China firm denies 1MDB bailout plot

East-Coast-Rail-LinkSYDNEY: The China Communications Construction Company (CCCC) has denied involvement in any plot to cover up the alleged multi-billion-dollar corruption scandal at 1MDB by inflating a railway contract.

The CCCC told The Australian it had “no knowledge of the claims” made in the Sarawak Report about the alleged plot.

“We will continue to follow those false accusations made by certain media and will take necessary steps to defend our lawful rights,” the CCCC said.

On July 26, the Sarawak Report claimed there was a plan to double the price tag of the East Coast Rail Link project from RM30 billion to RM60 billion.

Citing several documents, it claimed that the project would be awarded to Chinese state-owned company China Communications Construction Co Ltd to pay off troubled 1Malaysia Development Bhd’s (1MDB) bad debts.

A company nominated by CCCC would then assume US$5.6 billion of 1MDB’s debt in return for assets held on the sovereign fund’s books at the same amount, Sarawak Report said.

As part of the plan, the Sarawak Report alleged, a second company nominated by CCCC would pay US$315 million to buy 70 per cent of Putrajaya Perdana and 90 per cent of Loh & Loh Corporation.

The Australian report said the two Malaysian companies were linked to 1MDB as subsidiaries of conglomerate UBG when it was taken over in 2010 in a complex deal allegedly funded by 1MDB and benefiting businessman Jho Low, who is being investigated over the alleged looting of 1MDB.

The Australian report said it was unclear how much 1MDB’s assets were actually worth as the reliability of 1MDB’s book values was plunged into doubt last week following US government moves to freeze more than US$1 billion of assets allegedly pillaged from 1MDB.

It noted that both 1MDB and its most recent auditor, Deloitte, had said 1MDB’s 2013 and 2014 accounts should no longer be relied upon.

Following the Sarawak Report disclosure, Petaling Jaya Utara Member of Parliament Tony Pua had said: “These payments are clearly meant to go towards the settlement with IPIC, which has taken 1MDB to the London arbitration court for the amount of US$6.5 billion.”

Four years ago, IPIC had guaranteed US$3.5 billion of 1MDB bonds but claimed it had not received payment for the guarantee or other monies and interest owed.

Pua described the alleged plan as “a secret bailout”, adding: “If CCCC were to accept the fraudulently inflated contract to carry out the money laundering on behalf of the Najib (Prime Minister Najib Razak) administration, then the US$24 billion company listed on the Hong Kong Stock Exchange will itself be party to the money-laundering scam and subjecting itself to prosecution in jurisdictions around the world.”

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