The new Malaysian finance minister said Tuesday he had asked for the nation’s anti-corruption commission to investigate a "highly suspicious" payment totaling U.S. $2 billion to a Chinese firm when only 15 percent of its work building gas pipelines in Malaysia was complete.
The 8.25 billion ringgit in transactions represented nearly 88 percent of the cost of the two pipeline projects, Finance Minister Lim Guan Eng said in announcing the latest revelation of potential misconduct by the previous government.
The projects were to be undertaken by a Malaysian state company with Chinese financing and constructed by the China Petroleum Pipeline Bureau (CPPB), he said in a statement.
“We were shocked to discover that the amounts of 4.71 billion ringgit and 3.54 billion ringgit ... had already been drawn down and paid to CPBB,” Eng said, adding Malaysia might seek assistance from the Chinese government to investigate the possibility of money-laundering.
“Based on the highly suspicious transactions above, I instructed my officers to file a report with the Malaysian Anti-Corruption Commission last week.”
Suria Strategic Energy Resources Sdn Bhd (SSER), a firm wholly owned by and set up by the previous Ministry of Finance two years ago to undertake the pipeline projects, had secured most of the funds from the Export-Import Bank of China, according to the minister.
SSER was “an offshoot by the same people behind SRC International,” Eng said, referring to a subsidiary of the financial scandal-plagued Malaysian state fund 1Malaysia Development Berhad (1MDB), which the country’s new government is investigating over allegations of massive corruption.
In November 2016, the government of then-Prime Minister Najib Razak, who also served as finance minister, awarded the contracts to CPPB to build the two projects, Eng said. Najib has been implicated in corruption allegations linked to 1MDB, but has denied that he committed any criminal wrongdoing in connection with the state investment fund, which he started in 2009.
“The contracts were negotiated by the prime minister’s department, without involving treasury officials,” Eng alleged. “The attorney general’s chambers have also confirmed that these contracts were signed despite numerous unanswered questions and red flags raised.”
The president of SSER, Mohammed Azhar bin Osman Khairuddin, sat on its board of directors and was a director of Putrajaya Perdana Sdn Bhd, the new finance minister said. The latter firm, Eng noted, was “linked directly with Low Taek Jho,” a Malaysian tycoon better known as Jho Low.
Jho Low is at the center of investigations by the U.S. Justice Department (DOJ) into the alleged laundering of billions of dollars that, it says, were looted from 1MDB and used to purchase high-priced real estate, art pieces and other valuable items.
Najib: ‘Laws have been complied with’
Late Tuesday, Najib, whose Barisan Nasional coalition was swept out of power in last month’s general election, responded to a request in Eng’s statement seeking an explanation about “how he could possibly approve the above transactions.”
“To my recollection, I am confident that all necessary process procedures and laws have been complied with in the negotiation and execution of the two pipeline projects raised by Finance Minister Lim Guan Eng today,” Najib said in a post on Facebook, adding that the two projects were negotiated on a “government-to-government basis with the People’s Republic of China.”
“While I welcome open and transparent investigations into these two projects, I believe that great care [must] 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 added.
Earlier in the day, Najib’s wife Rosmah Mansor reported to the Malaysian Anti-Corruption Commission (MACC) to give a statement about how 42 million ringgit ($10.5 million) in money from SRC International had ended up in his private bank accounts.
Sources within MACC told BenarNews that Rosmah was not a suspect in the case but she was appearing before the commission to serve as a witness.
Rosmah, 66, stepped out of a silver Mercedes Benz as she arrived at MACC’s offices in Putrajaya late Tuesday morning. She emerged from the commission at 3:44 p.m. but did not speak to reporters.
Lawyers who accompanied her said their client had fully cooperated with the commission during three hours of questioning.
Rosmah visited the MACC two weeks after the commission had twice summoned her husband for questioning in the same case.
Since Najib’s coalition lost the election, the new government has barred him and his spouse from leaving the country. In addition, Malaysian police have conducted raids at his home, former office and residences linked to him in connection with an investigation into the 1MDB scandal.
During the raids, police said they seized suitcases containing nearly $29 million in cash and expensive items, along with 284 boxes containing luxury handbags.
Najib lawyers quit
In related developments, members of Najib’s legal defense team including Yusof Zainal Abideen and M. Puravalen decided they would no longer represent him because they could not reach a common ground for agreement with their client on several issues, according to the Malaysian Insight, a local news portal.
Their departure came days after Malaysian news outlets reported that Najib had hired a firm headed by former U.S. Attorney General John Ashcroft to represent him. According to a document filed by the U.S. Department of Justice under the United States Foreign Agents Registration Act (FARA), and which was seen by BenarNews, Najib Razak retained the services of the Ashcroft Law Firm earlier this year when he was prime minister.
Meanwhile, reports swirled that the governor of the nation’s central bank, Muhammad Ibrahim, had offered to resign after Finance Minister Eng raised questions about the institution’s alleged $520 million purchase of land from Najib’s government as a way for the former administration to pay off some of the debts accumulated by 1MDB.
The central bank and prime minister’s office did not issue any statements about the governor’s status, but a source familiar with the process on Tuesday said he had tendered his resignation the day before.