Guan Eng accuses China companies of corruption

(The Sun Daily) – The Ministry of Finance (MoF) revealed today that two mega-projects – the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP), costing a total of RM9.4 billion – were done on lopsided terms despite numerous unanswered questions and red flags raised, fuelling concerns over the possibility of money-laundering.

Both projects were awarded to China Petroleum Pipeline Bureau (CPPB) on Nov 1, 2016 and work started in April 2017. The contracts have two more years before completion but RM8.25 billion, or about 88% of the total value, has been paid although only 13% of the work has been completed.

In a statement today, Finance Minister Lim Guan Eng said given the “highly suspicious” transactions, his officers filed a report with the Malaysian Anti-Corruption Commission last week and the ministry will seek the assistance of the Chinese government to help trace the flow of funds.

“We have discovered the payment schedule for the above contracts are based almost entirely on timeline milestones, and not on progressive work completion. Worse, based on the agreements signed, 85% of the project value would be paid by March 1, 2019,” he said.

The MPP and TSGP contracts were negotiated by the Prime Minister’s Department without involving Treasury officials.

Suria Strategic Energy Resources Sdn Bhd (SSER), a unit under MoF set up to undertake the two projects, secured funding from China EXIM Bank amounting to 85% of the project value on March 22, 2017, with the balance 15% to be raised via sukuk issuance. Both bank borrowings and sukuk were secured with federal government guarantees.

Lim said he was informed by Treasury officials that SSER is an offshoot firm set up by the same people behind SRC International, a former subsidiary of 1Malaysia Development Bhd.

“SRC is the acronym for Strategic Resources Corporation, a name that is similar to SSER. The contracts for SSER were also signed at the same time as the contracts for the East Coast Rail Link project by then MoF secretary-general Tan Sri Irwan Serigar Abdullah, and financed by China EXIM Bank.”

Lim also noted that SSER president Datuk Mohammed Azhar Osman Khairuddin, who is also a member of the company’s board of directors, is also a director of Putrajaya Perdana Sdn Bhd, a company linked directly with businessman Low Taek Jho, also known as Jho Low.

The MPP involves a 600km multi-product petroleum pipeline connecting Malacca and Port Dickson to Jitra in Kedah, costing about RM5.35 billion.

The cost for TSGP, which was to build a 662km gas pipeline from Kimanis Gas Terminal to Sandakan and Tawau, is about RM4.06 billion.

Some RM4.71 billion and RM3.54 billion for the MPP and TSGP projects respectively have been drawn down and paid to CPPB, bringing a total of RM8.25 billion, or 87.7% of the total project value.

The payments made also do not include an additional RM1 billion worth of contracts signed and awarded to Chinese companies comprising two consultancy agreements worth about RM312 million and RM213 million each, as well as a maintenance agreement worth RM476 million.