KL probes $1.5b missing from Sabah foundation

KL probes $1.5b missing from Sabah foundation

KOTA KINABALU, Malaysia (Reuter): Up to four billion ringgit (US$1.5 billion) is missing from a state-run foundation in Malaysia's north Borneo state of Sabah, officials said yesterday.

"Action will be taken against any person regardless of who they are," said Sabah's Finance Minister Mohamed Salleh Tun Said, adding that the losses date back to the 1970s.

"The money means a lot to the state,"he said, describing it as the equivalent of the entire state budget for two years.

Prime Minister Mahathir Mohamad, who announced the losses on Tuesday night during a visit to Sabah, said the government would conduct an investigation into possible malfeasance.

"We feel the people of Sabah have been cheated," he told reporters in the Sabah state capital of Kota Kinabalu.

Mahathir's National Front government came to power in the timber and oil-rich state in March after several members of an opposition party that had ruled Sabah for the past eight years defected, costing it its majority in the state assembly.

An audit by accounting firm Price Waterhouse "showed that three billion to four billion has disappeared" from the Sabah Foundation, Mahathir said, after attending the annual harvest festival of Sabah's dominant Kadazan tribe.

Set up in 1967 to plough back profits made from logging to social-welfare projects, the foundation controls 30 to 40 firms, including a 972,000 hectare timber concession, Sabah's largest.

Up until 1990, the foundation used to distribute 100 to 200 ringgit ($38.75 to $77.50) a year to every citizen of Sabah, as well as award scholarships. It stopped doing so, saying the foundation lacked the funds.

When Mahathir's National Front assumed control over the state in March, it fired Sabah Foundation boss Jeffrey Kitingan.

Kitingan, whose brother Joseph Kitingan had been Sabah's chief minister, or head of government, was released in December after being held for two years in a federal detention camp under Malaysia's Internal Security Act. He was charged, but never tried, with plotting Sabah's secession from Malaysia.

Joseph Kitingan already faces two charges of corruption in the federal court in an unrelated case. He was found guilty and fined on one corruption charge in January, weeks before a state election.

The National Front, a multi-racial coalition that has ruled the federal government since independence from Britain in 1957, won 23 seats in the 48-seat assembly in February's state elections to 25 for Kitingan's United Sabah Party.

Kitingan's party began to crumble a month later after a spate of defections to Mahathir's coalition.