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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

AsiaweekTimeAsia NowAsiaweek

MARCH 10, 2000 VOL. 26 NO. 9

'Everyone Was Shocked'
A scandal climaxes as the Sultan's brother is sued

Cover: Internet money goes shopping in Hong Kong and what PCCW-HKT means for old-economy firms in Asia
• Players: The deal, the winners and the losers
• Interview: Richard Li on bagging the region's biggest buy
• SingTel: What now for Singapore Telecom?
• Chart: Comparing PCCW and Cable & Wireless HKT
• No. 1: The Lis are definitely Asia's top business family

Editorial: Taiwan should respond to China's peace feeler - hidden in a war threat
Editorial: India's RSS must curb its chauvinism

Philippines: Amid terrorist attacks in Mindanao, President Joseph Estrada plays tough with MILF insurgents
Brunei: The sultanate sues Prince Jefri
Singapore: Behind Ong Teng Cheong's maverick presidency
• Extended Interview: Ong does not regret riling his former colleagues
Nepal: Why the Maoists are resurgent

Green Stakes: Why Asia has to clean up - fast
• Snapshots: Where countries stand on the environment
• Eco-warriors: Fighting to save the planet
• By Design: Ideas that can make a difference

Exhibitions: The art world - a proxy cross-straits battlefield
Newsmakers: India's pointman for defense

Real Estate: Building up Indonesia's multimedia dreams
MyWeb: As this Malaysian Internet company proves, a U.S. listing is not an automatic road to riches
Investing: Don't use yesterday's rules to value tomorrow's hottest telecommunications companies
Business Buzz: CLOB gets resolved

Viewpoint: Political reform is inevitable in China

The flurry of events left Bruneians in a daze. On Feb. 22, the office of the prime minister, Sultan Hassanal Bolkiah, released a three-page statement. It said that his younger brother, Prince Jefri, would be charged in court with the "improper withdrawal and the use of substantial funds from the Brunei Investment Agency [BIA], which constitutes the state reserve fund" - in short, with stealing the government's money. An hour later, the statement was embargoed without explanation. In fact, the government was waiting for British courts to freeze Jefri's assets before it went public.

On Feb. 23, Brunei celebrated its National Day. The next morning, lawyers representing the prince appeared at the High Court. Then Hassanal's office lifted the news embargo. "Everyone was shocked, but some people wonder if there will be a whitewash," says a local academic. "They wanted to see criminal charges against Jefri, not just civil." Besides the charges and the asset-freezing, the prince was hit with a travel ban.

How did he land up in this mess? It goes back to 1997, when word spread of alleged fraud by Jefri's flagship company, Amedeo. He was sacked as finance minister as the scandal burgeoned and darkened the Bolkiah family's future. Last July, Amedeo was wound up in the Brunei High Court with debts of $3.5 billion - leaving creditors fuming. Jefri was still living it up in exile, jetting between his luxury homes in London, Paris and New York.

On Jan. 11, persuaded that an amicable settlement could be reached with his brother the Sultan, he returned to Brunei. "They lured him back, but no settlement has been reached," says a local businessman. "They want him to return all the money and property." It is no small beans - Jefri is alleged to have improperly acquired millions, if not billions, from state funds when he was finance minister and head of the BIA, which administers the country's assets. The agency, during Jefri's tenure, was said to have controlled more than $30 billion. After he left, it reportedly had less than $20 billion.

While other members of the Bolkiah family are known for their high living, Jefri did it more blatantly and extravagantly. Also, his lifestyle riled some clan members, notably his other brother, the conservative foreign minister, Prince Mohamed. As the debacle unfolded, a financial task force was set up under Mohamed's colleague and the new BIA chief, Education Minister Aziz Umar - Jefri's nemesis. Aziz soon alleged that huge amounts of BIA funds had been misappropriated while Jefri headed the agency.

Next, what remained of the prince's business empire - the lucrative Jasra oil interests and the DST mobile phone company - was expropriated. Then, based on the evidence gathered by Aziz's task force with the help of foreign financial experts, Jefri was lured back and formally charged. So, too, were his son Hakeem and his ex-secretary Awang Kassim. Officials say that more of Jefri's associates will soon face charges, possibly including former ministers and businessmen in Malaysia and Singapore.

Few people believe Jefri will go to jail, but many think the government will grind him down until he signs over his properties and returns as much money as he can. The prince's position in Bandar Seri Begawan is weak. Separated from his publicists and principal lawyers in London, he has hired Bandar's newest law firm to represent him. His London PR company issued a statement saying: "Jefri vigorously denies the claims made against him by the Brunei Investment Agency and will be defending himself."

Will the saga affect Brunei's stability? "For now, there is still loyalty to the royal family," says a diplomat. But the scandal will taint the Bolkiah name and could dilute the clan's absolute hold on the oil-rich country. Moreover, despite rising oil prices, Brunei faces flagging growth and its enviable living standards could dip. The palace is portraying the Jefri affair as a case of the law taking its course. "The domestic media have been told to report this as a matter of the people acting against Jefri to get their money back," adds the diplomat. "They do not want it reported as a family feud. But that is what it is."

Others praise the government for finally being open about the whole affair. "Previously there was no transparency," notes the diplomat. "Now it is on the front pages." Brunei authorities also want to end the sordid saga before hosting the APEC summit in November, their biggest-ever such international effort. So a resolution is likely soon. Whatever it is, Jefri's high-flying days are over for good.

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