China Petroleum Pipeline Engineering denies channeling funds to 1MDB

State-owned China Petroleum Pipeline Engineering denied on Wednesday reports that part of the payments for the two contracts worth $2.4 billion it won from Malaysia was channeled to service debts in troubled state fund 1Malaysia Development Berhad.

Several reports including one on Wednesday by the Wall Street Journal said that loans that Malaysia took out from Exim Bank of China for the projects were laundered through offshore shell companies and used to pay some $700 million of debt owned by 1MDB.

CPP insisted it followed “strict anti-money laundering banking rules” and refuted allegations that funds flowed to third-party Cayman Island-based companies.

KUALA LUMPUR: State-owned China Petroleum Pipeline Engineering denied on Wednesday reports that part of the payments for the two contracts worth $2.4 billion it won from Malaysia was channeled to service debts in troubled state fund 1Malaysia Development Berhad.

“We wish to make it very clear that all funds from Export-Import Bank of China were only paid directly to CPP’s bank accounts,” the company said in a statement.

The Malaysian government, probing contracts signed by the previous government with Chinese companies has since stopped the two gas pipeline projects, pending top-level negotiations with Beijing to be led by Prime Minister Mahathir.

Several reports including one on Wednesday by the Wall Street Journal said that loans that Malaysia took out from Exim Bank of China for the projects were laundered through offshore shell companies and used to pay some $700 million of debt owned by 1MDB.

CPP insisted it followed “strict anti-money laundering banking rules” and refuted allegations that funds flowed to third-party Cayman Island-based companies.

The denial came as China and Malaysia have identified fighting corruption as a new area of cooperation ahead of an upcoming official visit by Mahathir later this month. Corruption is also a priority of the Chinese government under President Xi Jinping.

Malaysian Foreign Minister Saifuddin Abdullah said on top of the common bilateral interests in trade, investment, tourism, education and agriculture, both countries will pursue a new area of cooperation combating corruption.

“Both governments share the same aspiration to foster good governance and anti-corruption,” the minister said after meeting his counterpart Wang Yi on Tuesday. Wang is on a two-day visit to Malaysia en route to a regional meeting in Singapore.

Under former Prime Minister Najib Razak, Chinese-built infrastructure projects in Malaysia accelerated after a Beijing-backed energy company bailed out 1MDB in 2015. The two pipeline constructions formed some $20 billion worth of infrastructure projects under Beijing’s Belt and Road Initiative that have come under close scrutiny by the Mahathir administration investigating the 1MDB embezzlement scandal.

China state media Global Times said in a comment on Wednesday that both countries will likely reach concessions on the loan terms and the scale of projects after renegotiation.

Foreign minister Wang on Tuesday said the common interests shared by both countries “far outweigh the few differences” and the two countries will map out a new blueprint for mutual cooperation during Mahathir’s trip.

Source: Nikkei Asean Review

Comments

Comments