KUALA LUMPUR: The two scandal-hit gas pipeline projects under investigation by Malaysia’s finance ministry had complied with all necessary procedures and laws, former prime minister Najib Razak said on Tuesday (Jun 5).
Malaysia’s finance minister Lim Guan Eng had announced earlier on Tuesday that his ministry had uncovered a RM9.4 billion (S$3.2 billion) scandal involving two gas pipeline projects.
Lim said Najib's government had paid RM8.25 billion or 88 per cent of the total value of two pipeline projects awarded to China Petroleum Pipeline Bureau (CCPB), although they are only about 13 per cent complete.
In November 2016, CCPB won the contracts to build a 600km petroleum pipeline along the west coast of Peninsular Malaysia, and the 662-km Trans-Sabah Gas Pipeline in eastern Sabah state.
In March 2017, the finance ministry raised 85 per cent of the project funding from China EXIM Bank through a wholly-owned subsidiary, Suria Strategic Energy Resources (SSER). The rest was raised by issuing sukuk, or sharia-compliant bonds.
Additional agreements signed for the two projects totalled a further RM1 billion.
Lim said the contracts were negotiated directly by Najib's office, and the former prime minister had ignored red flags raised by the attorney general's office on both deals. But Najib said all procedures and laws had been followed.
“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 Facebook post on Tuesday.
In the run-up to the recent general election in which he was ousted, Najib was under the spotlight for massive Chinese investments sealed under his administration, with his opponents accusing his administration of selling out to China. He dismissed those accusations as being politically motivated.
The former prime minister on Tuesday defended the deal, saying that the projects, which were negotiated on a government-to-government basis with China, would bring much economic and energy security benefits to Malaysia.
“I also note that Guan Eng had stated that all payments were made as per agreement to the China Petroleum Pipeline Bureau, a fully-owned subsidiary of one of the largest company in the world, the China state-owned China National Petroleum Corporation - not to any other parties,” Najib said.
“China's Premier Li Keqiang and I had witnessed the signing of the Memorandum of Understanding (MOU) for the pipeline projects along with other projects while in Beijing on May 14, 2017.
“At the same event, China had also committed to importing goods worth US$2 trillion over the next five years from Malaysia, invest up to US$150 billion in Malaysia and offer 10,000 places for training and studies in various institutes in China.”
Najib warned that the finance ministry’s allegations might hurt foreign relations and investments.
“While I welcome open and transparent investigations into these two projects, I believe that 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,” he said.