Article on SFI land issue 'misleading, contains factual errors', says lawyer

KOTA KINABALU: There is no "cheap sale" of the troubled Sabah Forest Industries Sdn Bhd (SFI) land to anyone, as claimed by Sarawak Report, says a lawyer who represents the Sabah government's interests.

Lawyer Tengku Datuk Fuad Ahmad, who acts as an advocate for the Sabah Chief Minister, the Lands and Survey director and the Sabah state government, said this in response to allegations made in an article by Sarawak Report.

"The article concerning land previously owned by SFI is misleading, inaccurate and contains a number of factual errors," he said in a statement on Tuesday (Sept 5).

The article claimed that a private operator received assistance "from the top" to have the land for only RM256mil – which the article claims to be a fraction of its market value – for the 280,000ha of forest land. The article also claimed that when SFI was first put up for sale in 2017, the same individual had agreed to pay RM1.2bil.

Tengku Fuad, in providing the background and answering the allegations, also stated the correct size of the land assets concerned.

"Indian company Ballapur Industries Ltd who owned 90% of SFI, mismanaged both SFI's timber concession and its pulp paper mill, causing operations to cease in November 2016.

"In 2017, SFI's receivers and manager (R&M) – Grant Thornton Consulting Sdn Bhd – put the assets of SFI up for sale by tender.

"SFI's assets consisted of the integrated timber complex machinery and an Acacia Mangium Forest area situated on 15 parcels of land amounting to approximately 12,000 ha," he said, adding that the tender exercise did not include SFI's timber concession licence as under the license terms, the concession cannot be sold.

He said that in August 2022, the Sabah government acquired the 15 parcels of land from the insolvent SFI under the 'Sustainable Forest Timber Utilisation, Processing, Management, Conservation Research and Development Scheme, District of Sipitang' (Public Purpose Scheme).

"Under the Sabah Land Acquisition Ordinance (Cap.69) read with the Federal Constitution, reasonable compensation must be paid to SFI (in liquidation) in exchange for the 15 parcels of land acquired (12,000 hectares) by the Sabah government. The sum offered was RM256mil.

"The basis of valuation, among others, recognised the fact that SFI's buildings, structures and facilities were poorly maintained and in a hopeless state of disrepair.

"Moreover, the Acacia Mangium Forest areas were not maintained and properly managed, resulting in trees rotting, over-growing and suffering from disease. Also, SFI – having ceased operations in 2016 – cannot be valued as a going concern.

"The acquired land now vests absolutely in the Sabah government and will be developed in accordance with the Public Purpose Scheme by the Sabah government in conjunction with its various agencies and GLCs.

"The purpose of this Public Purpose Scheme is to sustainably and responsibly utilise, manage, develop and re-plant natural forest and forest timber resources, conduct research and development in connection with reforestation and develop forest natural resources in Sipitang.

"It is also designed to re-employ and re-train former SFI workers as well as to provide employment opportunities for the people of Sipitang," he added.

The Sabah government intends over the next five years to invest some RM3bil in forest re-planting, research and development as well as new timber downstream facilities under the Public Purpose Scheme.

"The Sabah government in 2022, agreed publicly that ex-SFI workers and their families may remain on the acquired lands," he said, adding that the plan was for former SFI workers to be reabsorbed into the workforce through the said Public Purpose Scheme.

Therefore, the individual concerned and his companies are not involved at all in the acquisition of the 15 parcels of land, done entirely on the initiative of the Sabah government as part of its efforts to revive the economy in Sipitang, said Fuad.

He said the article relied on sources that have ulterior motives which "have nothing to do with the facts on the ground or ensuring the welfare and future prosperity of the people of Sipitang".

"The Sabah government has nothing to do with the sale of SFI or its assets. This responsibility falls upon SFI's Liquidator and the R&M.

"The real purpose behind the Sarawak Report article is to pressure the Sabah government into accepting the R&M's counter-offer of RM625mil for the 15 parcels of land acquired.

"The article did not mention that the R&M is already in active negotiations with the Sabah government on the issue of compensation.

"That the R&M failed to mention this demonstrates bad faith on their part," he said.

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SFI , Sarawak Report , Land , Sale , Allegations


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