By Ian Burrell and Martin Hickman

Special investigation: TV company takes millions from Malaysian government to make documentaries for BBC… about Malaysia. Corporation suspends relations with leading film-maker accused of conflict of interests over ‘palm oil’ programmes

The BBC has launched an investigation into how it broadcast to millions of people around the world programmes made by a company that had received millions of pounds in payments from the government of Malaysia.

It has suspended all programming from the London-based production company, FBC, which since 2009 has made at least four BBC documentaries dealing with Malaysia and controversial issues such as the country’s contentious palm oil industry and its treatment of rainforests and indigenous people.

In a statement, the BBC said: “FBC has now admitted to the BBC that it has worked for the Malaysian government. That information was not disclosed to the BBC as we believe it should have been when the BBC contracted programming from FBC. Given this, the BBC has decided to transmit no more programming from FBC while it reviews its relationship with the company.”

An investigation by The Independent has established that entries in the Malaysian government’s Supplementary Budget 2010 show that FBC Media (UK) was allocated 28.35m Malaysian Ringgit (MYR) – nearly £6m – for work on a “Global Strategic Communications Campaign” ordered by the Malaysian government in 2009. A similar sum (MYR29.34m) was designated to the company the previous year. Concerns over the arrangements have been raised in the Malaysian parliament.

Documents filed with the United States government’s House of Representatives in 2008 show that FBC Media (UK) contracted the Washington-based American lobbying company APCO Worldwide, which it paid more than US$80,000 (£50,000) in 2008 for the purpose of “raising awareness of the importance of policies in Malaysia that are pro-business and pro-investment as well as [showing] the significance of reform and anti-terrorism efforts in that country”.

The BBC’s guidelines on conflict of interest state: “Independent producers should not have inappropriate outside interests which could undermine the integrity and impartiality of the programmes and content they produce for the BBC.”

Having obtained this information on the Malaysian payments, the BBC is conducting an investigation into whether any of the FBC material it broadcast was in breach of BBC guidelines on impartiality. At the same time, CNBC, a business channel owned by the giant American NBC network, has withdrawn “indefinitely” its weekly show World Business, which was made by FBC and featured Malaysia on many occasions. In a statement issued to The Independent, the broadcaster said: “In light of serious questions raised two weeks ago, CNBC withdrew the programme World Business indefinitely and immediately initiated an examination of FBC and its business practices. CNBC has made a formal inquiry to FBC for its explanation in relation to the allegations that have been made.”

FBC denies any impropriety in its programmes for any broadcaster and said via its lawyers that “at no time have the television programmes made for the BBC ever been influenced or affected by our client’s commercial activities”. Its lawyers said that FBC ran both production and commercial divisions, which “are and always have been quite separate and distinct”. They added: “Our client, having reviewed its procedures, is now taking steps to ensure that even the merest appearance of bias or overlap is fully avoided.”

Last night, media regulator Ofcom said: “Ofcom is currently assessing this matter in accordance with our published procedures. We will shortly decide whether to launch a full investigation of the content in question under the broadcasting code.”

The BBC and palm oil

With its lush vegetation and smiling workforce dressed in polo shirts, the footage from the Tuan Mee palm oil estate, to the north of Kuala Lumpur, gave no obvious reason for BBC viewers to think they were being shown anything more than an exotic travelogue and an intriguing business story.

But the coverage of the workings of one of Malaysia’s most important industries, shown on BBC World News’s Third Eye series this summer under the title “The Power of Asia”, formed part of a much bigger picture.

The programme was made for the BBC by a London-based company called FBC Media, which has been hired by Malaysia to conduct a Global Strategic Communications Campaign, and has paid American lobbyists to raise “awareness of the importance of policies in Malaysia that are pro-business and pro-investment”.

In the Third Eye programme, one of several productions made on Malaysia for the BBC in the last three years, viewers were told of the key role of the Malaysian palm oil industry in meeting the growing demand for food in countries such as China and India. “Once an efficient production centre for rubber, Malaysia over the years has increasingly turned to oil palm,” said the voiceover. “The country is now one of the world’s biggest exporters, producing 40 per cent of global supply, and is reaping the economic benefits of higher demand from Asia.”

Azman Abdul Majid, of the Tuan Mee estate, was happy to tell his positive story. “The market now is so high that plantation in palm oil is a very good business in terms of profit, in terms of our benefit,” he said. The BBC show also featured Kuala Lumpur Kepong, another Malaysian palm oil business, and other Malaysian business figures.

The programme dealt with the growing food crisis in Asia and the economic instability and social unrest that may result. It highlighted failures in harvesting rice in China and contrasted that with the successful Malaysian palm oil industry. “There are now more than 200,000 smallholders depending on the sale of palm oil,” the programme stated.

It noted that “stocks in Asia’s food companies from Mumbai to Kuala Lumpur are now hotly traded”, but stressed the need to expand to meet the vast food demand. Indian companies were anxious to invest in Malaysian palm oil plantations “but land prices are now too high”.

Only a brief reference was made to the reasons why the palm oil industry is the subject of fierce debate. Environmental groups complain that its spread has caused devastating levels of deforestation which harm biodiversity, threaten the livelihoods of indigenous people and put at risk the survival of the orang-utan.

The programme took the view that production needed to be stepped up fast: “Asia is now experiencing rising demand and rising prices for grains and oils but production is lagging, as is investment and increases in yield.” It concluded with a sense of urgency: “Asia is going to have to grow its way out of trouble – and the clock is ticking.”

It was not the first time that BBC viewers had shown programming on Malaysia produced by FBC. In February 2011, BBC World News broadcast on its One Square Mile programme a piece from Sarawak in which presenter Rian Maelzer, who describes himself as the “South East Asia Correspondent” for FBC’s CNBC programme World Business, explored the lifestyle of the tribal Iban people and took a boat ride to visit a traditional longhouse.

“Tourism not only brings in money, it also encourages youngsters to keep alive skills that might otherwise have died out,” he reported. “For the past 40 years, the Malaysian government has practised an affirmative-action policy aimed at raising the living standards of indigenous groups.”

The attractive portrayal of Sarawak, and the fight to preserve traditional culture, is at odds with the area’s reputation among environmentalists, who have highlighted the battle of indigenous people in Sarawak to preserve the rainforest against logging and the development of palm oil plantations.

Similar subjects were examined in FBC’s Develop or Die documentary for the BBC in March 2009. The programme opened with a cartoon that drew comparisons between colonialists who asked “Are the natives friendly?”, and modern-day environmentalists who ask “Are the natives eco-friendly?” It examined the benefits of the Malaysian palm oil industry and its value to the economy, quoting smallholders whose lives have been transformed for the better by palm oil production.

While it quoted environmentalists, it reported that “the major players in the industry resent the sweeping nature of environmental campaigns”. The programme concluded by pointing out the pressure on nations such as Malaysia to develop.

“Now that their economies are more likely to fuel global growth in the next few years, they are more than ever questioning why they should be punished by Western-imposed standards.”

As part of its Develop or Die series, BBC World News also screened an FBC co-production, “World Debate: Islam and Democracy in