According to Finance Twitter, since 2014 Haris Onn Hussein, Hisham’s brother and Najib’s cousin, monopolises the security labels for all locally produced and imported cigarettes, as well as beer and liquor, in Malaysia – the clearest proof of cronyism and corruption.
- Kod Efisien transferred lucrative concession to Lembah Sari in 2006
- Lembah Sari awarded another RM77 million contract in 2014
- Owned by Hisham’s brother, Haris, Lembah Sari monopolised security labels for cigarettes, beer and liquor in Malaysia
- Concession ends this year
- Speculation that there will be no tender, but another round of transfer of concession from Haris’ Lembah Sari to Mahathir’s cronies, a deal which probably comes with “immunity” for Hisham
When an unknown private company – Kod Efisien Sdn Bhd – was awarded a jaw-dropping contract for security labelling of locally produced cigarettes and beers, it raised eyebrows. The deal could generate revenue of more than RM140 million annually for the concession-holder, essentially making the company a money-making machine.
The company, incorporated in February 2003, was awarded the concession in September the same year. Clearly, it was set up specifically to secure the contract. Interestingly, the concession to Kod Efisien was awarded in the waning days of then-Prime Minister Mahathir Mohamad’s administration. Hashim Abdul Wahab and Aminuddin Harun controlled 99% of the company.
Mahathir first signalled that the government would mandate security labelling of cigarettes and beer in his September 2002 budget speech, when he was also serving as finance minister. He had argued that security tagging would reduce tax losses incurred from the sale of smuggled or counterfeit cigarettes and beer. The premier also suggested the use of “banderols” (a type of customs sticker).
The Confederation of Malaysian Tobacco Manufacturers then wrote to the Finance Ministry (PM Mahathir) suggesting that security ink be used to label packaging instead of banderols. They had also proposed that Switzerland’s Sicpa Product Security SA, one of the world’s biggest suppliers of security ink for currencies, supply the needed equipment and ink.
Instead, the Mahathir government decided to give that job to Kod Efisien, whose job was merely to supply Sicpa-produced security ink and equipment for the labelling. Cigarette producers would pay Kod Efisien “five sen” to security-label every pack manufactured. Based on the consumption at that time, the lucrative contract would generate RM64 million every year for Kod Efisien.
Labelling for each can or bottle of beer produced, on the other hand, could generate revenue of up to RM80 million annually for Kod Efisien. Locally listed companies, including units of British American Tobacco PLC and Carlsberg AS of Denmark, were against the security-labelling arrangements as it would increase the prices of cigarettes and beer. But Mahathir didn’t care.
Three years after Kod Efisien enjoyed the concession (without any tender) from Royal Malaysian Customs Department, the Confederation of Malaysian Tobacco Manufacturers was suddenly informed by Kod Efisien that its services would be replaced by Lembah Sari from August 2006 onwards. What was surprising about Lembah Sari Sdn Bhd, an RM2 company, was its owner.
As it turns out, the chairman of Lembah Sari was Haris Onn Hussein, the brother of Hishammuddin Hussein, who was then the country’s Education Minister. Exactly how could this money-making concession – a contract worth RM70-RM100 million annually – was secretly transferred from Kod Efisien to Lembah Sari was beyond comprehension.
In 2014, Lembah Sari, which already owned the concession since 2006 (thanks to the contract transfer from Kod Efisien) to print security labels for all local and imported cigarettes, was stunningly awarded a RM77 million security-labelling contract for liquor and beer from the Royal Malaysian Customs Department.
According to The Edge, the company owned by the brother of Hishammuddin was given the contract to design, print, store, supply, and distribute banderols (tax stamps) for liquor (including beer) between 2014 and 2019. Effectively, Lembah Sari becomes the sole company to produce security labels for liquors and cigarettes in the country.
In other words, since 2014, businessman Haris Onn Hussein, brother to former Defence Minister Hishammuddin Hussein and cousin to former Prime Minister Najib Razak, effectively monopolises the security labels for all locally produced and imported cigarettes, as well as beer and liquor, in Malaysia – the clearest proof of cronyism and corruption.
Lembah Sari was only incorporated back in 2005. This also means the company was set up so that the concession from Kod Efisien could be transferred to it – suggesting irregularities and hanky-panky business deals had been committed. Haris, the executive chairman and director of Lembah Sari, possessed 68% stake in the company (8% direct stake and 60% indirect stake via Matricore Sdn Bhd).
When the suspicious contract transfer was exposed in 2014, Hishammuddin Hussein quickly dismissed accusations of graft in the Najib government’s decision to award the contract to print security labels for liquors to a company owned by his brother. He insisted that there was no conflict of interests in the deal. His brother had even claimed that he secured the job through open tender.
Amazingly, the Customs Department’s website only showed the winner of the bid as Lembah Sari but contained zero details on the so-called open tender. Tony Pua, then one of the opposition Member of Parliaments, had grilled Najib and Hishammuddin for explanation, pointing to immediate price increase of cigarettes after Lembah Sari took over the concession from Kod Efisien.
Here’s the juicy part. The concession for Haris Onn’s company is supposed to end this year. However, there has been silence over the controversial contracts. Considering that the old corrupt government has collapsed since the 2018 General Election, the new government of Mahathir is supposed to push for open tender in the name of transparency and accountability.
But based on the limited time left in the calendar year, speculations were that there will be no tender at all for the contract to design, print, store, supply, and distribute banderols (tax stamps) for liquor (including beer). Instead, there would be another round of transfer of the concession from Haris’ Lembah Sari to Mahathir’s cronies – a deal which probably comes with “immunity” for Hishammuddin Hussein.
So, it appears that the cash cow will be making a big circle back to PM Mahathir, the same prime minister who had first bulldozed the security labelling of cigarettes and beer in 2002 to his cronies in Kod Efisien before being transferred to Hishammuddin Hussein’s brother (Lembah Sari) and is now to be transferred again to Mahathir’s new cronies this year.
Suddenly, it makes perfect sense why Hishammuddin Hussein has yet to be charged despite revelation on February 19 that more than RM500 million from some land swap deals worth RM4.75 billion was lost under his watch. He was the Defence Minister from 2013 to 2018, during which 13 of the 16 dubious land swaps involving 2,932 acres of land were carried out.
Mahathir, who had been screaming until foaming at the mouth that nobody is above the law, seems to have granted exceptions to UMNO warlords like Hishammuddin, and it’s not hard to understand why. The cousin of Najib was believed to be the man behind Sabah UMNO defections to Mahathir’s party PPBM (Bersatu). Hishammuddin has also offered to find fugitive Jho Low to appease the premier.
Hishammuddin was suspected to have turned UMNO traitor, planning to leave the party with 30 MPs to join Mr. Mahathir. He was the biggest supporter of Mahathir’s ‘Malay Unity’ idea, which calls for UMNO members to join Bersatu. Most recently, he was exposed of working with PKR (traitor Azmin Ali), PAS and UMNO Member of Parliaments to either defect or support Mahathir’s full term of five years.
The grand plan was to eject existing allies like Chinese-DAP party and PM-in-waiting Anwar Ibrahim together with Amanah and form a new coalition of ‘Malay-only’ government. That would eliminate Mahathir’s promise to hand over the premiership to Anwar, allowing the 94-year-old prime minister to rule for as long as he likes.
Already, Haris Onn Hussein has a 20.16% stake in Ekovest, a company awarded the contract to build the Setiawangsa-Pantai Expressway (SPE) at a cost of RM3.738 billion with a concession period with the Government for 53½ years. That’s a cash cow the Hussein families can milk for half a century at the expense of ordinary Joes and Janes.
Haris was also linked to Liberal Technology Sdn Bhd, which was widely reported to have had dealings with Melbourne-based Securency International Pte Ltd. Securency had been implicated in a highly-publicised Australian banknote scandal, where it had hired a company owned by a “close relative” of Malaysia’s top leaders to help win banknote contracts to print the RM5 note with polymer plastic coating.
By transferring the concession of security-labelling for liquor and beer from his brother Haris to Mahathir’s cronies, Hishammuddin Hussein would be able to strengthen his alliance and friendship with the powerful prime minister. The “gift” could certainly provide him with immunity from prosecution of past corruptions, irregular business practices or abuse of power. – Finance Twitter