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Change Your Life! |
$16 billion vanishes into the thin air |
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June 29, 2000
BANDAR SERI BEGAWAN (AP) - News of an errant prince squandering his country's financial reserves would seem likely to shake the foundations of any kingdom.
But the people of the sleepy, oil-rich sultanate of Brunei appear ready to forgive and forget - even if they don't expect to get much of the money back.
The Sultan's younger brother, Prince Jefri Bolkiah - known for his yachts, private jets, performance cars and prize race horses - is blamed for the disappearance of an estimated dlrs 16 billion in oil revenues from the national coffers.
The scandal was recently aired in a court case, covered in startling detail by a local media with a long history of absolute deference to Sultan Hassanal Bolkiah and his family's secretive ways.
In an out-of-court settlement last month, Jefri agreed to return the money he had taken from the Brunei Investment Agency, the country's investment arm, which was formerly under his charge.
His abuses were apparently so egregious that the Brunei Investment Agency took the unprecedented step, for a government agency, of suing a royal -- which also unleashed the media on the case.
Political observers at first thought the high-profile case would bring a new era of transparency to the tightly controlled Islamic monarchy, which has no parliament, no presentation of annual budgets and no disclosure of balance sheets.
Others thought the royal family, known for its jet-setting lifestyle, would be held more accountable for how it spends Brunei's oil money, virtually the only income for the tiny Southeast Asian country on Borneo island.
But Bruneians are not exactly clamoring for reforms, despite skepticism that all the money can be recovered.
And many Brunei-watchers believe that the jungle-covered kingdom is retreating back into its royal shell, despite its hopes to attract investment from the secrecy-hating global financial community.
The hopes of more transparency have evaporated," said Geoffrey Gunn, who taught at Brunei's university for five years and now lectures in economics at Japan's Nagasaki University.
The case's hasty out-of-court settlement, which has not been disclosed, prevented ugly questions about the country's lack of checks and balances, Gunn said in a telephone interview.
"It's a victory for the Sultan and the status quo," he said. "I don't see it opening the way for any changes." Jefri, through his flagship company Amedeo, is believed to have spent part of the missing billions on careless investments around the world, including prestigious hotels such as the Plaza Athenee in Paris, the New York Palace, the Dorchester Hotel in London and the Bel-Air in Los Angeles.
"Auditors could probably find assets worth a couple of billion dollars, but beyond that they'll have trouble finding out where most of the money has actually gone," said Michael Backman, author of the book "Asian Eclipse: Exposing the Dark Side of Business in Asia."
"Jefri has probably been defrauded by all sorts of people around the world, because there's no accountability in Brunei, no one to call him on it, no political opposition to speak of," Backman said in a telephone interview from Paris.
The family of revered Sultan Hassanal Bolkiah has been running Brunei for the past 600 years. For the past several decades, the Sultan has been collecting huge revenues from abundant oil and gas reserves, and sharing the bounty with the nation's 300,000 people via a vast civil service, free education and health care and other subsidies.
No one pays taxes. Buildings in the capital, Bandar Seri Begawan, are new and shiny, and gleaming luxury cars hum along the country's wide, silky-smooth streets and freeways. Bruneians have a virtually unshakable belief that oil will continue to gush from the ground and the good life will continue despite Jefri's losses, a Western diplomat in Brunei said. According to him a lot of Bruneians don't appear to care about waste because they feel its not their money anyway.
That attitude is fostered by the fact that they don't pay taxes, social security or contribute in any way to the state, he said, speaking on condition of anonymity.
Even Hatta Bin Zainal Abidin, leader of a group that is the closest thing Brunei has to an opposition political party, found little fault with the way Jefri's case was handled. "His Majesty the Sultan was very concerned about the security of the nation," Hatta said. "That's why he agreed to accept the out-of-court deal."
A longer, more detailed court case could have stirred up unrest and destabilized the country, said Hatta, one of the few people in Brunei willing to publicly comment on any matter pertaining to politics.
Some outside observers agree that keeping things quiet may be in Brunei's best interest. "The assumption is that societies function better with transparency. But why can't we have it the other way?" said Yong Mun Cheong, a Southeast Asia expert at the National University of Singapore.
"My gut feeling is that Bruneians might think that way. They might not really want transparency," he said. "They have functioned that way for a long time. Why should they suddenly want to change?"
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