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High Court exposes Government’s 50 years of ‘oil revenue’ bullying
KUALA LUMPUR, Oct 18, 2025: It took some 50 years or five decades for the Malaysian Governments (elected every five years) to be exposed as “oil revenue” bullies after the formation of Malaysia in 1963.
The High Court on Friday (Oct 17) ruled that the Malaysian federal government has acted unlawfully by failing to fulfil the Borneo state’s right to 40 per cent of federal revenue derived from the state for nearly 50 years, local media reported.
The High Court in Kota Kinabalu also issued a mandamus order, which compels Putrajaya to review the revenue allocation with the Sabah government.
No News Is Bad News reproduces below the Hih Court ruling that the Malaysian governments had acted unlawfully for some 50 years:
Unlawful for Malaysia government to withhold Sabah’s 40% share of federal revenue derived from state: High Court
The Kota Kinabalu High Court also issued a mandamus order, which compels Putrajaya to review the revenue allocation with the Sabah government.
A file photo of the Kota Kinabalu Court Complex. (Photo: Google Maps/Noor Aziah Norbit)
17 Oct 2025 04:21PM
KOTA KINABALU: A high court in Malaysia on Friday (Oct 17) ruled that the Malaysian federal government has acted unlawfully by failing to fulfil the Borneo state’s right to 40 per cent of federal revenue derived from the state for nearly 50 years, local media reported.
Kota Kinabalu High Court judge Celestina Stuel Galid declared that the special grant arrangements between the federal and state governments were “unlawful, ultra vires, and irrational,” adding that they violated the federal constitution.
Ultra vires refers to an act that goes beyond the scope or in excess of legal power or authority.
“It is unlawful on the part of the federation to make the intended special grants under the 10th Schedule,” she was quoted as saying by Malaysiakini.
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In addition to this, the court issued a mandamus order, which compels Putrajaya to review the revenue allocation with the Sabah government.
It had also ordered that an agreement be reached on Sabah’s 40 per cent share of federal revenue for each financial year from 1974 to 2021, with this process to be completed within 180 days, Malay Mail reported.
The Sabah Law Society had filed for a judicial review on the case in 2022. It had argued that the 40 per cent grants from 1974 to 2021 remain payable, and that both the federal and Sabah governments had breached their constitutional duties by failing to review the payments in 1974 as required by law.
Sabah has for years been trying to negotiate a return of its entitlement of 40 per cent of its contribution to federal revenue as stated in the federal constitution, which it says is crucial for economic development.
The constitution centralises revenue collection - including all forms of taxes - at the federal level. The federal government then returns a percentage of this to the states based on their population
.Flags of Sabah and Malaysia in Kota Kinabalu, Sabah. (File Photo: CNA/Fadza Ishak)
In 2022, the federal and Sabah governments agreed on “interim” payments to the latter till 2026 instead, pending further negotiations on the original 40 per cent agreement.
The revenue-sharing formula has been a contentious issue for decades, and the topic of Sabah’s federal revenue may likely feature as a central theme during hustings for the upcoming state election.
On Thursday, Malaysia’s Election Commission announced that the state election on the Borneo island will be held on November 29, with Nomination Day set for November 15.
Malaysia
Armizan’s old clash with Tangau resurfaces as court clarifies Sabah’s 40% right
A new video by Armizan reviving his 2023 debate draws scrutiny after the High Court ruling.
Updated 1 hour ago · Published on 18 Oct 2025 7:55AM
In the clip, the minister in the Prime Minister’s Department replayed his 2023 debate with the Tuaran MP - October 18, 2025
by Jason Santos
A VIDEO released recently by Datuk Armizan Mohd Ali has brought an old parliamentary spat back into focus — one that has taken on new meaning after the High Court’s ruling on Sabah’s 40% revenue entitlement.
In the clip, the minister in the Prime Minister’s Department replayed his 2023 debate with Tuaran MP Datuk Seri Wilfred Madius Tangau.
At the time, Armizan had accused Tangau of “confusing Parliament” for insisting that Articles 112C and 112D of the Federal Constitution were not the same.
But the High Court’s decision on Friday appears to confirm Tangau’s view, declaring that the two provisions are different but connected — with one defining Sabah’s right and the other setting the review process.
“Who is confusing Parliament and the people of Sabah?” Armizan asked in the video.
“Forty per cent of the special grant is our right, but it’s difficult when our own leaders are confused — and worse, confuse others.”
Attacks on Shafie resurface
Armizan also used the video to criticise former chief minister Datuk Seri Mohd Shafie Apdal, accusing him of accepting a “raw deal” from Putrajaya during his time in office.
He claimed Shafie’s Warisan-led government accepted a RM53.4 million payment from the federal government in 2019 — far below what Sabah should have received under Article 112C.
“It’s simple,” Armizan said. “RM53.4 million is nowhere near 40 per cent. When they were in power, they did things differently — they could think ‘federal first, state’s rights later’.”
He further challenged Tangau, who was Shafie’s deputy chief minister at the time, to confirm whether the 2019 Cabinet accepted the offer based on the country’s financial situation and federal debt levels.
Shafie’s response: No review order was signed
Shafie quickly fired back, saying his administration never signed or endorsed any “review order” under Article 112D — unlike the current Gabungan Rakyat Sabah (GRS) government, whose 2022 and 2023 review orders were struck down by the court as unconstitutional.
“I disagreed with the formula,” Shafie said. “Yes, we considered the national financial situation at the time, but ask them to check the Cabinet minutes — I said no, the formula was not right.”
He said the RM53 million payment was meant as a temporary arrangement during a period of tight federal finances, following the 1MDB scandal, while his government continued to push for the full 40% entitlement.
“As far as I know, we never signed anything,” Shafie added. “We insisted on the 40 per cent implementation and nothing less.”
What the court decided
In her judgment, Justice Datuk Celestina Stuel Galid ruled that Article 112C defines Sabah’s 40% entitlement, while Article 112D requires both the federal and state governments to review it every five years.
She called the federal government’s failure to conduct reviews since 1974 “unreasonable and absurd,” declaring the 2022 and 2023 review orders “unlawful and ultra vires” the Constitution.
“The words ‘at the time of the review’ cannot be ignored,” she said, stressing that the review duty was mandatory, not optional.
In essence, the court found that Article 112C establishes the right, and Article 112D sets the process — validating Tangau’s original argument and undermining Armizan’s earlier claim in Parliament. - October 18, 2025
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