Malaysia to scrutinise China contracts after report of inflated deals struck to cover 1MDB debt
KUALA LUMPUR: The Malaysian government will scrutinise bilateral deals made with China under the previous government, finance minister Lim Guan Eng said on Tuesday (Jan 8).
This comes after a Wall Street Journal (WSJ) report said that Beijing had offered the administration of former prime minister Najib Razak a deal to bail out state fund 1Malaysia Development Berhad (1MDB) in return for contracts.
READ: 1MDB scandal – a timeline
“We know that the price (of projects with China) is inflated, but whether there was such a deal, I have to check,” the Malay Mail cited Lim as saying during a press conference at the finance ministry in Putrajaya.
The WSJ report alleged that the Najib administration had worked with Beijing on Belt and Road Initiative projects such as the East Coast Rail Link (ECRL), in order to divert funds to 1MDB.
The Najib administration was said to have inflated the value of the projects to divert money to 1MDB, which was struggling to pay its debts.
Najib oversaw the setting up of 1MDB in 2009, and the United States Justice Department estimated US$4.5 billion was misappropriated by high-level fund officials and their associates between 2009 and 2014.
The WSJ report cited minutes of meetings between members of the Najib administration with Chinese leaders as well as from secret talks between both sides.
“I would be interested to have a copy of those minutes by WSJ,” said Lim.
“I have to refer back to any details explicitly said. If it was said in black and white, then it is something we will pursue.”
In August, Malaysian Prime Minister Mahathir Mohamad said the Chinese-funded US$20 billion ECRL project and a natural gas pipeline project in Sabah would be cancelled for now.
Mahathir said the projects involved huge amounts of money and Malaysia did not really need them at the moment amid the country’s financial situation with high levels of debt left by the previous government.