Due to a dispute between the Sarawak Chief Minister Abdul Rahman Ya'kub and his nephew Abdul Taib Mahmud (at the time the Federal Natural Resources Minister) over oil rights, then Prime Minister Abdul Razak dispatched Razaleigh to visit Rahman at the latter's private residence. Razaleigh suggested the formation of a company instead of a statutory body where the former would distribute profits equally between the Federal and the State governments. Rahman was agreeable to this proposal. Upon Razaleigh's return to Kuala Lumpur, the Prime Minister tasked him with drafting, in secret, the Petroleum Development Act to be completed before the 1974 Malaysian general election. Rahman was in regular contact with Razaleigh to ask for updates about the terms offered by the Federal government. Razaleigh told Rahman about the abolishment of the concessions system and that 5% of oil revenues will be redirected back to the respective oil-producing States as royalty payments. A similar amount would go to the Federal government. Rahman considered this a fair deal and gave his blessings.