Selangor govt bypassed state-owned firm to award lucrative mining contract to private company

Eyebrows have been raised over a decision by the Selangor government to award a 10-year sand mining lease to a private company, breaching its own rules on granting mining licences and leases on government land, while at the same time bypassing a state-owned company, MalaysiaNow has discovered.

The mining lease of KL Larut Sdn Bhd expired in March this year but was renewed for another 10 years, allowing it to carry out mining activities on two plots of government land in Kuala Selangor.

It is learnt that the decision to renew KL Larut’s lease was made by the Selangor executive council in August this year.

Meanwhile, an application by Kumpulan Semesta Sdn Bhd (KSSB), a company formed by the Selangor government to develop and consolidate mining activities in the state, was summarily rejected, according to a letter from the state’s Land and Mineral Office sighted by MalaysiaNow.

In the letter, the land office informed KSSB’s CEO Abdul Rahman Ishak that its application to carry out mining activities on the two sites in Kuala Selangor, with a combined land area of more than 1,000 acres, had been rejected.

“As such, this administration would like to inform you of the summary rejection of your application,” said the letter dated Sept 3, 2020, sighted by MalaysiaNow.

Checks revealed that one of the four directors of KL Larut is P Thiagarajan Pavadai, a Klang-based businessman better known as Oms Thiagarajan.

The 66-year-old is known for his close ties with PKR president Anwar Ibrahim, and has often been in the news related to Indian community issues.

In 2018, barely a month after his release from prison, Anwar gave a speech at Thiagarajan’s birthday party held at a prominent hotel in Subang Jaya.

MalaysiaNow has reached out to Menteri Besar Amirudin Shari, who is also the exco in charge of land development and natural resources management, but received no response as of press time.

Breaching own rules

Investigations by MalaysiaNow further revealed that the decision to grant the additional 10-year lease for KL Larut breached a 2015 circular issued by the state’s director of land and minerals, which stated that all mining licences on state land must be done through open tender.

The renewal means KL Larut can carry out sand mining on the said land until 2030.

An industry source told MalaysiaNow that both plots of land, measuring about 300 and 748 acres each, could rake in as much as 300,000 metric tonnes of sand and minerals every month with a market price of over RM5 million.

It is understood that the company submitted a renewal application in March 2019, followed by an appeal in September, ahead of the expiry of its lease in March this year.

A source close to the state PKR leadership told MalaysiaNow that the renewal was only approved following executive intervention.

“After 11 months, the Selangor executive council stepped in to approve the renewal, giving KL Larut mining rights up to 2030, and throwing out state firm KSSB from the two sites,” it added.

Based on details obtained from the Companies Commission of Malaysia, KL Larut’s activities include mining of tin ore, metal, clay, sand and other minerals, including their import, export, wholesale and retail.

In April 2011, KSSB lodged a police report against Thiagarajan in relation to an incident at a sand mining site in Kuala Selangor, one of the spots where KL Larut has now been granted the 10-year lease.

Thiagarajan later sued KSSB over the allegations, but the court threw out the suit.

Sand mining in Selangor is a multi-million ringgit business. However, a mushrooming of illegal mining sites, resulting in losses of millions of ringgit in revenue every month, had forced authorities to consolidate the activities under KSSB, a company under Menteri Besar Selangor Inc headed by the MB himself.