Thu, Jun 07, 2018 - Page 6 News List

Malaysia links China to 1MDB scandal

‘HIGHLY SUSPICIOUS’:A Chinese state-run firm has already drawn 88 percent of the value of a pipeline project, but only 13 percent of the work has been finished


Malaysia’s ousted leader has denied wrongdoing in a multibillion-dollar China-backed pipeline deal after the new government said the project was “highly suspicious” and linked it to a massive financial scandal.

A company owned by the Malaysian Ministry of Finance signed the 9.4 billion ringgit (US$2.37 billion) deal in 2016 for a Chinese state-owned company to build a gas pipeline and an oil pipeline.

Former Malaysian prime minister Najib Razak — toppled in elections last month — was in office at the time, and is battling allegations that billions of dollars were looted from sovereign wealth fund 1 Malaysia Development Bhd (1MDB).

The pipeline deal was one of a series of big-ticket, Beijing-backed projects signed during Najib’s leadership, fueling suspicions China was helping the scandal-mired leader pay off debts racked up by the stricken fund.

Malaysian Minister of Finance Lim Guan Eng (林冠英) on Tuesday said that 8.25 billion ringgit has already been drawn down by the Chinese company building the pipelines.

That amounted to almost 88 percent of the project value — yet only 13 percent of the work had been completed, he said in a statement.

Lim said he had instructed officials to file a report about the “highly suspicious transactions” with anti-corruption authorities, adding that the company behind the deal had links to a scandal-mired former subsidiary of 1MDB.

“We have documents to prove ... it’s all part of the 1MDB scam,” Lim was quoted as saying in newspaper the Star.

State-owned Export-Import Bank of China provided 85 percent of the funding for the project, with the rest required to be raised by issuing sukuk, or Islamic bonds, Lim said.

Najib late on Tuesday said in a statement that there was no wrongdoing in the project, adding that he and Chinese Premier Li Keqiang (李克強) witnessed the signing of memorandums of understanding for the deal in Beijing last year.

The toppled leader, who has been questioned twice by graft investigators since losing power, said he was “confident” that all necessary “procedures and laws have been complied with” in the deal.

“Great care” should be taken “when making such serious politically motivated public allegations involving foreign state-owned companies, as it may have a negative effect on foreign relations and international trade,” Najib said.

Public disgust over allegations of corruption linked to Najib and his cronies was a major factor in his surprise election loss last month to an alliance headed by Malaysian Prime Minister Mahathir Mohamad.

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