was this the reason why the Attorney General herself, while she was brought to attend the signing ceremony back in October last year, is understood to have pointedly refused to add her own signature to the document?

Non-Binding and Conditional Agreement?

The former State Senator Adrian Lasimbang has now lodged a civil court action against the NCA in defence of native rights and indigenous groups, whom he rightly told the Sabah High Court were not consulted prior to the signing of this so-called Agreement.

Pursuant to his case, court documents show that he demanded full disclosure of the deal which Stan Golokin on behalf of HSPL sought to prevent by pleading that the agreement was confidential (he submitted only the signed confidentiality clauses to prove his point). On the other hand, the Conservator of Forests submitted arguments against such confidentiality and supporting the full disclosure with which the court agreed.

The AG and Conservator have cited public disquiet and native anger as part of their reasoning for the need to disclose and review the deal at the same time as playing down the level of commitment. Blame the media?

However, these crucial documents now finally released into the public domain in fact make clear that the original agreement was described as binding (several times) and makes no reference whatsoever to conditionality, a later due diligence exercise or any addendum as is now much later claimed by the Attorney General:

Signed October 28th 2021 and now laid before Sabah High Court
Signed (and initialled on every page) on October 28th 2021 and now laid before Sabah High Court

Moreover, this was not termed a “Proposed NCA” as the AG now claims it is, but was headed as being a “Nature Conservation Agreement” – signed and dated on October 28th by the CM and DCM of the State of Sabah, who initialled it on every page:

There is no reference in the agreement to it being 'provisional' nor to a further qualifying addendum being due nor to the agreement being conditional on further scrutiny and due diligence.
There is no reference in the agreement to it being ‘provisional’ nor to a further qualifying addendum being due nor to the agreement being conditional on further scrutiny and due diligence.

Sarawak Report concludes the AG and her political supporters are seeking to retrospectively qualify a done deal. Therefore, should the DCM and his allies at HSPL seek to fight this U-turn by the state government they may well produce a strong legal argument against a bogus attempt to re-write events in the light of public protests.

In which case those seeking to reverse this heist on Sabah’s carbon credit assets could well be forced to point to the fraudulent nature of the deal and its illegal provisions via a criminal prosecution involving as yet unidentified interested parties. This has already been demanded by the leader of the majority party Warisan who has filed a report to the MACC.

Amongst those illegal provisions, as the AG herself has helpfully pointed out, is the clause that seeks to prevent any future Sabah Assembly from altering the terms of the present NCA. This she explains in her press statement is simply illegal:

“any clause in the proposed NCA that seeks to bind the Sabah Legislature in any form is void for illegality under Malaysia’s Contracts Act 1950”

There is also the failure to conduct due diligence as to the interested parties in the deal and  the possible infringement of protected rights.

As these arguments play out the key question remains as to why the two most senior representatives of the Sabah State Government, together with the Conservator of Forests, signed an agreement described as an “International legally binding instrument” on 18th October last year if negotiations remained ‘incomplete’?

The State Attorney General in her press statement blamed ‘inaccurate” reporting by Sarawak Report for citing the outrageous penalty clauses included in the provisions they signed up to, claiming that since “the proposed NCA is not in force, it follows that its so-called penalty clauses are also not binding“.

However, to repeat, the documents now laid before the Sabah High Court prove the agreement was described as binding, was signed and did contain all the “inequitable and one-sided penalty clauses” exposed by Sarawak Report which the AG now claims she would never “permit… to be incorporated in the event that the NCA is finalised”. 

If the agreement was a merely a “non-binding framework”, as the AG is now seeking to suggest, why on earth was this not made absolutely clear within the document that was signed – indeed why was it signed at all?

The AG also claims that since the agreement was “incomplete” it is “hence non binding”. However, the document described itself as binding several times and was signed as such.

Likewise, if the agreement was full of obnoxious clauses that could never be accepted, as the AG now rightly admits, why were these clauses included and initialled?

Government at War With Itself ?

What is clear is that whilst the AG has sought to shift the blame onto ‘inaccurate reporting’ she is in fact doing her best to counter and undermine the agreement signed by her bosses on the grounds that it has plainly breached the law in numerous respects.

It is common knowledge that having been invited to the ceremonial signing on October 28th she refused to add her own signature as the law officer of the state. Now her gambit is to claim, without the slightest justification, that the entire exercise was ‘conditional’ and that “the proposed NCA and its promoters are now being scrutinised by the State Attorney General’s Chambers as part of a wide-ranging and on-going due diligences exercise”. If the terms do not meet her standards and requirements, she claims, “the proposed NCA will not proceed”.

By seeking to downgrade the document and place retrospective conditions the AG is to her credit plainly attempting a rearguard action to undo a potentially fraudulent deal involving pernicious exploitation of the people of the state. Less to her credit is her attempt to blame the media when it was the media that exposed the scam.

AG’s List Of Flaws

The AG’s efforts to undermine the deal by stating its flaws point by point present a damning indictment of the attempted heist on Sabah’s carbon rights on behalf of HSPL through its ‘authorised representative’ Stan Lassa Golokin, who has stated his role in papers submitted to the court case:

If Kitingan's associate Stan Golokin is now confirmed as the representative of HSPL who is the owner of the company's mysterious BVI shareholder Lionsgate?
If Kitingan’s associate Stan Golokin is now confirmed as the representative of HSPL who is the owner of the company’s mysterious BVI shareholder Lionsgate?

Topping the AG’s list of illegal and unacceptable clauses is the attempt to bar any future government from changing the NCA’s provisions without massive compensation to the company. So much for it being non-binding.

The law officer goes on to say that other issues which “remain unresolved are the Designated Area, Pilot Area and map; development of a Nature Conservation Management Plan; consent from Native communities; Carbon Pricing and Price Discovery mechanisms; Independent oversight … an objective performance assessment….. and a satisfactory due diligence report on and confirmation of the truth and reliability of Hoch Standard’s representations and capability”.

Could any assessment be more damning with such a list of flaws, in terms of the betrayal of the people of Sabah by those leaders who agreed to sign? At stake is a public asset worth billions of dollars that was secretly consigned to anonymous parties without the slightest consultation or review, even though the Deputy Chief Minister allegedly told the news channel Al Jazeera that it had been debated and agreed by the State Assembly.

Alleged Addendum

The AG went further in her attempt to throw a retrospective spanner into the works in her public statement by claiming the State Government will “require than an addendum to the NCA be executed where absurd and / or unfair contract terms are removed”.

What an admission that the terms of the existing proposal are every bit as outrageous as reported by Sarawak Report last week!  But the question remains as to why such absurd and unfair” terms ever signed up to in the first place if those who signed had not fully intended for them to be there?

And why is the AG only now belatedly attempting to obtain an addendum that was never referred to in the original agreement and ought never have been needed if the original agreement had been drawn up honestly and properly with her due diligence consent?

It is not hard to read between the lines that the Chief Minister and Conservator of Forests have been woken up by the public outcry to the sheer enormity of the contract they have signed and are supporting the AG’s attempt to place a legal block on the attempts by Kitingan to push forward with the arrangement. Blame the press for misreporting what happened and re-write history.

Documents submitted in the court case lodged by Adrian Lasimbang confirm as much. The panic and the back-tracking began the very day after the NCA was signed.

Forest Department Was Strong-Armed To Sign NCA!

The papers disclosed by the  Conservator of Forests reveal that on 29th October he issued a devastating letter to Hoch Standard acknowledging that he had been “concerned” and “reluctant to enter the NCA in its current form” despite plainly having been strong armed into doing so by the State Government which had nonetheless “decided to proceed” with signing the agreement:

Damning letter proves Sabah Forestry Department opposed the NCA
Damning letter proves Sabah Forestry Department opposed the NCA

The objective of the letter is plain in that the Conservator then sought to put on record that in his opinion Hoch Standard had responded to those concerns by agreeing that “the NCA would be subject to continuous renegotiation in order to provide more clarity and address all our concerns”.

The Conservator, Frederick Kugan, states that he “takes comfort” from this alleged commitment by HSPL along with an agreement to place an addendum to the NCA. This is clearly the self same proposed addendum referred to by the Attorney General.

Furthermore, in an affidavit of 27th January opposing the attempt by Hoch Standard to prevent the agreement being laid before the open court Kugan repeated the claim that the “NCA is un-finalised, not in force and not legally binding upon the Respondents” not least he claims because “amongst other matters, the proposed forest map delineating the ‘Designated Area’ is not yet part of the NCA – without its incorporation the NCA is incomplete”.

Yet none of these provisions feature in the official NCA agreement that was signed with HSPL on Octorber 28th. It seems evident AG is now attempting to back the Conservator’s claim of verbal conditions having been agreed in an apparent attempt to pressure HSPL and its key political supporter Jeffrey Kitingan to back down.

Yet, there is no evidence brought of these supposed verbal pledges and Kitingan, who is regarded as the ‘kingmaker’ of the present Sabah Government having brought crucial seats to the present coalition may consider himself sufficiently powerful to pushback his colleagues over what he has advertised as an excellent deal for the state. In which case, the unconvincing record of the MACC when it comes to pursuing investigations against political allies of the federal government may likewise play in his favour.

However, now that the matter has finally been exposed, Sabah’s powerful deputy must also consider the pressures of public opinion and international condemnation plus the outrage should HSPL seek to claim its percentages of the profits or (more likely) the extravagant penalties provided for in its favour following any termination of this outrageous contract.

Unless and until the owner of Lionsgate is revealed Sabah ought not pay a penny in profits or compensation to HSPL.

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