KOTA KINABALU: Two state government officials, including a retired officer, have been arrested by anti-graft investigators probing the evasion of millions of ringgit worth of Sabah's crude palm oil sales tax.
The duo - a senior official with the state Finance Ministry and a retired senior officer - were believed to have received RM700,000 in bribes from a palm oil mill in Lahad Datu to "overlook" the mill's falsification of the quantity of crude palm oil produced to evade state taxes worth about RM2mil a month since 2015.
According to Malaysian Anti-Corruption Commission (MACC) sources, the duo were arrested at the Sabah MACC headquarters here at 11am Wednesday (May 18) after they turned up for questioning in a case that involves bribery and fraud.
"They were soliciting and accepting bribes from a palm oil mill that was falsifying sales tax declarations for crude palm oil to the state Finance Ministry every month," the source said.
The state could have lost palm oil tax revenue of between RM150mil to RM200mil over the years, the source said, explaining that it involved a company with its headquarters in Peninsular Malaysia.
When contacted, Sabah MACC director Datuk S.Karunanithy confirmed the arrest and said the case was being investigated for soliciting and accepting bribes under Section 17 (a) of the Malaysian Anti-Corruption Commission Act 2009.
He said the two suspects were detained for 24 hours for further investigation and they expect to seek a remand application at the Kota Kinabalu Magistrate's Court on Thursday (May 19).
"There could be more arrests as our investigations progress," he added.
It was learned that the palm oil mill was under-declaring the quantity of crude palm oil produced by about 30% to 50% to the Sabah Sales Tax Department under the state Finance Ministry.
The anomaly in the declaration was detected as the quantity reported to the state department did not match the records of the Malaysian Palm Oil Board as well as the factory's sales record.
Sabah imposes a 7.5% state sales tax on crude palm oil and the mills must declare the amount processed and pay the tax to the state government.
"To avoid the tax, these mill's submit a tax declaration form containing false details on the quantity of crude palm oil to the state Sales Tax Department.
"The officers in the department were allegedly receiving bribes and were not verifying the details declared by the factory management," a source explained.
Sabah MACC officers have been on the ground investigating the case for the last few months and had been recording statements from various individuals linked to the mills and government officials.
However, the sources believe that not all factories in Lahad Datu were involved in such "fraud" as they found cases linked to two factories belonging to one company whose accounts have also been frozen.