Malaysia seizes pipeline company’s RM1 bil funds, says report

The Trans-Sabah Gas Pipeline was to be built from Kimanis to Sandakan and Tawau.

PETALING JAYA: More than RM1 billion in a Malaysian bank account of a Chinese state-owned company is reported to have been transferred on government orders to a company owned by the finance ministry.

The Straits Times newspaper in Singapore described the seizure and transfer of funds by the Malaysian authorities as “an unprecedented move in Malaysian banking”.

It said global banking giant HSBC was told earlier this month to transfer the money, held in the Malaysian account of China Petroleum Pipeline Engineering Ltd, to Suria Strategic Resources Sdn Bhd, wholly owned by the finance ministry.

The Chinese company is the main contractor for the 660km-long peninsular west coast pipeline, a project costing RM5.35 billion, and a Sabah gas pipeline costing RM4.06 billion. Both projects have been suspended by the Pakatan Harapan government.

Last year, Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin had said that the government was trying to recover the money already paid to the contractor building the Trans-Sabah Gas Pipeline.

“We have two options at the moment — either to recover the funds which was paid prematurely or to carry on with the project,” she said at the time.

Today’s Singapore report said that China Petroleum Pipeline had confirmed that the funds had been transferred out. “CPP firmly abides by the laws of Malaysia and is perplexed by the unilateral transfer of monies without notifying CPP,” said the company.

HSBC, however, declined to comment.

Last year, the Pakatan Harapan government questioned why about RM8.3 billion, or 88% of the contract value of RM9.41 billion, was paid out by the previous government through Suria Strategic Resources. Officials said only 13% of the work had been completed.

When the two pipeline projects were suspended, some of CPP’s bank accounts were frozen, the report said.

Last year, press reports alleged that money paid by Suria Strategic Resources had been diverted to third-party Cayman Island companies linked to the 1MDB scandal. CPP denied these allegations.