Tuesday, February 23, 2010

The argument goes back even further

My contention is that the Petroleum Development Act 1974 should not have even been passed in the first place because, according to the Federation Agreement, 100% of the oil and gas belongs to the states and the federal government should not have stolen it.


Raja Petra Kamarudin

Oil royalty – Najib is Razak’s son or Mahathir’s heir?

I agree with veteran Umno leader Tengku Razaleigh Hamzah that the federal government’s full-page advertisements in Malay weeklies on the oil royalty controversy is an insult to the intelligence of all Malaysians.

The full-page advertisements contain an important omission – the reply 35 years ago in Parliament by the then Prime Minister, Tun Razak to my question whether all states in Peninsular Malaysia, Sarawak and Sabah had signed agreements with Petronas for oil exploration along the coastline and what were the joint profits for the state.

As recorded in the Parliament Hansard of November 12, 1975, this was Tun Razak’s reply: “All states in Malaysia, except Sabah and Sarawak, have signed the agreement with Petronas under the Petroleum Development Act 1974. I have been informed that Selangor had agreed to sign the agreement.

“Under the agreement, each state will receive 5 per cent of the value of petroleum found and extracted from each of the states, whether onshore or offshore, that is sold by Petronas or agencies or contractors.”

Since I resurrected in Parliament in November last year Tun Razak’s categorical undertaking in Parliament 35 years ago on the five per cent oil royalty rights of the states, Cabinet Ministers had conspicuously avoided the subject – just like the full-page federal government advertisement explanations on Sunday.

Is Datuk Seri Najib Razak, the sixth Prime Minister, the son of Razak the second Prime Minister or the heir of Tun Mahathir, the fourth Prime Minister on the oil royalty controversy?

If Tun Razak is alive today, would he have agreed to the gross violation of the states’ oil royalty rights in blatant breach of the Petroleum Development Act 1974 as initiated by Mahathir in 2000 to politicize the issue and deny the PAS government of Terengganu its rights to the state oil royalties? Or would he have honoured the agreements he assigned Tengku Razaleigh to sign with all the state governments when he was Prime Minister?

There can be no question that on this issue, Tengku Razaleigh is more to be trusted than Mahathir.

Najib should demonstrate that he is Razak’s son or not Mahathir’s heir on this issue to restore justice to the states, whose fundamental state rights have suffered insidious erosion in the past few decades. – Lim Kit Siang


Lim Kit Siang takes us back 35 years to 1974 and talks about the Petroleum Development Act 1974 and what Tun Abdul Razak, the Second Prime Minister of Malaysia, and father to current Prime Minister Najib, promised the nation. I want to go back even further and talk about another promise Tun Razak made to the nation.

And this was the promise made by Tun Razak in 1960.

In 1960, Tun Razak presented the bill for the Internal Security Act (ISA) to Parliament. The opposition leader in Parliament then, D. R. Seenivasagam of the PPP, stood up to argue how can the country agree to such a draconian and wide law that allows for detention without trial, which is a violation of the Federal Constitution of Malaya.

Tun Razak explained that the ISA would be used only against the Communist Terrorists (CTs), numbering about 700 or so, operating in the Pahang jungles and along the Malaya-Thai border. This law shall be used only against the CTs and to combat the insurgency and for no other purpose.

And with that assurance by Tun Razak the ISA was passed by Parliament with the support of the opposition as well.

Tun Razak has since died. The Emergency or insurgency has since ended. The Communist Party of Malaya signed a peace treaty with the Malaysian government and laid down its arms in 1979. But the ISA remains and is no longer used against the 700 or so CTs but against political dissenters, opposition politicians, and critics of the government.

Promise Number One by Tun Razak broken.

Now let us talk about what Lim Kit Siang raised: promise Number Two.

Lim Kit Siang talks about Tun Razak’s promise in 1974. Sure, the federal government is violating its own law or Act, the Petroleum Development Act 1974. It is even violating the Agreement signed between Petronas and all the states in Malaysia. So these are two violations, the Act and the Agreement.

Okay, now I want to take you back to pre-1957 and talk about the Merdeka Agreement or Federation Agreement.

It was agreed that the 11 states (Singapore, Sabah and Sarawak were not yet included then) would come together to merge under a federation, like the American states did when they merged under the United States. And this federation would be called the Federation of Malaya.

It was further agreed that foreign policy (like power to declare war on other nations), national security, defence, and whatnot, would be federal matters. Land, natural resources, issues of Islam including Islamic laws, and such matters would come under the jurisdiction of the respective states.

That is why Islamic laws differ from state to state while common laws are standardised in all the courts throughout Malaysia. And that is why the states decide on what happens to their land, water, timber, tin, rubber, plantations, gold, and whatsoever resources in the ground, on the ground, and offshore.

Around the late 1970s, all the countries in the world agreed that each country’s economic zone would be extended to 200 kilometres from just 12 kilometres. This means anything found within 200 kilometres of the shoreline, including fish in the sea, would belong to that country.

Now, according to the Federation Agreement and the international agreement on the new boundary of the economic zone, anything found within 200 kilometres of that state’s shore would belong to that respective state.

We must understand, when the Federation Agreement was drawn up, and when the states agreed to merge to form the Federation of Malaya, no one suspected that one day the Peninsular Malayan states would discover oil -- although oil was already discovered in East Malaysia as far back as 1882. (Extraction started 100 years ago in 1910).

Nevertheless, under the Federation Agreement, oil and gas is a state resource. And since it is within 200 kilometres offshore, it belongs to that state within Malaysia.

And that was why Tun Razak instructed Tengku Razaleigh Hamzah to come out with the draft of a new law. Legally, the oil and gas belongs to the states. The only way the federal government can ‘steal’ this oil and gas would be to come out with a new law that allows them to do so. If not it would be illegal for the federal government to touch the oil and gas. It belonged 100% to the states.

And this new law or Act called the Petroleum Development Act 1974 allowed the federal government to unilaterally (note the word ‘unilaterally’ and not ‘bilaterally’) amend the terms of the Federal Agreement. Normally, it requires all the parties to the Agreement to agree to any amendments to that Agreement before it can be amended. In this case, only one party made the changes (unilaterally) and the other parties were forced to remain silent.

Of course, not all parties initially agreed to these new amendments to the Federation Agreement. Some objected and were ousted from office. They were then replaced with a new head of state. Invariably, a ‘backroom deal’ was hatched prior to the new man being put onto the throne -- which was he would sign the agreement once he is put in office.

Those from the East Malaysian states who already had control of their oil since 1910, and therefore did not see why they should agree to hand over the oil to the federal government 53 years later, mysteriously died in a plane crash that was never explained until today.

Finally, all the states were forced against their will to sign the Agreement with Petronas -- although the Federation Agreement, which was the basis of the states merging into a federation, was being grossly violated.

But the federal government did not steal everything. They stole just 95%. They agreed to leave 5% for the states. And in 1976 a Supplementary Agreement was signed between Petronas and the states stipulating that this 5% will be paid in cash twice a year, in March and September of every year, and that it would be called Royalty.

So that is three Agreements that the federal government broke. First was the Federation Agreement of 1957, which says that the state resources belong to the state (and oil and gas are state resources). Next was the Petroleum Development Act of 1974, which says that Petronas will handle the oil and gas in all the states but it must give 5% back to the states. Third was the Supplementary Agreement of 1976 that says Petronas must pay the states 5%, to be called Royalty, and in the form of cash twice a year every March and September.

So yes, what Tengku Razaleigh Hamzah and Lim Kit Siang said is very true. But that is only part of the story. And I have filled in the gaps about the history of the whole issue. My argument is not about whether the Petroleum Development Act 1974 (and the 1976 Supplementary Agreement) has been breached or not. My contention is that the Petroleum Development Act 1974 should not have even been passed in the first place because, according to the Federation Agreement, 100% of the oil and gas belongs to the states and the federal government should not have stolen it.

But then Bugis are pirates and their job is to rob and plunder. I should know because I am also Bugis. And so was Tun Razak -- as well as his son Najib of course. So what would you expect from Bugis pirates who robbed and plundered the states’ oil and gas and then threw them back 5% to shut them up (or make them disappear in plane crashes if they refuse the 5% and ask for 50%)? And now these pirates want to rob the last 5% from the states and give them back nothing.

If one breaches an agreement, what happens? You can either sue for damages or sue for specific performance. Alternatively, you can terminate the agreement. Hmm…if they terminate the Federation Agreement on grounds of non-compliance to the terms of the agreement would this mean that the Federation of Malaysia will get wound up? And would this mean that states like Kelantan and Terengganu would become independent Sultanates and Sabah and Sarawak would become independent Republics? And would this also mean that 100% of their state’s resources would revert to them and Petronas would receive nothing?

Now that is a lovely thought.

news courtesy of Malaysia-today.net and written by Raja Petra Kamaruddin

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