This article first appeared in Forum, The Edge Malaysia Weekly on February 26, 2024 - March 3, 2024

For all his political prowess, the late Tun Abdul Taib Mahmud’s grip on his affairs became weak in his final years, and he left behind a multibillion ringgit business empire that is on shaky ground.

Even before his death in Kuala Lumpur last week, there was a legal suit pending between Taib’s sons and his wife, Toh Puan Raghad Kurdi Taib, over shares in the family’s flagship company, Cahya Mata Sarawak Bhd (CMS). The drama surrounding Taib’s transfer from a hospital in Kuching to a healthcare facility in Kuala Lumpur only added spice to the family feud.

And within his own family, there appear to be differences between his children.

For example, Taib’s daughters are not part of the legal suit between his sons and Raghad. In addition, CMS filed a civil suit two years ago against several individuals, including the husband of one of his daughters.

Taib is survived by two sons, Datuk Seri Sulaiman Abdul Rahman Taib and Mahmud Abu Bekir Taib, who are currently the key figures in CMS. He also had two daughters, Jamilah Taib Murray and Datuk Hanifah Hajar Taib. Hanifah is the member of parliament for Mukah in Sarawak and a deputy minister in the federal government.

Hanifah’s husband, Datuk Syed Ahmad Alwee Alsree, was the face of CMS between 2006 and 2019. He joined the group when the family was exiting the banking industry with the disposal of a 32.8% stake in RHB Banking Group to the Employees Provident Fund (EPF). He took over from Sulaiman.

UBG Group, a subsidiary of CMS, held a 32.8% stake in RHB Capital Bhd, which controlled the banking group. UBG became a cash-rich shell following the disposal of its stake in RHB Capital in 2007 to EPF. It was later acquired by Low Taek Jho, better known as Jho Low.

A lawyer by qualification, Syed Ahmad was CMS’s executive director until he stepped down in 2019. After that, CMS was managed by two professionals, including the long-serving Datuk Isaac Lugun.

In June 2021, Sulaiman rejoined the CMS board as group managing director. A year later in July 2022, CMS filed a suit against six persons, including Syed Ahmad and Isaac, for alleged breach of fiduciary duties in relation to the construction of an integrated phosphate additives plant in Samalaju, Sarawak. This followed an investigative audit by an accounting form.

CMS is the flagship company of the Taib family. Its core business is in the cement, phosphate, construction, road maintenance and property development sectors. Notably, CMS controls the only cement plant in Sarawak and Sabah, making the plant its cash cow.

It also has an 18.8% stake in Kenanga Investment Bank Bhd and a 17.9% stake in KKB Engineering Bhd.

The single largest shareholder in CMS is ­Majaharta Sdn Bhd with 12.6% interest. The second largest block of 10.3% is held by the estate of the late Laila Taib, Taib’s first wife and the mother of his children.

It is this block of shares that is the subject of a contest between the brothers and Raghad.

Mahmud and Sulaiman hold insignificant stakes directly under their names. According to the company’s annual report, their collective holding is less than 1%.

Their sisters Hanifah and Jamilah own a substantial block in CMS through Majaharta, a vehicle that they control. They are not part of the suit against Raghad.

Even if Taib were alive, the case would in all probability be a long-drawn-out affair. With his passing, it is almost certain that the suit will unearth a lot of juicy and potentially embarrassing details about the Taib family’s interests. There will certainly not be a speedy outcome.

Which raises the question: Who really calls the shots in CMS pending the disposal of the suit?

With the Laila Taib block tied up in a legal dispute, the single largest shareholder in CMS is Majaharta. However, its beneficial parties and their proxies are not represented on the board of CMS.

CMS’s political clout in Sarawak has also waned in the last few years. It used to have control over the building materials and road construction and maintenance works sector in the state. In 2020, the company disposed of a 2% stake in PPES Works Sdn Bhd and CMS Resources Sdn Bhd to the Sarawak Economic Development Corporation (SEDC).

The transaction effectively reduced CMS’s stake to 49% in both PPES Works and CMS Resources, and loosened the group’s grip over Sarawak’s construction works and building materials industry.

PPES Works has the concession to build and maintain all roads in the state while CMS Resources operates five quarries and a jetty to meet the demand for construction in the entire state. These two companies, together with CMS’s cement plant, have positioned the group as a near monopoly holder of building materials in the state.

Now, even CMS’s monopoly over cement production in Sarawak and Sabah could come to an end.

Last November, Sarawak received its maiden batch of cement from Vietnam. According to Premier Tan Sri Abang Johari Tun Openg, the import was necessary to meet the growing demand for cement in the state. He said there was a possibility that Sarawak would have another cement plant.

Another incident that highlights the family’s waning influence over state agencies is the ongoing suit between Sarawak’s electricity provider Syarikat Sesco Bhd and the company that operates CMS’s phosphate plant. In July last year, Sesco even cut electricity supply to the plant.

Nobody could have imagined such a scenario when Taib was in power. Heads would have rolled if it had taken place then.

Until he stepped down in 2014, Taib was easily one of the most powerful persons in Malaysia. He had wealth and political clout in the state and federal governments.

One instance of him flexing his muscles was in 2001/02 when UBG was in danger of being taken over under a government initiative to consolidate the banks. He dealt directly with former prime minister Tun Dr Mahathir Mohamad to iron out matters relating to the merger of UBG and RHB.

A banking executive with a ringside view of the UBG exercise to take a controlling stake in RHB recalls the crucial moment when Taib stepped in to see through the deal. He went to meet Mahathir in Putrajaya.

“There were no formalities between the two. Taib slouched in his chair as the discussion with Dr Mahathir went on. In fact, there wasn’t much of a discussion. It was like two buddies talking. Nobody could talk to Dr Mahathir the way Taib did,” says the executive.

The Taib family exited RHB because of restrictions imposed by Bank Negara Malaysia on their influence on the management of the bank. A particularly prominent incident that was widely reported in 2006 was the delay and controversy surrounding the reappointment of Sulaiman to the board of RHB Capital.

Sulaiman was the executive chairman of RHB Capital for a three-year period starting from May 2003. In April 2006, he was reappointed to the company’s board but in a non-executive role.

By 2007, he had already left the banking group and Syed Ahmad was the face of the family in negotiations for the sale of its stake in RHB Capital.

The Taib family exited the banking business and went on to expand its empire in Sarawak under its flagship CMS group and a host of other companies — many of which are unlisted.

Now, CMS itself is on shaky ground.

M Shanmugam is a contributing editor at The Edge

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