The Pahang government, which is led by the state Umno chief, 'awarded' a plum logging concession believed to be worth about RM100 million to the ruling party five years ago.

The concession, granted in March 1998, allows the party to log a 10,000-acre plot of land in Nenasi, about 100 kilometers south of Kuantan. Industry experts have conservatively estimated that the logging proceeds from this concession to be close to RM100 million.

To make the deal aboveboard, the party is required to pay a premium for the concession - a figure of RM4.8 million - to the state forest department. However until today, no payment has been made.

The party's motives in obtaining the land becomes even murkier as other documents in malaysiakini's possession indicate that Umno Pahang had given its concession rights to a Kuantan-based company, Seruan Gemilang Makmur (SGM), for a paltry RM50,000.

This deal, signed in October 2000, gave SGM exclusive rights to extract, remove and sell all the timber logs in the 10,000 acres - or about 40 sq km - belonging to Umno Pahang.

Umno Pahang working secretary Abdullah Rahmat signed the deal on behalf of the party.

Industry experts contacted by malaysiakini have questioned the extremely low transfer rights and wondered if there was a "hidden agreement" between the two parties.

Financial gains

This concession is also believed to be a tip of the iceberg of total logging concessions granted by the state to Umno Pahang as a mean to raise funds for the ruling party.

Former Pahang menteri besar Khalil Yaacob (left), who is now party secretary-general at the national level, has been previously accused of alleged discrepancies in the awards of timber concessions.

In a police report lodged in 2001, Umno's state representative Fauzi Abdul Rahman alleged that Khalil, who is also information minister, had permitted areas larger than what was permitted under the national forestry policy to be harvested.

By then the state leadership has been assumed by Adnan Yaakob - who took office in May 1999 - although the state party chairmanship was still held by Khalil until he handed it over to the new mentri besar after the 1999 general election in November.

An Umno internal inquiry on Khalil, launched three years ago, has yet to complete its investigation.

Malaysiakini also learned that in the state Umno-SGM agreement, several other Umno leaders were also instrumental in ensuring the company obtained logging licence from the state forest office.

A recommendation letter dated February 2000 from Umno Pahang treasurer Abdul Rashid Abdul Rahman to the state forest office confirmed that the party "does not have any objection for the state forest office to issue a licence" to logging firm SGM.

"I understand that the applicant SGM has referred this matter to the menteri besar, and the MB agreed that this application should be given proper attention by the state forest office," said Abdul Rashid in the letter.

Millions in profit

The licence to log the land is renewable for every 1,000 acres - plots below 1,200 acres do not require environmental impact assessments - but after having cleared some 7,000 acres, SGM hit a snag.

In June last year, the state forest office refused to issue new licences to SGM. It is believed that the present mentri besar Adnan wants to have nothing to do with the deal made by his predecessor, a rival party leader.

Failing to get the state Umno to help in its bid to obtain the licence to log the remaining plot of forests, SGM turned to the courts in March this year.

The company is claiming that it had suffered losses amounting to RM31 million due to the failure to obtain licences to log the remaining 3,000 acres.

Court documents show the logging company claiming that Umno Pahang had promised to "do whatever necessary to ensure the extract and selling of timber logs" from the land belonging to the ruling party.

The company had since obtained a judgment in default to the tune of RM70,000 in damages after Umno Pahang failed to attend court hearings early this year.

However, the latest twist in this shadowy business deal is that the ruling party had entered an appeal against the decision, and this will be heard at the Kuantan High Court next Wednesday.

An appeal by SGM for a higher damage will also be heard on Aug 20.