Penang loses millions in quarry royalty scam

Suspecting that it could be losing tens of millions in royalty arrears, the Penang government has decided to probe into the activities, royalty declarations and reports of all quarry operations in the state over the past 12 years.

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The state government decided to dig deep into the suspected royalty scam by quarry operators after an initial probe on three companies unearthed that two operators owed the state RM6,013,626.56 in arrears.

The exorbitant losses in royalty revenue were attributed to under-declaration and manipulation of annual returns by quarry operators, and lapses in calculation, monitoring and enforcement by state authorities.

“We believe that we were losing millions in quarry royalty payments due to under declarations by operators and inefficiency of the government machinery to check on them,” revealed state executive councillor Law Choo Kiang.

The disclosure of the quarry royalty scam is set to trigger another round of “public war” between the current Pakatan Rakyat and previous Barisan Nasional state administrations.

Penang has 15 quarry operations with 80 per cent of them on the mainland.

All them will now be probed by Law, who is in charge of the state agricultural, agro-based industries, rural development and flood mitigation portfolios, as the state government smells “something amiss” in the royalty revenue.

He will now check on royalty revenue collected from all quarry activities since 1997, believing that the state government can recover tens of millions in arrears.

“State revenue is the people’s money, and the state government is duty bound to collect it,” he told a press conference in Komtar, Georgetown today.

The companies probed were Batu Tiga Quarry Sdn Bhd, which had operations in Penanti and Berapit, Kuad Sdn Bhd in Penanti, and Saw Chong Teok Quarry Sdn Bhd in Juru.

One quarry overpaid royalty by 10pc

Kuad was found owing RM3,607,958.46 while Batu Tiga Quarry owed RM2,405,668.10 in royalty arrears to the state government for a five-year period between Jan 2004 and Dec 2008.

Law’s probe has revealed that both quarry operators had manipulated their declarations to unlawfully reduce royalty payments for the past five years.

The operators’ royalty quantum is based on declarations of their annual returns and machine capacities, which are pre-conditions stated in their permits issued under the National Land Code to remove quarry products and materials.

Saw Chong Teok on the other hand was found to have overpaid its royalty by at least 10 percent, but Law said the extra money would not be refunded to the company.

The Seberang Perai Tengah district office will issue letters on Monday to Kuad and Batu Tiga Quarry instructing the operators to pay up their dues in a certain period of time.

“If the operators failed to do so, the state can revoke their licences and press charges on them in the court,” said Law, who was assisted by PKR assemblypersons Bukit Tengah’s Ong Chin Wen and Pantai Jerejak’s Sim Tze Tzin, and several government officers in his investigation.

He commenced his probe on March 30 solely to determine whether or not there were wrong calculation and short payment of royalties by the three quarry companies.

PAC investigations to cover wider area

A full report was handed over to the state land committee headed by Chief Minister Lim Guan Eng on Wednesday and was deliberated and accepted by the state full executive council meeting on Thursday.

Meanwhile, the state Public Accounts Committee (PAC) will start its probe in the quarry royalty scam next Friday.

Unlike Law’s probe which touches solely on royalty revenue, the nine-man PAC investigations would cover the competency, accountability, enforcement and efficiency of the state mechanism in checking, monitoring, calculating, verifying and collecting quarry royalties.

Based on the findings upon conclusion of its inquiry, the PAC chairperson Jagdeep Singh Deo said it would make recommendations to beef up the state mechanism which monitors operations of quarries and the collection of royalty revenue.

Heads may also roll among government officers if they are found guilty of any wrongdoings.

Besides DAP’s Datuk Keramat assemblyperson Jagdeep, other PAC members are Koay Teng Hai (DAP-Pulau Tikus), Sim Tze Tzin (PKR-Pantai Jerejak), Maktar Shapee (PKR-Sungai Bakap) and Mohd Hamdan Abdul Rahman (PAS-Permatang Pasir), all from ruling Pakatan Rakyat; and Syed Ameruddin Syed Ahmad (Umno-Bayan Lepas), Muhammad Farid Saad (Umno-Pulau Betong), Dr Hilmi Yahaya (Umno-Teluk Bahang) and Ariff Shah Omar Shah (Umno-Seberang Jaya) from the opposition Barisan Nasional.

PAC secretariat has been instructed to send out letters to all its members to attend the inquiry, which would initially probe officers from state land and mines department, district offices and quarry operators.

“We will call others if needed to clarify any doubtful matters which arises,” Jagdeep told Malaysiakini.

This will be PAC second official inquiry in the past year following its investigation on the “King of Tennis” debacle late last year.

The PAC report on “The King of Tennis” was tabled and deliberated last week at the assembly sitting.

The royalty scam surfaced when former Deputy Chief Minister 1 Mohammad Fairus Khairuddin was implicated in graft allegations linked to quarry operations in the state.

He has since been cleared from all the allegations by the Malaysian Anti-Corruption Commission.

Athi Veeranggan, Mkini