Canadian insurance giant arranged CAN$ 146 million in mortgages for a real estate group with links to Sarawak Governor Abdul Taib Mahmud. – Extremely high annual interest rates alarm observers over money-laundering compliance. Read more below to find out just how much the Taib family borrowed.
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TORONTO, CANADA. Donald A. Guloien, President and CEO of Manulife Financial, the Canadian finance giant with operations in Asia and North America, is facing tough questioning over a series of unusual mortgage transactions ahead of the upcoming shareholder assembly being held in Toronto this Thursday, 1 May.
According to Swiss NGO, the Bruno Manser Fund, Manulife has provided six mortgages for a total of CAN$ 146 million to Sakto, a Canadian real estate group with close ties to Taib Mahmud (“Taib”), the former Chief Minister and current Governor of the Malaysian state of Sarawak. The long-term mortgages have been arranged since 2003 and are secured by three office and residential buildings in Ottawa, known as the Preston Square development. Sakto was founded in 1983 by Taib’s brother and is currently directed by the politician’s daughter, Jamilah Taib, and her Canadian son-in-law.
While it already appears unusual for a highly-reputed Canadian financial services provider to conduct multi-million-dollar transactions with Politically Exposed Foreign Persons from Malaysia, the terms of the mortgages are even more unusual. For every property, two sets of mortgages were arranged, one at conventional commercial interest rates and one at a staggering 20% annual interest rate, “payable on demand”. The 20% interest mortgages include a $13 million mortgage secured on Ottawa’s 333 Preston Street, a $15million mortgage secured on 17 Aberdeen St and a $45 million mortgage secured on 343 Preston Street.
The Bruno Manser Fund is alarmed over Manulife’s highly unusual mortgage transactions with Sakto. A 20% annual interest rate in the real estate business means high risk and lack of commerciality – typical indicators of money-laundering.
“These transactions point to serious shortcomings with Manulife’s compliance process”, said Lukas Straumann, director of the Bruno Manser Fund. “A number of red flags should have alerted the compliance office to stop these mortgage deals.”
In a letter to Donald A. Guloien, the Bruno Manser Fund is asking Manulife to explain its Sakto mortgages, including its customer due diligence and anti-money-laundering procedures.
Taib Mahmud has been under investigation by Malaysia’s Anti Corruption Commission (MACC) since 2011. He has recently stepped down as Chief Minister of Sarawak after 33 years in office. The Taib family is known to have stakes in over 400 companies in 25 countries. The Bruno Manser Fund estimates the Malaysian clan’s worldwide assets at USD 20 billion.