Sultan of Brunei

He was once the world’s most notorious playboy. Prince Jefri, wayward brother of the Sultan of Brunei, would book entire floors of the best hotels for his entourage when they jetted in on spending sprees which saw millions spent on everything from fast cars to horses.

But after a decade of self-imposed silence Prince Jefri has hit back, claiming that he has become the family’s “fall guy”.

Other members of the ruling family were responsible for much of the excess that has led to his infamy, he claimed, in an interview at his home in London.

“I am no angel for sure, but I have been the fall guy,” he said, speaking publicly for the first time as the dispute heads back to the British courts.

The youngest brother of the Sultan of Brunei – one of the richest men in the world – Prince Jefri became a byword for excess in the 1990s amid reports of almost unbelievable spending and high-living. The brothers became tabloid fodder after a family dispute reached the British courts, which resulted in restrictions being imposed on his spending power.

Yesterday Prince Jefri was given leave to appeal to the Privy Council in an attempt to win a more generous settlement from his family. He will now try to persuade the council to overturn a ruling in the Brunei courts which could see his assets in the UK and around the world seized.

The appeal will be heard in public, which could prove deeply embarrassing for the Sultan of Brunei with new revelations and allegations. It could also throw light on the ownership of a mystery Citigroup bank account – the 555 account – into which billions of dollars is said to have been deposited.

Brunei – a tiny Asian state the size of Norfolk – had billions of “oil-dollars” to spend in the 1990s. As finance minister and head of the Brunei Investment Authority (BIA), Prince Jefri toured the world investing in property and snapping up hotels and trophy assets including retailer Asprey & Gerrard and the Dorchester Hotel in London.

But he was later accused by his brother of misappropriating more than $15 billion as he went on his global spending spree.

During a bitter legal battle with his brother, tales of private yachts and fleets of private aircraft (including one Boeing 747 airliner allegedly converted to carry polo ponies) emerged alongside claims of high living. But Prince Jefri claims that many of the tales are exaggerated.

“It is strange when you are reading it. It is upsetting particularly for my children,” he claimed.

He only used the infamous luxury yacht Tits (complete with the tastefully named tenders: nipple one and two) four or five times. “The whole family used it. I did not have time,” he said. As for the pornographic watches that, reportedly, showed a couple copulating on the hour, these days his choice of watch appears to be much more restrained.

In person it is hard to reconcile Prince Jefri with his playboy image. He is impeccably dressed and incredibly fit for a man who celebrated his 52 birthday two weeks ago (his 17 children – aged between 1-33 – gathered in Paris to mark the occasion). But he is also short, quiet and restrained. He could, even, be described as shy.

The latest legal battle dates from an out-of-court settlement agreed in 2000, under which the BIA agreed to drop its pursuit of Prince Jefri if he returned assets to Brunei. But the peace quickly broke down. Prince Jefri’s office in Brunei was raided – “they took all my things, they took my documents and personal belongings including jewellery” – as both sides accused each other of breaching the agreement.

Prince Jefri claims that the 2000 settlement included a “lifestyle agreement” that allowed him to hold on to a number of US hotels and homes in London and Paris as well as a trust fund to provide for him and his family. He alleges the agreement has since been breached, however the BIA claim that Prince Jefri has failed to return assets as agreed in 2000.

Following yesterday’s ruling the row now looks set to be played out in the London courts.

Suggestions that he has hidden assets are rejected by Prince Jefri. “You cannot hide a hotel,” he said. And he claims that although he may have legally owned assets – like the boats and planes – they were in fact used by other members of the family.

For example, he claims, he bought a number of Old Master paintings for his brother. “I would buy them. He would keep them. He would come to the house and take what he wanted. It was between brothers. He knows what he took,” he said. A spokesman for the Sultan of Brunei declined to comment.

He has, until now, kept his own counsel in order to protect his brother. “I did not want to tarnish him. It would have reflected on him,” he said.

It may seem a bizarre claim – given that they have been in dispute for almost a decade and have not spoken for over two years – but then Prince Jefri’s relationship with his brother is complicated. In both his London and Paris homes there are numerous gold-framed official portraits of his brother in full military regalia on sideboards and tables. The two brothers were obviously close: playing on the same polo team for a number of years. “We were very close. He introduced me to the game,” explained Prince Jefri, who lights up at the talk of polo.

But in recent months he has become increasingly concerned about his brother’s rule of Brunei.

In particular recent changes to the Brunei constitution have sparked concern. “I never thought he would go this far. You cannot even say anything bad about him. I would be imprisoned or fined if I said these things in Brunei,” said Prince Jefri.

“He can change almost anything he likes by decree. I worry about what will happen when the oil runs out – 90 per cent of the economy is dependent on oil and gas,” added Prince Jefri, who argues that after four decades a “state of emergency” should be lifted.

But despite the attack on his brother’s legal powers and immunities Prince Jefri still hopes to reach an amicable settlement: “I have tried to resolve this … I am still eager to deal with this.”

He added: “I am tired of lawyers. It is frustrating. It is sad. I have seen too many lawyers.”

He has not felt able to return to Brunei for a number of years and freely admits that he misses home. “I have lots of friends there. I would like to visit, my family is still there, but it is very difficult now.”

He is one of the world’s richest men but the prospect of shelling out £4 million on a gold-lined miniature Koran tested the legendary largesse of even the Sultan of Brunei.

In a sign that the South-east Asian potentate’s extraordinary wealth has its limits, he allegedly backed out of a deal with Australian businessmen to buy the matchbox-size holy book in 2005.

Adding to the exoticism of the saga, the Australians claimed to have bought the tiny treasure from a former colonel in the KGB, who told them the Ottoman Empire relic had been in his family’s possession for more than a century.

The 61-year-old sultan had allegedly agreed to buy it as a wedding present for his third wife, a glamorous television hostess 32 years his junior.

The dispute went to court and yesterday the sultan scored a victory, with an Australian judge ruling that the case was outside the court’s jurisdiction and that the three businessmen should instead pursue it through Brunei’s legal system.

But the prospects of that happening are almost zero because the sultan is immune to prosecution in his tropical fiefdom, a former British protectorate on the north coast of Borneo.

He can do no wrong, either in a regal or personal capacity.

“The fact of us going to Brunei to lodge a lawsuit against the sultan is something that can’t happen, given the fact that he’s declared himself infallible,” said Michael McGurk, one of the businessmen who claimed breach of contract.

“The sultan should be called to account … he’s managed to get himself a ‘Get Out of Jail Free’ card.”

He said the court’s decision was a travesty of justice.

“No one should be above the law in Australia.”

He added that the dispute cast doubt on the sultan’s reputation as a generous benefactor as he and the other owners had guaranteed that part of the proceeds of the sale would go to Islamic charities in Sydney.

“All of those charities have lost out today as a direct result of this judgment,” said Mr McGurk.

The business syndicate argued that the sultan, a graduate of Sandhurst, had agreed to buy the miniature Koran, with negotiations conducted through his private secretary and godson.

The businessmen said they travelled to Brunei on numerous occasions to try to finalise the deal, spending more than £200,000 on flights, accommodation and legal costs.

But lawyers for the sultan had earlier argued that the case should be dismissed, calling it “a joke”.

His reluctance to part with £4 million may be explained by the wild spending spree he and his now out-of-favour brother, Prince Jefri, embarked on in the 1980s and early 1990s.

Their extravagance guzzled millions of dollars of Brunei’s oil and gas revenue and reduced the sultan from being the world’s richest man to barely making the top 20, according to Forbes magazine.

The Koran, which can fit into the palm of a hand, is encased in a bejewelled box.

It was authenticated last year by the head of the department of Arabic and Islamic Studies at Sydney University, who described it as “a rare copy of the Koran of exceptional characteristics”.

It dates back to the 16th or 17th century and was intended as a sacred object rather than as a text to be read.

The syndicate will consider appealing the court’s decision.

Bandar Seri Begawan (Thomson Financial) – Brunei, which already boasts one of the highest per capita incomes in Asia, wants to vault into the world’s top 10, according to a long-range government development plan.

The tiny, oil-rich nation on the weekend unveiled its ‘Wawasan Brunei 2035′ plan which urged better implementation of development initiatives in order to accelerate economic growth.

The government identified tourism as a potential revenue generator, called for improvements in transport and communications infrastructure, and greater investment in research and development, according to an executive summary of the ‘Brunei Darussalam Long-Term Development Plan’.

Brunei is aiming for a ‘dynamic and sustainable economy with income per capita within the top 10 in the world,’ the summary said.

The government also wants Brunei to have a quality of life that is among the world’s top 10, it said.

The nation has been debating how to secure its economic future amid dwindling oil and gas resources.

Brunei is the third-largest oil producer in Southeast Asia after Indonesia and Malaysia, and the world’s fourth-largest producer of liquefied natural gas, according to the Brunei Yearbook 2007.

Reserves are expected to last for at least two more decades based on current production rates.

The government’s long-range plan said economic progress has been inconsistent. It said a delay in implementing development projects has contributed to lower economic growth, limiting effectiveness of the government’s fiscal stimulus strategy.

One of the key challenges to accelerate economic growth rates during the 2007-2012 six-year plan ‘is therefore to enhance the national capacity to carry out development initiatives,’ the government’s report said.

The plan aims to increase by at least 7 percent a year the number of tourists staying in paid accommodation, with an immediate target of 50-60 percent average hotel occupancy this year.

The report also calls for a 50-percent increase in tourism-related employment by 2010.

The transport and communication sector will focus on improving infrastructure, with emphasis on reducing travel time and opening up new access within the country, it said.

Another important feature of the initial six-year plan is research and development (R&D), the report said.

‘Investment in R&D is aimed at narrowing the gaps that exist between Brunei Darussalam and its neighboring countries in the field of science, technology and innovation,’ it said.

The government will also introduce a new Environment Act to strengthen environmental protection ‘and ensure sustainable management of the country’s national resources,’ the report said.

Brunei’s government has allocated 9.5 billion Brunei dollars (7.0 billion US) to implement the initial six years of its long-range plan, the Borneo Bulletin on Sunday quoted Kamis Tamin, permanent secretary in the prime minister’s office, as saying.

The country’s mineral wealth has brought Brunei’s citizens, who number fewer than 400,000, an array of social welfare benefits.

Brunei is a Malay Muslim absolute monarchy ruled by Sultan Hassanal Bolkiah, who last year celebrated 40 years on the throne.

The sultan is prime minister, defense minister, finance minister and head of Islam in the country which occupies a sliver of Borneo island. It gained full independence from Britain in 1984.

Multicolored triumphal arches are being erected throughout this capital and across the roads leading to it. Garish signs are going up on grandiose Government buildings, raw, new office towers and shoddy Chinese shops, and chains of Christmas-tree bulbs illuminate them.

The theme of the decor is the number 42, because Paduka Seri Baginda Sultan Haji Hassanal Bolkiah Muizzaddin Waddaulah, the 29th in his line of rulers of Brunei, will celebrate his 42d birthday on Friday.

Four parades in the capital, where about one-quarter of the country’s population of 227,000 lives, will be the highlights of 10 days of celebrations. Perhaps, as in most years, some of the prison inmates will be set free. A Dwindling Breed

In the 21st year of his reign and from a newly built palace of 1,800 rooms – a more recent, somewhat smaller palace houses the second of his two wives – Sultan Hassanal Bolkiah is one of the last remaining absolute monarchs, freely spending and investing the riches that accrue from the petroleum and natural gas of his realm on the northwest coast of Borneo island.

Where the public purse ends and the Bolkiah family’s private assets begin is one of Brunei’s enduring and closely guarded mysteries. But there is no doubt that the ruler and his family are among the most conspicuously rich people in the world, and that by Southeast Asian standards, most people in Brunei live in the comfortable-to-wealthy range.

There are almost half as many cars as people, making for surprising rush-hour traffic jams in one of the world’s smallest capitals. Free education and health services, exceptional for Southeast Asia, are the norm here. Unlike the rest of the region, Brunei has a labor shortage, and unemployment is rare.

Brunei’s petroleum may run out in a quarter-century, geologists say, but with foreign exchange reserves of $20 billion, its small population can live from the earnings of the Sultan’s investments. Plenty of Money, Few Freedoms

Brunei has a per capita income higher than that of the United States. The Borneo Bulletin, a semi-official newspaper, put it this week at ”in excess of $17,500.” Because of the personal character of the ownership of Brunei’s economy, the exact figure is secret.

Brunei has no national debt, trade deficit or income tax. It also has no semblance of democracy, except that at the village level citizens choose their chiefs.

A constitution somewhat limiting the monarch’s absolute power, adopted in 1959, has never been put into effect. Local elections in 1962 gave 54 of 55 seats to opponents of the Sultan’s father. The winners were not seated, a rebellion erupted with Indonesian aid and was crushed, its leaders were imprisoned or fled and no more elections have been held.

There is no free press, and state-owned television is devoted largely to the Sultan’s activities. News from the Communist world or about religions other than Islam is effectively banned. Handel Passes the Censors

Earlier this year, an amateur choral group that wished to perform Handel’s ”Messiah” had to submit the text to the Home Ministry, the top police authority, before receiving permission to sing.

Last March, the Sultan announced the detention of two conservative businessmen who had served as president and secretary general of a small party that had been formed at official instigation but had, surprisingly, adopted critical views.

At a meeting in New Zealand, Abdul Latif Chuchu, the secretary general, had criticized the Sultan’s absolutism and called for parliamentary democracy and urged the United Nations Human Rights Commission to hear his complaints.

The Sultan dissolved the party. Its two officials remain imprisoned without trial. Politically interested Bruneians said they did not know how many people are detained for political offenses, nor whether some of those arrested in 1962 were still imprisoned. Diplomats’ estimates range from fewer than 10 to about 40. Dissent Generated From Abroad

Much of the criticism that reaches here comes from exiles who enjoy a measure of tolerance in Malaysia and smuggle leaflets into Brunei. The criticism centers on the great wealth and conspicuous use of it by the Sultan and other family members.

”Since I’ve been here, I have seen unending coming and going of jewelers and others selling the best of luxury goods from every Western country,” a diplomat said. ”And the amounts they sell are astounding.”

An occasional visitor to the palaces said that every time he visited he was shown newly acquired paintings by old and modern masters, of inestimable value. ”The palace absorbs vast sums of money in interior decoration,” another diplomat said. ”It’s a cross between Ali Baba’s cave and an Italian furniture catalogue.”

The Sultan, a polo enthusiast, has created an extensive complex of polo grounds, air-conditioned stables for perhaps 100 of his own ponies and a stud farm. In official publications the ruler’s passion for the game, which is not known as a sport for the masses, is ascribed to higher motives.

”Through sport, particularly polo, he has sought to enhance and develop good relations in Southeast Asia and in Europe,” the current official compendium of ”Facts and Figures” reports.

There is probably no better vantage point on the changes creeping across this oil-drenched sultanate than astride one of the sleek, powerful horses at the Jerudong Park Polo Club.

Not long ago, the club’s 200 imported Argentine ponies, immaculate fields and opulent clubhouse were restricted to family and guests of Sultan Hassanal Bolkiah. Now, in what this country has declared Visit Brunei Year, anyone can ride for as little as $20.

The open-stable policy, though, is far more than equestrian outreach. The club was built in a decade of royal extravagance that, coupled with the Asian financial crisis in 1997 and 1998, devastated Brunei’s wealth and helped push its economy into a recession from which it has yet to fully recover.

In response, Brunei’s multibillionaire monarch has assumed the unlikely role of economic disciplinarian, trying to drag his sleepy, conservative Muslim enclave into the global economy. Selling pony rides is part of a larger effort to refill the coffers, lure tourists and investors, and wean Brunei from a long overdependence on oil and government money.

”We have to be more competitive,” said Wahab Juned, director general of the Economic Council Secretariat, whose 12 members were appointed by the sultan to draft an economic blueprint. ”We need to create jobs.”

Skepticism over Brunei’s efforts abounds. Brunei has been vowing to diversify its economy since the mid-1980’s, but reductions in the dominance of oil have been achieved largely by raising government outlays. Surging oil prices have taken some of the urgency out of the reform drive. But while the sultan’s planners have honed their free-market vocabulary, few are willing to discuss how economic liberalization might reduce the dominance of a man most will refer to only as ”His Majesty.”

”What Brunei needs now is transparency and accountability in the government,” said Hatta Zainal Abidin, president of the Solidarity National Party, the country’s only legal political opposition group.

The sultan’s family has been ruling this part of Borneo for six centuries, gradually ceding territory to what is now Malaysia to the point that modern Brunei’s roughly 300,000 people live in an area the size of Delaware. Brunei is so small that it has no central bank, instead pegging its currency to Singapore’s. The capital remains a quaint backwater, where most women cover their heads, buildings rise no higher than the central mosque and alcohol is banned.

The discovery of oil here in 1929 clinched Brunei’s fortune and has made the sultan, 54, one of the world’s wealthiest individuals, with a net worth estimated at $16 billion. His spending is legendary: he has two palaces, one for each wife, the largest a $350 million, 1,788-room building bigger than the Vatican. He paid $53 million in 1985 for London’s Dorchester Hotel, then two years later spent an estimated $185 million to buy the Beverly Hills Hotel.

Since the sultan is the absolute ruler, his wealth and the nation’s are indistinguishable, even though Brunei is technically a constitutional monarchy. The constitution and legislature have been suspended since an abortive rebellion in 1962. The dearth of elected officials keeps the sultan busy: he is the self-appointed prime minister, finance minister, defense minister, police superintendent and chancellor of the national university.

Autocracy has been good to Bruneians. They pay no income tax. Education and health care are virtually free. And despite its generosity, Brunei’s government has no debt.

Brunei is no Kuwait, however. There are no flashy boutiques lining the streets of the capital, Bandar Seri Begawan; Mercedes do not clog the parking lots. On paper, Brunei’s average personal income is on a par with Canada’s, but it is anyone’s guess what the average income is if the royal family is excluded.

The 207,000 barrels of oil Brunei produces every day still account for roughly 40 percent of its economy and almost 90 percent of its exports. Oil is the private sector’s biggest customer and the government’s chief source of revenue. Yet Brunei Shell Petroleum, the government’s joint venture with the Royal Dutch/ Shell Group and the dominant oil producer, hires only about 2,800 Bruneians.

As a result, nearly half the population works for the government, a situation that authorities long ago realized was unsustainable. But it took the country’s previous finance minister, the sultan’s famously flamboyant playboy brother Prince Jefri, to drive the point home. Prince Jefri was in charge of the super-secret Brunei Investment Agency, or B.I.A., which invests the nation’s oil wealth, and of Brunei’s largest private company, Amedeo Development. Amedeo poured state money into building projects — power stations, street lights and the country’s cellular phone network — helping to halve oil’s role in the economy.

Amedeo built the playground at Jerudong, including the polo club, a country club, an amusement park and a $1 billion, 600-room hotel with real gold leaf on the walls, a saltwater lagoon and its own golf course designed by Jack Nicklaus.

It all began to unravel in 1997 with a mysterious rift between the brothers. In February, the sultan took over as finance minister. The next month, a former Miss USA and six other American women sued the two in an American court, accusing them of trying to turn them into sex slaves. The sultan denied the charges, and the case was dismissed on the grounds that the men had diplomatic immunity.

The suit was followed by a conservative crackdown in Brunei against un-Islamic practices.

In July 1998, the sultan fired Prince Jefri from the B.I.A. and Amedeo. Auditors went in to find Amedeo teetering under $6 billion in debts and $16 billion in losses. Worse, some Amedeo projects appear to have been financed or backed with B.I.A. funds. Last year, the sultan sued the prince to recover $15 billion he said had been misappropriated. The prince denied the charges.

Before the court could force the prince to shed light on the inner workings of the B.I.A., he and the sultan settled, with the prince agreeing to relinquish his assets in return for a $300,000-a-month allowance.

Outside the Jerudong amusement park, some of the prince’s 2,000 cars can still be seen parked behind ”For Sale” signs. The Jerudong facilities were put under private management, with the sultan handing over all but 93 of his ponies to an Indonesian company as part of the new equestrian center.

Cleaning up the Amedeo mess was devastating to the economy. Not only did it mean pulling the plug on the nation’s biggest private-sector investor, but it forced the sultan to halve government expenditures.

Combined with slower oil exports, Brunei’s economy shrank 4 percent in 1998. Rising oil prices have since pulled part of the economy back, but the nonoil economy remains in recession, and incomes and opportunities for new job seekers are falling.

Government officials say they hope the embarrassing financial fiasco will jolt the country from complacency. ”It’s a blessing in disguise,” Mr. Wahab, of the Economic Council Secretariat, said. ”These things have opened up our eyes.”

The sultan established the council in 1998, and last year it evolved into a 12-member secretariat charged with devising a more balanced economic diet. The secretariat’s solution is to cut government spending and subsidies, privatize government-run companies and find new sources of cash — even by issuing Brunei’s first government bonds. At the same time, the secretariat hopes to stimulate the private sector by promoting Brunei as a financial center, tourist destination and high-technology center.

There are formidable obstacles, the first being that half the nation’s work force is happy working for the government. Government salaries exceed most private-sector wages, according to Rosni Tungkat, director of the finance ministry’s department of economic planning and development. And while government employees get low-interest loans to buy a car and a house, private-sector employees live with the risk of losing their jobs in a country with no unemployment insurance.

Despite having such a vast policy machine, Brunei’s progress is hampered by one major bottleneck, critics say. ”At the end of the day, the sultan appears to be the one who makes the decision on every economic matter,” said one economist, who, like almost everyone working in Brunei, insisted on anonymity. Government planners, he said, ”have this way of thinking very big and doing very little.”

Few policy planners even know just what resources are available. The B.I.A. discloses nothing; even talking about its investments is forbidden by law. ”I myself don’t know how much we have or how much we have earned,” Ms. Rosni said.

Gradually, progress is being made. The government has frozen hiring and replaced its pension plan with a national fund that applies to nongovernment workers as well, all to encourage more civil servants to take the plunge to the private market.

It recently opened the country’s first toll road. There is even talk of charging for health care and education and instituting an income tax.

Also in the works is a local stock market, where the government plans to sell to private investors a bevy of state-owned agencies, from the national telephone operator to the airport. The secretariat is also considering the creation of a national oil company to explore for oil and refine it independently of Shell. Last month, the government inaugurated a program with several banks to provide low-interest loans to local entrepreneurs.

”This is what we’ve been waiting for,” said Abas Mohamed, deputy president of the National Chamber of Commerce and founder of a Web design company. ”It will take another couple of years, but the entrepreneurs in Brunei will be stronger.”

The Ministry of Industry and Primary Resources, meanwhile, is struggling to lure foreign investment in everything from shrimp and poultry farms to dot-coms and pharmaceutical research, according to Matdanan Jaafar, director of the ministry’s planning and industrial promotion department.

Mr. Matdanan acknowledges that interest has been low so far. ”Our incentives are not up to date,” he said. ”And we also have a long approval process.” To increase Brunei’s allure, he said, the government is considering doubling its corporate-tax exemption for foreign investors to 10 years.

Mr. Matdanan says Brunei has a better chance promoting itself as an exotic destination for tourists visiting the rain forests of Borneo. Travel agents are less sanguine. While Brunei’s ban on liquor is no deterrent, Marcel Boeni, a visiting Swiss agent, said its high prices and small size make it a poor alternative to neighboring Malaysia.

And while Jerudong’s attractions are high on the list of potential draws, they are not likely to bring crowds, Mr. Boeni said. After all, he asked, ”Who rides a plane 17 hours to learn how to ride a horse?”

The Sultan of Brunei, the richest man in the world until recently, has been forced to liquidate millions of pounds of investments to pay off debts.

Within the last month, the Sultan, Sir Muda Hassanal Bolkiah, has liquidated up to pounds 1bn worth of internationally managed investment portfolios to repay loans for which they were collateral.

In the last year, the man who can afford to have his Aston Martin sports cars flown to the British factory to have the engine oil changed, has seen his personal fortune fall by an estimated $2bn (pounds 1.3bn). He has also lost his title as Forbes magazine’s World’s Richest Person.

The unprecedented cash-raising measures have been forced on the ruler of the tiny South-east Asian state by a combination of the wide-ranging economic meltdown in the Far East and the collapse on the world market in the price of oil – the source of most of Brunei’s wealth.

Just how serious his problems are is not clear as details of the Sultan’s wealth are considered a state secret. Any problems the Sultan is facing will obviously be affected not only by the uncertainties of oil prices, but how long the recession in the Far East lasts.

Yesterday, it was reported that the state-run Brunei Investment Agency (BIA) had run down funds with Morgan Grenfell Asset Management, JP Morgan – the American investment house – Citibank and the Japanese bank Nomura.

“This is quite serious,” said one source yesterday. “It clearly shows there is a cash crisis of some sort that he is having to deal with.”

The Sultan himself is taking the matter seriously. The Independent has learnt that last month he called his investment managers to the capital of Brunei, Bandar Seri Begawan, for a crisis meeting. But the prices and the recession facing the former high-growth economies may only be part of the problem that is threatening the finances of the man whose name has become synonymous with vast, unimaginable wealth.

In recent months, the Sultan and his brother, Prince Jefri, have been locked in a bitter dispute following a series of allegations that the Prince was leading a wild and extravagant lifestyle, financially and sexually.

Earlier this summer, one of Prince Jefri’s companies – Amedeo Development Corporation (ADC) – was closed with outstanding debts of up to pounds 10bn. Prince Jefri himself was ousted as head of the BIA, the last post of any importance he held within the state, and he has fled to the United States.

From there he claimed that his dismissal was the result of the increasing influence of conservative government advisers who wished to turn Brunei into a fundamentalist Muslim state.

News of the Sultan’s asset liquidation comes as teams of accountants work through records in Brunei’s Ministry of Finance to ascertain exactly how much the country is worth.

Senior partners from the accountancy firm, Arthur Andersen, have also been appointed by the Sultan as special managers and inspectors to a number of companies, including the now defunct ADC.

“Clearly things have not been going as they should,” said a spokesman for the accountancy firm. “It will be the job of the managers and inspectors to go in and have a look at what has been happening and make their report and recommendations for the future.”

Most analysts believe the Sultan’s wealth and the general wealth of Brunei are one and the same thing – he technically owns all of the 2,200- square mile country – and any reduction of his personal fortune could hit the country hard.

The population, around 300,000, pays no income tax, social services are free and lavish while the education system includes grants for overseas education, and enables children from poorer homes to enter professions.

All this has been achieved from the wealth of oil, which started to make Brunei rich in the early 1970s. But some estimates predict oil reserves will last no more than a further 25 years. Pressure on the Sultan to create alternative wealth is growing and things will not have been helped by the latest developments.

Perhaps it is too soon to start feeling sorry for the Sultan. While he may now be only the second-richest man in the world, this is more to do with the inexorable rise of the wealth of Microsoft’s Bill Gates, rather than a collapse of the Sultan’s.

It is worth bearing in mind that although Mr Gates has built up a resounding pounds 31bn, the Sultan has a respectable pounds 22bn. And he earns more than pounds 70 a second.

He is still very rich.

The fight between Brunei’s national investment firm and the sultan’s brother, Prince Jefri Bolkiah, has reached Singapore’s courts.

The prize in this legal battle: the prince’s now-unoccupied Nassim Road mansion, worth at least $120 million and believed to have housed valuable artworks and other assets.

The prince, the younger brother of Sultan Hassanal Bolkiah, is already mired in tussles with the Brunei Investment Agency (BIA) over his assets elsewhere, including those in London and New York.

The BIA, which the sultan oversees, is the main agency holding and managing the Brunei government’s General Reserve Fund and its external assets.

In the fight for the Nassim Road property, the BIA is represented here by Senior Counsel Vinodh Coomaraswamy.

According to court documents filed in the Supreme Court, the BIA is seeking a court order to compel the 53-year-old prince to hand over the title to the premises.

The Registrar of Titles here requires a Singapore court order for the BIA to be registered as the legal owner of the mansion.

Prince Jefri, defended here by lawyer George Pereira, is contesting the application.

A hearing has been fixed for October.

The plush Nassim Road premises, named Arwaa mansion, were understood to have been used by Prince Jefri up to the year 2000.

The house, having been developed as a single structure from two back-to-back properties with different addresses, has entrances on two roads.

Although unoccupied, it is guarded round the clock by private security staff; cleaners are also there regularly.

In a bid to keep it in his possession, Prince Jefri is expected to argue, among other things, that Arwaa mansion was excluded, and therefore separate, from matters heard before the Brunei courts as part of the enforcement proceedings started there against him in 2004.

The prince, who left Brunei that year and now lives in France, is expected to ask the courts here to return Arwaa mansion to him.

His assets in London are still the subject of court enforcement.

Over in New York, a court ordered in March that he hand over ownership of the plush New York Palace hotel in Manhattan to the Brunei government.

It has been reported, however, that the court has barred its sale because the prince is disputing the order for a chance at ownership.

I came to Brunei by accident.

While trying to book a flight from Darwin, Australia, to Bangkok, I happened upon Royal Brunei Airways, which offered the cheapest airfare. Rather than endure the eight-hour wait between connecting flights in Brunei, I decided to spend a few days in this tiny Muslim sultanate. Although at times I found myself rummaging around for something to do, I managed to see one of Southeast Asia’s most remarkable structures and had the best hotel experience of my life.

The country’s complete name is Negara Brunei Darussalam, which loosely translates as “Brunei — abode of peace.” And what a peaceful abode it is. Serious crime is rare, liquor is stringently forbidden, nightlife is practically nonexistent, and the country’s largest city, Bandar Seri Begawan (population 60,000), seems to shut down before dark. (Even during the height of rush hour, when the streets were jammed with late-model Mercedes Benzes and BMWs, I never heard a horn honk.)

Located in the north end of the island of Borneo, Brunei is less than half the size of Rhode Island and supports one-third of that state’s population. The 350,000 predominately Malay citizens are ruled by His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah, better known as the Sultan of Brunei. The 29th in a long line of Sultans, he supports two wives and is believed to be as rich, or nearly as rich, as the world’s richest man — Bill Gates.

Abundant revenue from offshore oil wells at Seria and Muara has made the Sultan a multibillionaire. His people enjoy free education, free medical care, high minimum wages and no taxes. Everyone is entitled to a pension, as well as low-interest loans and subsidies for automobile purchases (which might explain the abundance of Mercedes Benzes and BMWs).

After checking into the Brunei Hotel’s clean and relatively inexpensive digs ($32 U.S.) in the center of Bandar Seri Begawan, I walked the quiet streets and within less than an hour had seen just about everything. Aside from the Yayasan Sultan Haji Hassanal Bolkiah Complex, a posh shopping mall commonly referred to as the Yayasan, the city has three notable features: the water village of Kampung Ayer, the Omar Ali Saifuddien Mosque, and the Sultan’s private palace — which is off-limits to visitors.

Visible from nearly every vantage point in the city, the Omar Ali Saifuddien Mosque is a sight to behold. Built in 1958 and named after the present Sultan’s father, the fortresslike edifice supports a huge golden dome, with several smaller domes perched high atop rectangular pillars. Inside the main dome lay a Venetian mosaic made of 3.5 million pieces. The walls are exquisite Italian marble, as are the floors upon which intricately woven prayer mats are laid.

Outside, I gazed at the mosque’s shimmering image in the reflecting pool. As if on cue, the Muslim call to prayer (the adhan) began drifting from speakers suspended beneath the golden domes. Sung by a crier, or muezzin, the Arabic song has a rhythmic, mesmerizing quality that permeates the city five times each day.

A few steps away from the mosque lay Kampung Ayer, one of the city’s famous stilt villages. Poised on rotting wooden stilts above the Brunei River, many of the shacks are crumbling, brightly painted wooden structures. Farther upriver is a proliferation of new, characterless, prefabricated shacks with concrete stilts. A maze of wooden plank walks connect the stilt villages to each other and to schools, mosques and mom-and-pop convenience stores. Half the city’s residents live in these above-water communities. Each morning the typical villager walks the plank from his home, flags down a water taxi and crosses the river to a job in a city center.

After ambling aimlessly along the plank walks and receiving hesitant nods from residents along the way, I found myself with an empty itinerary and two nights remaining before my flight to Bangkok. Hoping to find a bargain, I called the Empire Hotel and Country Club (www.empire.com.bn), the best hotel in Brunei and a member of the Leading Hotels of the World. I was surprised to learn that the weekend rate for a standard room was only $131 U.S.

Three things struck me as I entered the Empire Hotel: the expansive lobby with a huge crystal chandelier in the shape of an inverted pyramid, an amazing marble floor motif, and the seven-story atrium, where white marble columns stand as tall as California redwoods.

My room was anything but standard. Like all of the 423 rooms and suites, it had a private balcony facing the South China Sea. The bed was fitted with fine Egyptian cotton sheets. The bathroom was a marble palace with a tub deep enough to drown in.

Because I don’t play golf and didn’t feel like bowling, I passed up the flood-lit, 18-hole course and the high-tech, six-lane alley. Instead, I walked next door and watched “Lord of the Rings: The Two Towers” at The Empire’s lavish three-screen Cinema, furnished with deep leather sofas instead of chairs.

It was the best time I’ve ever had at a movie.

But my most vivid memory is the arrival of His Highness Shaikh Khalifa Bin Salman Al-Khalifa, prime minister of Bahrain. The hotel literally laid out the red carpet for him, and I stood at the edge of the carpet amid the crowd of oglers assembled at the lobby door. After an hour, he appeared. Dressed in a flowing robe and headdress, he stepped from a limousine with his entourage and was quickly whisked away by a team of hotel managers.

Later, I learned that the prime minister and his staff took 49 rooms, including the emperor’s suite at nearly $13,000 U.S. per night.

I wonder if he got the weekend rate.

The Sultan of Brunei owns the world’s largest residential palace with 1,788 rooms, the world’s largest luxury car collection, a $250 million private Boeing 747 with gold plated toilets, a billion-dollar theme park, his brother was the world’s most notorious playboy with a $500 million yacht, and most importantly, Hassanal Bolkiah inherited from his father a tiny Muslim country of 300,000 souls in Asia producing 200,000 barrels of oil daily.

The Sultan and his brother the Prince Jefri Bolkiah are known throughout the world for their spending habits, palaces, hotels, yachts, airplanes, luxury cars…etc.