Prince Jefri Bolkiah

Infobox Bruneian Royalty
name = Jefri Bolkiah
title = Prince of Brunei


caption =
othertitles = "HRH" Pengiran Digadong Sahibul Mal "HRH" Prince of Brunei
full name =
spouse = "HH" Pengiran Anak Isteri Pengiran Norhayati
issue = "HH" Prince Abdul Hakeem "HH" Prince Bahar "HH" Lady Hamidah
royal house = House of Bolkiah
father = "HM" Sultan Omar Ali Saifuddin III
mother = "HM" Raja Isteri Pengiran Anak Damit
date of birth = Birth date and age|1954|1|1
place of birth = flagicon|Brunei Brunei Town, Brunei
date of death =
place of death =
date of burial =
place of burial =
occupation = |

His Royal Highness Pengiran Digadong Sahibul Mal Pengiran Muda Jefri Bolkiah ibni Al-Marhum Sultan Haji Omar Ali Saifuddien Sa'adul Khairi Waddien (born November 1, 1954), is a member of the Brunei Royal Family.

HRH is married to Her Highness Pengiran Anak Isteri Pengiran Norhayati binti Pengiran Jaya Negara Pengiran Haji Abdul Rahman and they have children together:

*HH Prince Abdul Hakeem
*HH Hamidah
*HH Prince Bahar

Disagreement Between Royals

The youngest brother of His Majesty Sultan Haji Hassanal Bolkiah Mu'izzaddin Waddaulah (the 29th Sultan of Brunei and Yang Di-Pertuan of Brunei Darussalam), Prince Jefri Bolkiah, was once a top minister in the country’s cabinet and privileged member of the royal family. As minister of finance and chairman of the Brunei Investment Agency (BIA), Prince Jefri used his influence and access to the country’s vast oil revenues to help develop Brunei’s infrastructure and diversify its economy. In the late 1990s, however, he fell out of favor with the sultan over alleged misappropriation of funds during his tenure in these roles.

The prince is accused of spending about US$14.8 billion of Brunei’s money on personal investments and roughly another US$13.8 billion for unknown purposes.(1) According to the prince, much of the “missing” money was transferred to the sultan’s private accounts. “In addition to the transfers made directly from the BIA accounts, to bank accounts controlled by His Majesty, I was sometimes instructed to transfer monies from the BIA accounts, into accounts controlled by myself. From those accounts I was then instructed to transfer monies and or make payments at His Majesty’s command.” (2) In an attempt to resolve the dispute, Prince Jefri signed a statement in which he accepted responsibility for the withdrawal and use of the BIA’s funds. Prince Jefri later testified that he had agreed to do so in order to save the sultan from the public embarrassment that would have resulted from an enquiry into the use of the money. (3)

In accordance with a settlement agreement signed in 2000, the prince began to return his assets to the state, including more than 500 properties, both in Brunei and abroad, more than 2,000 cars, more than 100 paintings, five boats, and nine aircraft. (4) However, a legal battle proved unavoidable when Prince Jefri declared the agreement void in 2004, citing the sultan’s failure to live up to his end of the settlement agreement. Areas of dispute included the Sultan’s public release of the Statement of Responsibility, the Brunei Government’s seizure of properties that Prince Jefri was entitled to keep under the settlement agreement, the BIA’s failure to establish a trust fund for the prince that the settlement agreement required the BIA to fund and maintain, and a dispute regarding the existence and terms of a “Lifestyle Agreement.”

The prince claims that after numerous meetings with the Sultan in 2000, the two entered into a “Lifestyle Agreement.” This Lifestyle Agreement, according to the prince, allowed him to retain several assets, including The New York Palace Hotel, St. John’s Lodge in London, Cavell House in London, the Bel-Air Hotel in Los Angeles, Place Vendome in Paris, and other assets. (5)The agreement was never put in writing, as “there was still a significant public interest in the whole affair and publicly it would cause concern…” (6) Initially, the verbal arrangement was sufficient for the prince. “…I believed that His Majesty would honour his promise to me,…I believed it was a family matter that the lawyers did not fully understand…the ‘Bruneian way’…is that His Majesty’s word supersedes any contract.” (7) The prince in fact kept these assets (and lived in many of them) for several years following his discussions with the Sultan. However, in 2004, the BIA restarted legal proceedings to obtain control over the assets. The BIA claimed that no “Lifestyle Agreement” ever existed, and in the end, the courts agreed with the BIA. Brunei is a small autocratic sultanate (8) in which the sultan has absolute power, governmental transparency is nonexistent, and uncovering the truth behind both parties’ claims is difficult. While a cabinet of ministers aids in the everyday running of the government, “the checks on excessive executive power are few.” (9) In fact, it is a crime in Brunei to disparage the Sultan. Still, though it seems improbable that the veil obscuring the true Brunei will soon be lifted, it is possible to sift through the known facts and gain a basic understanding of the country’s history and how the course of events over more than 100 years led to the brothers’ current legal battle.

Brunei’s History

Brunei, which is located in northwest Borneo, voluntarily became a British protectorate in 1888. The sultanate had been struggling to maintain control over its territories and was at risk of being absorbed into neighboring Sarawak. (10)

Britain introduced a residency system in the early 1900s in which British residents were nominated to take on many of the governmental responsibilities that had traditionally fallen to the sultan and his family members. (11) Whether or not the possibility of finding oil in Brunei prompted the British to take full responsibility for protecting and governing Brunei is unknown, however, “oil companies were drawn to the sultanate starting in the 1890s by the presence of oil seepages…” (12) (Before the 1929 discovery of the first commercial oil field in Seria, in western Brunei, the sultanate exported products such as cutch (a dye manufactured from mangrove bark extract), coal, jelutong (a type of wood), and plant rubber. (13)

Sultan Omar Ali Saifuddien, father to Prince Jefri and Sultan Hassanal, became the 28th sultan of Brunei in June 1950, after his older brother passed away without a male heir. Sultan Omar was instrumental in developing Brunei into the modern country it is today. Known as “the architect of modern Brunei,” (14) Sultan Omar introduced the first five-year development plan, for the years of 1953–1958, to direct the country’s growth. He also included a budget to be set aside from oil revenue for improvements to infrastructure, heath, education, and agriculture.

While the first few development plans read more like “summaries of proposals” (15) than directed, goal-oriented lists of tasks, they did target two main areas for improvement—the infrastructure of the economy and the socioeconomic welfare of the people. (16) And improvements were realized: Roads were built, as were schools and hospitals; airport and seaport construction were given priority; and electricity, gas, and water supplies became more widespread. (17)

Represented as a devout Muslim and humble servant of his country, Sultan Omar grew up in a time when it was typical for even the highest of nobles to begin working in the lower ranks of civil service. (18) His children, however, were born into in a world of wealth and privilege, a world that would eventually create the kind of problems never before faced by the country or its ruling class.

Oil-Rich Brunei

The extreme wealth for which the country and its rulers have become known, while slowly gathering through the 1960s, turned into a windfall in the 1970s when the Organization of Petroleum Exporting Countries (OPEC) initiated spikes in oil prices. International recognition accompanied the fortune, as Hassanal, who joined his father on Brunei’s throne in the late 1960s, was declared one of the world’s richest men.

Though the sultan protests that the money belongs to Brunei and not to him personally, the question remains: Who decides how the money is spent? This ambiguity lies at the heart of the current dispute between the sultan and Prince Jefri.

It seems impossible to define where the desires of the royal family end and the needs of the country begin. For example, Hassanal and his brothers, Princes Mohamed and Jefri, became devoted polo players in the 1970s. In response, world-class polo facilities, complete with several hundred Argentine polo ponies, were constructed. Brunei hosted an annual international polo tournament for several years at its seaside polo club, Jerudong Park. In addition to providing the royals first-class equipment to fuel their hobby, the tournament may have fostered some of Brunei’s international relationships and elevated the country’s reputation as a hospitable and welcoming host.

Not all of the extravagance has a dual purpose. The sultan reportedly spent $17 million on a birthday bash complete with Michael Jackson, (19) roughly $2.5 million on a badminton coach, and nearly $1 million on guards for his exotic bird collection. Acupuncture and massage treatments total nearly $2.5 million, and housekeepers are paid roughly $14 million each. (20) For a period of time, nearly $8 billion of state funds—more than Brunei’s GDP—bankrolled the sultan’s lifestyle. In a rare interview with Newsweek the sultan responded to inquiries about his spending habits. “I do enjoy fast cars. But there is no harm in that if you have the money…Brunei is very wealthy. When a person is rich, he doesn’t buy a minicar, he buys a Rolls-Royce.” (21)

Members of the royal family are not the only Bruneians enjoying oil’s benefits. The government shares the wealth by subsidizing public needs such as health care and education. Government subsidies are so extensive, in fact, that the country actually has become a mini–welfare state, often referred to as the “Shellfare State, ”(22) due to the country’s main oil company, Brunei Shell Petroleum.

Yet beneath Brunei’s prosperity exists a serious economic situation—a lack of economic diversification. In 1980, the oil sector accounted for 84 percent of Brunei’s gross domestic product (GDP). (23) Aware that the oil supply is finite, the government has counted economic diversification as imperative since the mid-1970s.

Prince Jefri as a Developer

Prince Jefri was named the initial chairman of the Brunei Investment Agency, created in 1983 to replace the British-dominated Investment Advisory Board (24) in the management of the country’s vast foreign reserves. Full independence from Britain followed in 1984. At this time the prince was also appointed deputy minister of finance (Sultan Hassanal was minister of finance) and minister of culture, youth, and sports. Sultan Omar died in 1986, giving Hassanal full control after 20 years of shared rule. The new sultan took over his father’s role of minister of defense and designated Prince Jefri minister of finance in addition to his other roles.

As a minister of the government, the prince continued to push for modernization and diversification of Brunei’s economy. Brunei had succeeded in lessening oil’s high percentage of its GDP by the mid-1980s, though it still accounted for the majority. Foreign investments such as government bonds, foreign currency, and real estate contributed to the GDP as well, however much of the balance was coming from the government instead of private industry. (25)

The government struggled to generate growth in the private sector for a variety of reasons, including public resistance to privatization and the possibility of new taxes (at this time, there was no personal income tax), weak demand for Brunei’s non–oil and gas exports, and perhaps most problematic, a lack of entrepreneurial culture among Brunei’s Malays (26), who make up the majority of the country’s population.

Many Malays aspire to work for the government, as the salaries are typically high, the benefits plentiful, and the atmosphere uncompetitive despite the number of Bruneians vying for the same jobs. Thus, the public sector has drawn many Bruneians away from certain private industries such as construction and agriculture, which accounts for the high percentages of foreign labor and Chinese residents who fill those jobs.

Unsatisfied with the bureaucratic nature of the government, (27) Prince Jefri developed Amedeo Corporation, a private development company. Its purpose was twofold: First, it helped boost private industry in Brunei at a crucial time and created thousands of jobs. It was also the vehicle through which Prince Jefri “undertook many projects with the aim of improving conditions within Brunei.” (28) Through Amedeo he continued to develop Brunei’s network of roads, built power stations and a state-of-the-art hospital, and increased housing.

Jefri understood that “an opening up was needed if Brunei is going to survive in the world…” (29) To this end, he also built an amusement park and luxury hotel in an effort to attract tourists. As minister of culture, youth, and sports, he oversaw Radio Television Brunei, “the lead and only public broadcaster,” (30) which offers both imported and locally produced programs. (31) He also brought satellite to Brunei, (32) enabling “viewers and listeners…to tune in to foreign radio services…and more than 14 television channels such as BBC World…and MTV.” (33)

Prince Jefri Under Investigation

The prince’s current problems began with the investigation into Amedeo Corporation, which came under scrutiny in the late 1990s, coinciding with the Asian economic crisis of 1997–1998. This scrutiny also coincided with a power struggle in Brunei, during which Prince Mohamed, second-oldest brother behind only the sultan, began accumulating power. Mohamed now controls the security police and many other ministries, and is believed to be the source of much of the Brunei government’s disfavor with Prince Jefri. “In May [1998] …Bruneian authorities began freezing the domestic assets of Jefri’s 27 local companies, known collectively as Amedeo.”(34) In Paris at the time, Prince Jefri was informed by phone of the issue. The investigation into his companies and activities of the BIA during his tenure began shortly thereafter. (35)

The inquiry revealed that during his tenure as chairman of the BIA, enormous amounts of money were funneled between the BIA’s accounts, Prince Jefri’s accounts, and private accounts allegedly belonging to the sultan. The legal question hovers around the authorization of these transactions: Did the prince take it upon himself to dip into BIA funds and then blame the sultan? Was he ordered by the sultan to secretly transfer money to the sultan’s numbered, but unnamed, accounts?

Sultan Hassanal was eager to settle the matter out of court, and Prince Jefri complied, though his choice in the matter was limited on several levels, the most benign being his devotion to his sultan. “My duty as a subject and a Wazir was to obey any commands of His Majesty…I felt his request had to be carried out…” (36) However, when the State of Brunei obtained a writ against the prince and members of his family, an injunction freezing his assets and an order to seize his passport, the prince’s position became much more confining, legally, monetarily and physically. “I believed I had no option but to agree to sign the Settlement Agreement,” he claimed. (37)

Resolution

The issue would have been resolved at that point if, according to the prince, the sultan had delivered on his part of the agreement, to keep the Statement of Responsibility confidential and to adhere to the Lifestyle Agreement. Though he had already begun to return the agreed-to assets to the BIA, the prince took the lack of follow-through on these issues as a sign the agreement was repudiated and refused to hand over the remaining possessions.

The sultan then amended Brunei’s constitution to, among other things, prohibit the reproduction of any judgment that might adversely affect the sultan’s position in the country, allow the sultan to refuse to attend any court proceedings he wished, and prohibit the review of any of these amendments. Afterward, the BIA “issued a summons in the Brunei High Court,…seeking orders against Prince Jefri…to enforce his outstanding obligations for the transfer of assets to the BIA.” The order was granted, and upheld by the Court of Appeal in 2006.

The case finally reached the Privy Council in London, which can serve as Brunei’s highest court of appeal as a result of Brunei’s former colonial status. Counsel for the prince claimed that a judgment to enforce the agreement without a full trial would not fairly resolve the issue and that either the judgment should be dismissed or a trial should ensue. The Privy Council reviewed the appeal taking into account several issues, including the Lifestyle Agreement, confidentiality of the Statement of Responsibility, the missing trust, and the assets in question.

While the Privy Council conceded that a Lifestyle Agreement had clearly been discussed by the prince and the sultan, and records established that the sultan was sympathetic to the prince’s lifestyle concerns, the Privy Council concluded that no firm agreement had ever clearly been reached. In fact, the Privy Council claimed that the closest the sultan ever came to committing to a Lifestyle Agreement was to state that “…all assets are to be transferred first to the BIA then he would sign the [agreement] .” In response to Prince Jefri’s claim of an oral agreement between the sultan and him, the Privy Council not only did not believe the explanation, but also explained that it was legally inadmissible due to Brunei law, which states that no oral agreement can be used to contradict a written contract.

The Privy Council also found that the release of the prince’s signed Statement of Responsibility was not a breach of the agreement. In addition to restating the inadmissibility of an oral agreement, the Council argued, first, that keeping the statement private would essentially defeat its purpose, as, according to Prince Jefri, he signed it to save the sultan from public embarrassment over the misuse of BIA funds. “But unless the Statement could be publicly known that purpose could not be achieved,” the Council explained. The Council also noted that the terms of the agreement allowed it to be disclosed upon the sultan’s request or in relation to the funds in question. Thus, the Council did not find that the release of the statement violated any of these terms.

Once the Statement of Responsibility was released, as was anticipated, creditors brought legal action against the prince for projects that could no longer be seen as the government’s responsibility. A Discretionary Trust was to be set up as part of the Lifestyle Agreement in order to offset some of these expenses. All parties acknowledged that the trust never materialized, and the court deemed this a failure on the part of the Brunei Government and the BIA to comply with a requirement of the agreement. However, as the prince was permitted to cover his expenses with assets he still owed the BIA, the court did not see this failure as significant enough to repudiate the contract.

Also in question was whether Prince Jefri had been entitled to keep certain properties in Brunei. The settlement agreement permitted him to keep an official residence and a private residence. Prince Jefri identified these properties as parcels known as Assana, Nadaa, Arrifa and Lake House. Legal title had been transferred to the BIA in 2000, though the prince continued to occupy them for several additional years before the BIA seized them. The Council recognized that the issues surrounding the assets raised numerous questions, and the prince, in fact, may be entitled to possession of some or all of these properties. However, it concluded that nothing significant enough to be seen as a breach of contract had occurred.

Ultimately, the Privy Council ruled in favor of the Government of Brunei and the BIA, stating that the prince did not have enough evidence to overturn the judgment requiring him to return the rest of his assets to Brunei and the appeal should be dismissed.

Continuing Court Procedures

The decision of the Privy Council did not end the litigation between Prince Jefri and the BIA. The BIA re-opened proceedings in Malaysia and the Cayman Islands, resulting in the BIA gaining control over the Hotel Bel-Air in Los Angeles and the New York Palace in Manhattan. [http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article4412709.ece]

The BIA also re-opened collateral litigation in the High Court of England. That court had been called upon to help freeze Prince Jefri’s assets, and as part of that proceeding Prince Jefri was asked provide a listing of his assets. After winning before the Privy Council, the BIA asked the court to determine whether Prince Jefri should be held in contempt of court for allegedly making misstatements in his listing of assets. The contempt proceeding was scheduled for a hearing in June 2008. However,Prince Jefri did not appear at that proceeding. Judge Peter Smith did not rule on whether Prince Jefri was in contempt, but did issue a warrant for his arrest. Judge Smith said, "If he is arrested, it will take an advocate of great skill to persuade me that he should have bail… unless some way of securing his attendance in the interim can be provided which is safe. By that I mean perhaps a large surety and perhaps lodging of passports." (Transcript of proceedings of 11 June 2008, Brunei v. Bolkiah, High Court of Justice, Chancery Division,Claim No. HC00007888.)

References

(1) First Affidavit of Prince Jefri Bolkiah in The State of Brunei Darussalam and Brunei Investment Agency v. His Royal Highness Prince Jefri Bolkiah and Others, (High Court of Brunei Darussalam, 2005), 9.

(2) Ibid., 6.

(3) Ibid., 10.

(4) Ibid., 15.

(5) Ibid., 11.

(6) Ibid., 14.

(7) First Affidavit of Prince Jefri Bolkiah in The State of Brunei Darussalam and Brunei Investment Agency v. His Royal Highness Prince Jefri Bolkiah and Others, (High Court of Brunei Darussalam, 2005), p.12.

(8) Country Profile 2003: Brunei (London: The Economist Intelligence Unit, 2003), 6.

(9) Ibid.

(10) Ibid.

(11) David Leake, Jr., Brunei: The Modern Southeast-Asian Islamic Sultanate (Jefferson, NC: Mcfarland & Company, Inc., 1989), 66.

(12) Ibid., 113.

(13) Ameer Ali, From Plenary to Plenty: Development of Oil Rich Brunei, 1906 to Present, Department of Economics Research Monograph Series 2 (Australia: Murdoch University, 1996), 13, 34–35.

(14) Ibid., 58.

(15) Ameer Ali, From Plenary to Plenty: Development of Oil Rich Brunei, 1906 to Present, Department of Economics Research Monograph Series 2 (Australia: Murdoch University, 1996), 59.

(16) Ibid., 62.

(17) Ibid.

(18) David Leake, Jr., Brunei: The Modern Southeast-Asian Islamic Sultanate (Jefferson, NC: Mcfarland & Company, Inc., 1989), 69.

(19) Richard Behar, “The Fairy Tale's Over for the Kingdom of Brunei Forget anything you've read about the Sultan, his spendthrift brother, and those missing billions. If you don't, you'll never wrap your mind around the real story....,” Fortune Magazine (February 1999), http://money.cnn.com/magazines/fortune/fortune_archive/1999/02/01/254405/index.htm.

(20) Beth Neil and Gary Anderson, “The Man Who Pays His Cleaner £7 M,” Mirror (October 2007), http://www.mirror.co.uk/news/topstories/2007/10/26/man-who-pays-his-cleaner-7m-89520-20011789/

(21) David Leake, Jr., Brunei: The Modern Southeast-Asian Islamic Sultanate (Jefferson, NC: Mcfarland & Company, Inc., 1989), 77.

(22) Ameer Ali, From Plenary to Plenty: Development of Oil Rich Brunei, 1906 to Present, Department of Economics Research Monograph Series 2 (Australia: Murdoch University, 1996), 102.

(23) East ASEAN Growth Area: Country Profiles: Brunei Darussalam, Philippines, Volume VI, Part 3 (Manila: Asian Development Bank: 1996), 4.

(24) Brunei: The Modern Southeast-Asian Islamic Sultanate, 127.

(25) From Plenary to Plenty: Development of Oil Rich Brunei, 1906 to Present, 179.

(26) Country Profile 2003: Brunei (London: The Economist Intelligence Unit, 2003), 15.

(27) Second Affidavit of Prince Jefri Bolkiah in The State of Brunei Darussalam and Brunei Investment Agency v. His Royal Highness Prince Jefri Bolkiah and Others (High Court of Brunei Darussalam, 2005), 6.

(28) First Affidavit of Prince Jefri Bolkiah in The State of Brunei Darussalam and Brunei Investment Agency v. His Royal Highness Prince Jefri Bolkiah and Others (High Court of Brunei Darussalam, 2005), 3.

(29) Richard Behar, “The Fairy Tale's Over for the Kingdom of Brunei Forget anything you've read about the Sultan, his spendthrift brother, and those missing billions. If you don't, you'll never wrap your mind around the real story....,” Fortune Magazine (February 1999), http://money.cnn.com/magazines/fortune/fortune_archive/1999/02/01/254405/index.htm.

(30) Haji Md. Hussain bin Abdul Rahman, “Broadcast Media in Brunei Darussalam,” in Broadcast Media in ASEAN, ed. Arun Mahizhnan and Henry Tan (Singapore: ASEAN Committee on Culture and Information, 2002), 15-23. (31) Ibid. (32) “The Fairy Tale’s Over…”

(33) "Broadcast Media in Brunei Darussalam,” 15-23.

(34) Richard Behar, “The Fairy Tale's Over for the Kingdom of Brunei Forget anything you've read about the Sultan, his spendthrift brother, and those missing billions. If you don't, you'll never wrap your mind around the real story....,” Fortune Magazine (February 1999), http://money.cnn.com/magazines/fortune/fortune_archive/1999/02/01/254405/index.htm. (35) First Affidavit of Prince Jefri Bolkiah in The State of Brunei Darussalam and Brunei Investment Agency v. His Royal Highness Prince Jefri Bolkiah and Others (High Court of Brunei Darussalam, 2005),.9. (36) Second Affidavit of Prince Jefri Bolkiah in The State of Brunei Darussalam and Brunei Investment Agency v. His Royal Highness Prince Jefri Bolkiah and Others (High Court of Brunei Darussalam, 2005), 9. (37) Ibid., 10.

(38) http://www.eonline.com/News/Items/Pf/0,1527,829,00.html

(39) http://www.thesmokinggun.com/archive/sultan9.html

(40) http://www.thesmokinggun.com/archive/sultan7.html

(41) http://www.eonline.com/News/Items/0,1,1664,00.html

(42) http://www.eonline.com/News/Items/Pf/0,1527,829,00.html

(43) http://www.eonline.com/News/Items/0,1,1664,00.html

(44) http://www.highbeam.com/doc/1G1-60638435.html

External links

* [http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10498458 From corner shop princess to billionaire wife]
* [http://online.wsj.com/article/SB120433378645304553.html Will the Prince Turn Pauper? Mar 2008 "Wall Street Journal"]
* [http://news.independent.co.uk/uk/this_britain/article2035196.ece December 2006 "Independent" article about a lawsuit filed by Jefri Bolkiah against two advisers]
* [http://www.pathfinder.com/asiaweek/magazine/Enterprise/0,8782,171443,00.html "Paradise Lost" - Asiaweek article about the sale of the assets of Prince Jefri]
* [http://www.lvlife.com/2003/04/feature2.html Article on Prince Jefri's $60m Las Vegas home] in "Las Vegas Life".
* [http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=423624&in_page_id=1770 Lawyer accused of £11m swindle in High Court clash with prince] in "the Daily Mail".