Sanctions on Scomi chief


Scomi chief among 13 on US list for alleged role in nuclear proliferation 

By Leslie Lopez, The Straits Times

Scomi chief Shah Hakim (left) has close ties to Datuk Seri Abdullah's son Kamaluddin.

The decision by the United States to slap sanctions on a Malaysian businessman with close ties to Prime Minister Abdullah Badawi's son is set to revive debate over the country's role in the clandestine nuclear-smuggling network headed by rogue Pakistani scientist Abdul Qadeer Khan.

Mr Shah Hakim Shahzanim Zain, chief executive officer (CEO) and major shareholder of Malaysian engineering powerhouse Scomi Group, was designated by the US State Department together with 12 other individuals, including Dr Khan, for their alleged involvement in nuclear proliferation.

Also designated was Mr Buhary Syed Tahir, a Sri Lankan businessman and a Malaysian permanent resident, who was recently released by the Malaysian government after being detained for four years under the Internal Security Act (ISA).

The sanctions, which the US State Department said comes after a 'multi-year US government review', mean that the individuals designated by the censure order are banned from doing business with the American government, a US government official told The Straits Times. It also severely limits their access to US government financial assistance.

The sanctions, which were announced this week, also dictate that the individuals designated will have their assets and funds in the US frozen, the official said.

The US sanctions do not apply to listed companies such as Scomi Group. But several bankers say that the unwelcome designation of its CEO and main shareholder by the US could hurt the group's efforts to expand its engineering and manufacturing business overseas.

Its core activities include oil and gas and building monorail systems. Currently, it is pursuing contracts for monorail projects in India and the Middle East.

Mr Shah Hakim did not respond to a request for comment for this report, and the US State Department statement did not detail the grounds on which the Malaysian businessman was designated under the censure order.

But regional intelligence officials said that the businessman's designation is related to fund transfers from Libya and Lebanon to finance the manufacture of centrifuge components manufactured by a Scomi subsidiary.

Ever since the nuclear-smuggling ring was exposed in late 2003, Scomi executives have maintained that they were never involved in any nuclear proliferation activities. They also insisted that the company was misled by Mr Tahir, who was a key associate of Dr Khan, into manufacturing centrifuge parts for unspecified overseas customers involved in the oil and gas industry. Mr Tahir's wife was a one-time shareholder of Scomi.

The Malaysian government at the time also cleared Scomi, in which Datuk Seri Abdullah's only son Kamaluddin is a major shareholder, of any wrongdoing.

The Malaysian government has yet to publicly comment on the latest sanctions.

But diplomats and regional intelligence officials said that the US sanctions have raised doubts over those assertions.

The nuclear smuggling ring was exposed in October 2003 when European intelligence officials intercepted a Libya-bound shipment of centrifuge components produced by a Scomi subsidiary.

After a lengthy international investigation, Mr Tahir was detained under the ISA, after the Malaysian police discovered that he secretly brought seven Libyan technicians to be trained to operate high-technology machines at the Scomi-run facility to produce centrifuge parts.

Mr Tahir was released last year after the Malaysian government declared that he no longer posed a security threat to the country. He continues to reside in Malaysia.