“Sabah’s Nature Conservation Agreement “legally impotent” says Attorney General

By Chris Lang

Sabah’s Attorney General put out a press statement about the proposed two-million-hectare Nature Conservation Agreement, last week. The State Attorney General, Datuk Nor Asiah Yusof, states that, “In short, the NCA in its present form is legally impotent.”

As Sarawak Report points out, the press statement describes the Nature Conservation Agreement as “incomplete”, “illegal”, inequitable”, “absurd”, and “unfair”.

In her press statement, the Attorney General raises several serious problems with the Nature Conservation Agreement. The Designated Area, the area covered by the Agreement, “has not been ascertained nor identified”.

Until the Designated Area is ascertained and incorporated, each and every term, condition and penalty in the proposed NCA is rendered non-binding and unenforceable.

Nature Conservation Agreement is “not in force”

She argues that the NCA is “not in force” and therefore the “so-called penalty clauses are also not binding”. The State Government “will not permit such inequitable and one-sided penalty clauses to be incorporated in the event that the NCA is finalised”.

The Attorney General points out that the clause in the Agreement that aims to prevent any future Sabah Assembly from altering the terms of the NCA is illegal: “any clause in the proposed NCA that seeks to bind the Sabah Legislature in any form is void for illegality under Malaysia’s Contracts Act 1950“.

The NCA will not be finalised, the Attorney General writes, unless an addendum is added that removes “absurd and / or unfair contract terms” and puts in place clear safeguards and protections for the State.

The Attorney General’s Chambers are carrying out a “wide-ranging and on-going due diligence exercise” into the proposed NCA and its promoters. “Unless and until Hoch Standard Pte Ltd, its promoters and affiliates, meet the requirements of the State Government, the proposed NCA will not proceed,” the Attorney General writes.

The signed NCA is “incomplete and hence non-binding”. Issues not yet resolved include the following:

the Designated Area, Pilot Area and map; developmentof a Nature Conservation Management Plan (NCMP); consent from affected Native communities (where necessary); Carbon Pricing and Price Discovery mechanisms agreeable to the State; Independent oversight of the implementation of the NCA and an objective performance assessment in meeting the intended goals; safeguards to mitigate/avoid negative impact to current key economic sectors of the State; safeguards to ensure that revenue gained from carbon trading are leveraged for the long-term benefit for the people of Sabah; and a satisfactory due diligence report on and confirmation of the truth and reliability of Hoch Standard’s representations and capabilty.

The Sabah Climate Change Committee “will assess advise the Cabinet on all matters related to the NCA”. The Cabinet “reserves its right not to finalise the NCA.”

“Astonishing push back”

Sarawak Report comments that,

This astonishing push back by Sabah’s chief law officer can only be described as a stunning vindication and victory for the whistleblowers, NGO activists and journalists who had leaked and stood up against this resource grab by powerful decision-makers.

Likewise, it is a recognition of the outrageous fraud against the people of Sabah who had stood under the terms of this agreement to be liable for tens of billions of dollars to a private company (Hoch Standard Pty Limited) secretly appointed to be the middleman.

Jeffrey Kitingan who has spearheaded and defended the deal, to the extent of threatening to sue journalists and critics, now stands abandoned by his own law officer. If he wants to take up legal cudgels it will have first to be against his own state government before he sues private individuals who pointed out the fraud.

Mongabay journalist John C. Cannon was the first person to write about Sabah’s Nature Conservation Agreement in November 2021.

Why was the Agreement signed?

The Attorney General’s press statement states that the Agreement is a “non-binding framework agreement” that was subject to several conditions:

The State Government signed the NCA in October 2021 on the condition that it was a non-binding framework agreement that was subject to:-

(i) Further due diligence to the satisfaction of the State Attorney-General and the Cabinet;

(ii) An Addendum to the NCA by which all unfair and absurd contract terms are removed;

(ii) the identification and obtaining of free prior informed consent from all affected Native Communities;

(iv) the identification and ascertained of suitable and available TPAS (the ‘Designated Area’).

But, as Sarawak Report points out,

[T]he statement by Sabah’s top legal officer appears to represent an attempted cover up of a disastrous commitment entered into by the state and a blatant bid to walk back a signed agreement that was initialled on each and every page by the Chief Minister, Deputy Chief Minister (DCM), Conservator of Forests and the representative of Hoch Standard Pty Ltd, namely Stan Lassa Golokin who is an associate of the DCM.

On 6 February 2022, Kitingan and Golokin gave a three-hour-long press conference defending the NCA deal. They did not refer to the NCA as “non-binding” or “subject to several conditions”.

The Agreement itself states that “It is the intention of the Parties that this Agreement shall be an internationally legally binding instrument”. As Sarawak Report notes, the Agreement was signed and initialled on every page (including the page that states that the Agreement is legally binding):

Sarawak Report asks, “If the agreement was a merely a ‘non-binding framework’, as the AG is now seeking to suggest, why on earth was this not made absolutely clear within the document that was signed – indeed why was it signed at all?”

That seems like a reasonable question.

Sarawak Report concludes that until the owner of Lionsgate, the British Virgin Islands registered company that owns Hoch Standard, is revealed, “Sabah ought not pay a penny in profits or compensation to HSPL [Hoch Standard Pty Ltd]”.

That also seems reasonable.