20 per cent royalty on O&G is quite affordable
Tun Razak’s 4 dying pleas on oil to be complied by Borneo States
PART III “I, then instructed the State Attorney General ( Datuk Mon Jemuri) to write to the federal AG to say that if the PDA(1974) Bill is not withdrawn. I would take the Federal Government to court,” fumed ( Tun) Abdul Rahman Yacob, the Chief Minister of Sarawak. “What is all this taking the federal government to court,” demanded Tun Razak. “Sarawak oil belongs to Sarawak,” explained Tun Rahman. Sarawak would be quite different from Kelantan and other States of Malaya. “Only Sarawak and North Borneo ( Sabah) have the British Orders in Council 1954 (‘ OIC 1954’)” where the edge of the respective continental shelf itself was their international boundaries under the (Alteration of Boundaries), 3 years before Merdeka of Malay in 1957. The Federal AG then did not know that OIC 1954 at all.
Unfortunately, that PDA1974 Bill ref lected again the sheer domination of KL without any consultation with the Borneo Territories as equal partners, but now reassured by Tun Mahathir on equal partnership and under the Rule of Law recently. But that Bill had contravened completely Tun Razak’s own three fundamental Assurances on 3rd August 1962 under Article VIII of MA 1963, pivotal to the Borneo Territories for joining in the formation of Malaysia under the national interests which unfortunately ended up for the development of the Peninsula Malaysia predominantly, for examples, in infrastructure and in saving the banks in the world financial and economic crisis, all the banks of the Borneo Territories with no liquidity problems were being swept away overnight by the banks in Kuala Lumpur, unfortunately not in MA1963. This point has been mentioned by local DAP chairman many times.
Tun Rahman managed to convince Tun Razak, the Federal AG, Tan Sri Abdul Kadir, and Tun Tan Siew Sin, the federal finance minister, after explaining the QC’s legal opinion from London, including one from ex federal AG of Australia, an expert on the international law of the sea and natural resources from Cambridge University and another legal expert from the Bench previously stating that the PDA 1974 was ultra vires, void basically against the 7 FCs and illegal against the 7 PM laws of Sarawak, therefore unenforceable against Sarawak. Tun Razak and the Federal AG were convinced that Sarawak would easily win this case on the declaratory judgment in the Privy Council, still allowed then.
TunRahman’s letter on perpetuity to convince Sabah’s CM
Even after that, Tun Razak still earnestly made the first dying plea that he urgently needed that Tun Rahman’s letter (‘ TR’s’) to grant the lease of Sarawak’s O& G in perpetuity to the federal government only to show and convince the YAB Tun Mustapha and Tun Fuad of Sabah, because Sabah must amend Section 48 of the Land Ordinance from 99 years to perpetuity after explaining that he would die within three years by the end of 1975, according to the Harley Street doctors, London on his terminal leukaemia. Under the dire circumstances for Sarawak, Tun Rahman most reluctantly could prima facie be able to accommodate that in writing without the Council Negeri’s knowledge because that grant in perpetuity has already been provided under Section 13(1)(a) of the Land Code, except for the Native Customary Land.
Council Negeri will never approve the PDA, Oil Agreement and TR’s letter
Both lawyers, Tun Rahman and Tun Razak, agreed that Tun Rahman’s purported grant in perpetuity, PDA 1974 and two- page Oil Agreement would be ultra vires, void, i l legal and unenforceable without the Council Negeri’s approval which would be like snowballs in hell. So, Tun Razak’s requested that void and illegal letter, PDA 1974 and Sarawak Oil Agreement to be kept at abeyance, namely not to be brought up in the August House on grounds of ‘national interest.’ On the other hand, that does not mean that the August House could just simply approve them constitutionally and legally under the 7FCs and 7PMs straight away. The Council Negeri must first waive, renounce and amend under the constitutional procedures, namely its sole dominion right of the Sarawak’s O& G by amending the entrenched provisions of the 7FCs including Item 3 Part V Tenth Schedule on royalty in parliament. Then, the Council Negeri has to amend the OMO 1958, SLC 1958 and the balance of the 7PMs ( 7 protective municipal laws of Sarawak) including renunciation of Article 76 and others of the United Nations Convention on the Law of the Seas (‘UNCLOS’). Council Negeri cannot just approve PDA 1974 and TR’s letter, the Oil Agreement and later Articles 4 & 5, EEZ Act 1984 and TSA 2012 directly in contravention to the 7FCs and 7PMs. All these were not done. So there is no implied approval nor laches nor estoppel on the PDA 1974, TR’s letter and Oil Agreement of 24th March 1975 by the August House nor the state government under the royalty system, not under an usufruct.
5 per cent unofficial additional royalty for aborting Privy Council’s appeal
The second dying plea was to abort the appeal for a declaratory judgement from the Privy Council, London with strong, eminent and independent judges, such as Lord Wilberforce and Barwirck CJ of Australia and others on the Sarawak’s dominion of its O& G in consideration of payment of another 5 per cent unofficial royalty for additional development fund to be paid to Sarawak enforceable under Article 3(a) of the Vienna Convention on the Law of Treaty and independently under the customary international law as well as under the Oral Assurances given by Tun Razak out of the 10 per cent cash payment under Article 4 of PDA 1974 paid by Petronas to the federal, verifiable by records of partial payments. The 5 per cent royalty was paid by Petronas under the Sarawak Oil Agreement of 24th March 1973. It was 10 per cent royalty in total. However, TunRazak refused to put that additional unofficial 5 per cent royalty in writing for fear of leak to Sabah which would clamour for the same on the top of the 40 per cent rebate of all federal incomes received from Sabah annually under Item 2(1) of Part IV 10th Sch to be returned to Sabah as grants basically. Despite appeals, Sarawak was not granted that entrenched right of rebate as grants because North Borneo ( Sabah) then was richer than Sarawak. Sabah joined because of security while demanding Prime Minister title and own independent finance ministry. Now PH’s manifesto has assured 50 per cent rebate of the same. When can federal afford to pay that?
That additional 5 per cent unofficial royalty for Sarawak was personally confirmed to the writer by Tun Tan Siew Sin, the First Malaysian Finance Minister, after he retired, the Federal AG then, Tan Sri Kadir, and Tun Rahman the Chief Minister then, several times on and off the golf courses, hotel and a social club before his demise for the confirmed oral history since 1970ies. In retrospect, had Tun Rahman gone to the Privy Council, the legal and constitutional status and history of O& G and development of Sarawak and Malaysia as a whole would be quite different. How all Sarawakian would have wished that Tun Rahman had done that!
Federal needed the balance of 80 per cent to fulfil total commitments under MA1963
On the third dying plea officially there would only be 5 per cent royalty under the Sarawak’s Oil Agreement and the unofficial 5 per cent additional royalty would come out of 10 per cent cash payment with the balance of the share profit or pure revenue of O& G and taxes including Petronas profit about 75 per cent to 80 per cent excluding the balance of the 5 per cent cash payment by Petronas would be absolutely necessary to be assigned to the federal government to fulfil the total commitments working with the usual deficit budgets annually for the federal government and commitments under MA 1963, apart from defraying the heavy security costs in Sabah under ‘national interest.’ Tan Sri Stephen Yong, the DCM of Sarawak Cabinet then, has confirmed this in his memoir, ‘A life twice lived’, at page 132, “also we reluctantly accepted the terms and to many Sarawakians, this was tantamount to giving away our precious natural resources.” In fact that was the crown jewels, if you will.
There was no proof of the communists ( CCOs) burning the Rest Houses nor actual ‘emergency’ or security or public disorder affecting the economic life in Sarawak territorial waters nor any oil platform offshore being blown up by the communists who were actually in the jungles before 1962. In fact, Sarawak dispatched its brave rangers to quell the racial riots in KL. The EOs 7, 10, 11 and the Act 354 specifically were solely about the reduction of the Borneo Territories’ territorial waters from 12 nautical miles to 3 and how to measure the boundary, void against Article 2 of the FC and in contravention to UNCLOS and relegation of the equal partners status of the Borneo Territories into satellite states similar to States of Malaya in breach also of Article 161E( 3) of the Federal Constitution unwittingly or otherwise. In brief, there was no factual matrix to convince the Law Lords except lack of good faith with no exceptional convincing circumstances such as the necessary amendment of the Sarawak constitution, explained in Ningkan’s case of 1966 in the Privy Council to amend the constitution and to resolve the constitutional crisis on the vote of no confidence. In fact, the previous premier has confirmed that Sarawak’s rights were being taken away by “design” or otherwise.
Tun Razak feared also that the Privy Council could declare also that the Emergency Ordinances (“EOs”) did not affect the O& G of Sarawak under OMO 1958, OIC 1954 and SLC 1958 and would expressly declare the PDA 1974 ultra vires, void and illegal under the FC and the municipal laws of the Borneo Territories, namely the 7FCs and 7PMs. They knew the British judicial attitude on Emergency Regulations to be only applicable in real war times against aliens not oil unless requisitioned for the war efforts in exceptional cases, but not on the frivolous reduction of 12 to 3 nautical miles of territorial waters, totally irrelevant to the factual matrix of emergency evincing prima facie mala fides. The communists were not in the territorial waters.
The fourth dying plea, let Petronas kick start to save the nation and MA63
Under these extraordinary circumstances, Tun Razak made his fourth dying plea to build Petronas, on grounds of the national interest, to fulfil the onerous federal commitments under MA 1963 and transform Malaysia to a developed nation in the Third Countries under the Prime Minister’s sole control under the PDA 1974 and further allowing only at the initial stage of licensing which both knew would be void and illegal to kick start this biggest commercial undertaking outside the hands of the federal government department or ministry. Both accepted that there would come a day when Sarawak and Sabah would wake up and claim their dominions of their O& G right to issue O& G licences under 2(c) of the Ninth Schedule and demand for the increase of royalty, declaring the PDA 1974 and other federal legislations to be void and illegal. Subsequently TR’s letter would be revealed by the federal government for political defence or perhaps in court, conceded by Tun Razak. The increase of the royalty and the right to issue PSCs due to their dominions would arise when the better educated and enlightened Borneons would fight for the short- changes on the royalty and all other rights whittled away by the federal waves and under currents under MA1963. Some wanted Malaysia- exit instead of autonomy, as advised by the present premier.
By that time after a few decades later, Tun Razak had envisaged that the federal government with Petronas as the saviour, catalyst and transformer of the Malaysia economy would have built up a strong financial reserve on the 80 per cent plus share profit of O& G, taxes and Petronas’s profit to fulfil the total commitments of MA 1963 and federal requirements and allow the increase of royalty because of the accumulate huge cushion of revenues. But he died even before Sabah signed the Oil Agreement to oversee the implementations. Decades ago, Tun Rahman had requested the writer to disclose and clarify the above at the appropriate time after several confirmations for the oral history since 1970ies.
Compulsory BN’s alignment caused decades of “silent” grievous agony
In fact, Tun Razak later died on 14th January 1976. Sabah Oil Agreement was signed by Datuk Harris only on 14th June 1976 after Tun Fuad’s fatal aircraft accident on 6th April 1976. At the early 1975, Tun Rahman had reluctantly agreed to the BN’s alignment and to exercise rightly or wrongly, his maximum compassion, empathy and agonising forbearance for which Sarawak has to suf fer the legacy of “silent grief” and unspeakable forbearance under BN for 44 years of disproportionate oil royalty and revenues because of the Tun Razak’s 4 dying pleas acting as a political whip on “national interest’ at the end of negotiations as the head of BN in KL expecting political alignment to let Petronas to be the national oil company and saviour of Malaysia and MA1963.
That was one of the worst handicaps to fight for the Sarawak’s O& G and restoration of Sarawak’s right under MA63 under BN’s flag. That was like that the “party” for negotiation was over, when “God save the Queen” was played during the colonial days at the end of the “dinner” when Tun Razak raised the toast of “national interests”. This painful forbearance and silent grief were also confirmed by our TYT Tun Pehin Sri as the Chief Minister for 33 years, the late YAB Tok Nan and our present YAB Chief Minister who have to undergo the same type of painful dilemma, forbearance, agony and handicap under the BN government’s political alignment.
Now, Sarawak is out of BN, we hope the new fair-minded PM under PH would be more generous, open and fair to accept the recognition of dominion of Sarawak’s O& G with payment of at least 20 per cent affordable royalty under the 7 FCs and 7 PM laws of Sarawak in the legal and political solution set out above and under the Rule of Law with a new legacy for the Borneo Territories even at this troubling time of national rescue packages under another round of national service and national interests.