While certain quarters allege that a multi-million ringgit logging concession deal between Umno Pahang and timber company Seruan Gemilang Makmur (SGM) reeks of high-level corruption, the ruling party has claimed to be a victim of the transaction and seeks counter-compensation.

In an affidavit filed at the Kuantan High Court on June 17, Umno Pahang secretary Ahmad Tajudin Sulaiman said the party was not aware of the agreement, and did not approve it.

He said SGM "failed to speak the truth and provide accurate facts" and therefore had no basis to claim for compensation.

Umno Pahang has entered an appeal against an earlier court ruling which ordered the party to pay RM70,000 to the timber company in compensation after SGM accused it of breaching a logging concession contract.

The appeal will be heard at the Kuantan High Court next Wednesday.

Not sealed

According to Umno Pahang's affidavit, the deal was not officially endorsed by the party.

"The agreement was signed by a working secretary who was not entitled to represent the party. The agreement was also not sealed," said Ahmad Tajudin in the document, a copy of which was made available to malaysiakini .

However, another document in malaysiakini's possession showed that the deal had indeed been signed and certified with the state Umno's seal.

Umno Pahang working secretary Abdullah Rahmat signed the agreement on behalf of the party in Oct 2, 2000.

Eight months earlier, party treasurer Abdul Rashid Abdul Rahman had written a recommendation letter to state forest department in support of SGM's application for a logging licence.

In the signed agreement between Umno Pahang and SGM, the timber company was given exclusive rights to clear the ruling party's 10,000 acres of logging concessions in exchange for RM50,000.

Ahmad Tajudin also claimed that Umno Pahang did not breach the contract as the "deal's payment of RM50,000 never took place".

"SGM told the working secretary not to bank in the check, dated Oct 6, 2000, on that day because the bank account did not have enough money," he explained.

Compensation sought

Umno Pahang also requested for an unspecified amount of compensation from the company on the grounds that the party had incurred losses due to the failed business transaction.

"SGM has gained profit through its logging activities on Umno's land despite the agreement being invalid," said its secretary.

"The land should be cleared by SGM in order for Umno Pahang to start its oil palm planting in the area. Until now, SGM has failed to clear the land and Umno Pahang assumes that the company is reluctant to do so. Because of this, the planting is delayed and Umno Pahang has suffered losses and impairment," he added.

Yesterday, malaysiakini reported that SGM sought RM31 million in compensation from Umno Pahang after the party failed to secure a licence from the forestry department for the company to log the remaining 3,000 acres out of a 10,000 acre plot of land in Nenasi, about 100km south of Kuantan.

In March 1998, the Pahang government led by the state Umno chief - then Khalil Yaakob - had awarded the logging contract, estimated at RM100 million, to Umno Pahang.

To make the deal aboveboard the party was required to pay RM4.8 million to the state forestry department as a premium for the deal. However, no such payment has been made to date.

The party later sold its concession rights to SGM for a mere RM50,000, giving the company the exclusive right to extract, remove and sell all the timber logs in the land belonging to the party.

Industry experts questioned the low transfer rights and wondered if there was "hidden agreement" between the two parties. This concession was believed to be the tip of the iceberg of total logging concessions granted by the state to Umno Pahang as a mean to raise funds for the ruling party.

Licence denied

However, the Umno Pahang-SGM relationship soured last June when the state forestry department refused to re-issue the logging licence to SGM.

It is believed that current menteri besar Adnan Yaakob - who took over from Khalil in 1999 - had refused to have anything to do with the deal, forcing SGM to seek legal redress.

Khalil, who is now party secretary-general at the national level, had been previously accused of alleged discrepancies in the awards of timber concessions.

An internal inquiry on him, launched three years ago, has yet to be completed .

On June 13 this year, the Kuantan High Court ruled - after Umno Pahang failed to attend the hearings - that the party should pay SGM a total of RM70,000, an amount which the logging company considered too low.

Observers noted that Umno Pahang could easily put a lid on the matter by paying the sum but the party has chose to battle it out in the courts.

Meanwhile, malaysiakini also learnt that SGM is facing another predicament as it was being sued by a Negeri Sembilan-based timber manufacturer for RM2.8 million over its failure to continue to provide timber logs due to the stalled deal.

The agreement signed by the two companies was based on the concession rights given to SGM by Umno Pahang.