The hearing of Sarawak Chief Minister Abdul Taib Mahmud's application to strike out several paragraphs from Malaysiakini's statement of defence, including details of his family's business, has been postponed to March next year.

Senior assistant registrar Norhayati Abdul Mansor at the Kuala Lumpur High Court this morning set the date for both parties to file all necessary affidavits pertaining to the case before March 26 next year.

Malaysiakini's lawyer Fahri Azzat and Taib's counsel Yee Mei Ken were present when she made the decision in chambers. Both parties agreed to an adjournment of the hearing today.

The senior Sarawak politician filed an application two weeks ago to strike out several paragraphs from Malaysiakini's statement of defence as 'immaterial' to his defamation suit.

The affidavit filed by his lawyers at Shearn Delamore argued that the facts stated "went far and beyond the ambit of this case" and must be struck out.

Malaysiakini's statement of defence was in response to a defamation suit filed by Taib in the Kuala Lumpur High Court on May 16 over a series of articles on his alleged involvement in a timber kickbacks scandal.

He named Malaysiakini and its editor-in-chief Steven Gan as parties to the suit.

Taib's objections are to these sections of the statement of defence:

  • Malaysiakini's claim that Taib had abused the judicial process by failing to initiate legal proceedings against the original source of the timber kickback allegations such as Japan Times and Kyodo News and using the suit to deny Sarawak State Assembly members the opportunity to debate the issue;
  • Details of the alleged involvement of his family in the conglomerate Cahaya Mata Sarawak Bhd (see chart);
  • Malaysiakini's 'fair comment' pleadings; and
  • The link made between his two brothers with Dewan Niaga (Sarawak) Sdn Bhd, the sole agent for timber shipments out of the state.

Malaysiakini has instructed its team of lawyers from Azzat & Izzat to vigorously challenge Taib's application.

Background to the suit

Taib has also filed a suit in the Kuching High Court against two opposition leaders - PKR state chief Wan Zainal Wan Sanusi and the party's Stampin branch chief See Chee How - for distributing leaflets containing articles taken from Malaysiakini and Japan Times.

Malaysiakini reported the matter a week after the Japan Times article was published on March 29, 2007, and followed this up with a special issue entitled, RM32 mil kickbacks - tip of the iceberg.

According to Japan Times, a multi-million ringgit 'bribe' was allegedly paid over a period of seven years to a Hong Kong company, Regent Star, said to be linked to Taib and his family.

The money was said to have come from a Japanese cartel consisting of nine companies which has been buying timber from Sarawak.

It allegedly paid Regent Star 1.1 billion yen (RM32 million) for services rendered in this transaction. This was disguised as business expenses, and was therefore not taxed.

However, the Japanese tax authorities discovered that the payments were "illegitimate expenses" as the Hong Kong agency - believed to be a paper company - did little "substantive work" to justify the payments.

The Tokyo Regional Taxation Bureau has instead classified the payment as a "rebate", which is taxable.

The newspaper reported that the shipping firms were likely to be slapped with well over 400 million yen (RM11.6 million) in back taxes along with heavy penalties for "hiding" the funds from the tax authorities.

The companies are suspected of having made payments to the Hong Kong agent for 26 years, and thus the total income concealed could be several times the figure cited by sources.

However, the Hong Kong Registrar of Companies stated in a notice that Regent Star has applied to be deregistered.


SPECIAL REPORT: Tip of the iceberg