https://www.todayonline.com/world/malaysia-suspects-chinese-funds-diverted-clear-1mdbs-debts
Malaysia suspects Chinese funds diverted to clear 1MDB’s debts
Bloomberg file photo
Published01 August, 2018
Updated 01 August, 2018
Prime Minister Mahathir Mohamad has stalled over US$20 billion (S$27 billion) worth of infrastructure projects that are part of China’s "One Belt One Road" initiative, saying the contract values appeared to be inflated, in what he called a sign of possible corruption.
Sources told the financial daily that Putrajaya believes officials under former prime minister Najib Razak’s administration worked with representatives of Chinese companies involved in these deals to divert funds to pay off nearly US$700 million owed by the state investment fund.
“Chinese companies may be involved in round tripping of major infrastructure projects in Malaysia that siphons off funds from these projects to help 1MDB,” Finance Minister Lim Guan Eng told the WSJ.
Malaysia is currently negotiating with China to restructure the terms of the projects, which leave Putrajaya in debts of billions of ringgit to Chinese banks.
Last month, Council of Eminent Persons chair Daim Zainuddin met Chinese Prime Minister Li Keqiang to lay out Malaysia’s concerns about the loans. Dr Mahathir is scheduled to meet Chinese President Xi Jinping in Beijing this month.
According to the WSJ, Malaysian officials are focusing on a US$2.5 billion agreement signed in November 2016 in which state-owned China Petroleum Pipeline Bureau, a subsidiary of China National Petroleum Corp, would build a series of petrochemical and gas pipelines in the peninsula and Sabah.
Officials said money from the project was believed to have been used to pay 1Malaysia Development Bhd’s debts, citing the timing of the transactions ahead of a loan due date and the involvement of key suspects in the 1MDB scandal.
Mr Low Taek Jho, the fugitive financier who was a close aide of Najib, played a central role in negotiating the pipeline deal and other Malaysia-China infrastructure projects, said a former official who worked in the Prime Minister’s Department.
Officials suspect some of the US$2 billion meant for the China Petroleum Pipeline Bureau likely went instead into a series of shell companies before landing at a Cayman Islands-based company called Silk Road Southeast Asia Real Estate Ltd.
All the transactions were carried out in Chinese yuan, which would have avoided triggering compliance alarms at US banks, one of the officials added.
The Ministry of Finance said about 13 per cent of the pipeline project has been built.
1MDB is still carrying debts of around RM35 billion. THE MALAYSIAN INSIGHT
Malaysia suspects Chinese funds diverted to clear 1MDB’s debts
Published01 August, 2018
Updated 01 August, 2018
- https://www.todayonline.com/world/malaysia-suspects-chinese-funds-diverted-clear-1mdbs-debts#
- https://www.todayonline.com/world/malaysia-suspects-chinese-funds-diverted-clear-1mdbs-debts#
- https://www.todayonline.com/world/malaysia-suspects-chinese-funds-diverted-clear-1mdbs-debts#
- https://www.todayonline.com/world/malaysia-suspects-chinese-funds-diverted-clear-1mdbs-debts#
Prime Minister Mahathir Mohamad has stalled over US$20 billion (S$27 billion) worth of infrastructure projects that are part of China’s "One Belt One Road" initiative, saying the contract values appeared to be inflated, in what he called a sign of possible corruption.
Sources told the financial daily that Putrajaya believes officials under former prime minister Najib Razak’s administration worked with representatives of Chinese companies involved in these deals to divert funds to pay off nearly US$700 million owed by the state investment fund.
“Chinese companies may be involved in round tripping of major infrastructure projects in Malaysia that siphons off funds from these projects to help 1MDB,” Finance Minister Lim Guan Eng told the WSJ.
Malaysia is currently negotiating with China to restructure the terms of the projects, which leave Putrajaya in debts of billions of ringgit to Chinese banks.
Last month, Council of Eminent Persons chair Daim Zainuddin met Chinese Prime Minister Li Keqiang to lay out Malaysia’s concerns about the loans. Dr Mahathir is scheduled to meet Chinese President Xi Jinping in Beijing this month.
According to the WSJ, Malaysian officials are focusing on a US$2.5 billion agreement signed in November 2016 in which state-owned China Petroleum Pipeline Bureau, a subsidiary of China National Petroleum Corp, would build a series of petrochemical and gas pipelines in the peninsula and Sabah.
Officials said money from the project was believed to have been used to pay 1Malaysia Development Bhd’s debts, citing the timing of the transactions ahead of a loan due date and the involvement of key suspects in the 1MDB scandal.
Mr Low Taek Jho, the fugitive financier who was a close aide of Najib, played a central role in negotiating the pipeline deal and other Malaysia-China infrastructure projects, said a former official who worked in the Prime Minister’s Department.
Officials suspect some of the US$2 billion meant for the China Petroleum Pipeline Bureau likely went instead into a series of shell companies before landing at a Cayman Islands-based company called Silk Road Southeast Asia Real Estate Ltd.
All the transactions were carried out in Chinese yuan, which would have avoided triggering compliance alarms at US banks, one of the officials added.
The Ministry of Finance said about 13 per cent of the pipeline project has been built.
1MDB is still carrying debts of around RM35 billion. THE MALAYSIAN INSIGHT
