Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
Malaysia’s Finance Minister Lim Guan Eng. Photo: Bloomberg

Malaysia’s seizure of Chinese pipeline firm’s assets not a slight on Beijing, says finance minister Lim Guan Eng

  • Lim told parliament the sequestration of US$240 million from a bank account of China Petroleum Pipeline Engineering was ‘company specific’
  • Prime Minister Mahathir Mohamad confirmed the seizure on Monday, saying Kuala Lumpur was only taking back money for work that had not been done
Malaysia’s recent seizure of US$240 million from the bank account of a state-linked Chinese pipeline builder following cancellations of two major projects last year is “company specific” and not meant to slight Beijing, Finance Minister Lim Guan Eng said on Wednesday.
Prime Minister Mahathir Mohamad confirmed the seizure on Monday, claiming that he saw no reason for China Petroleum Pipeline Engineering (CPP) to be unhappy about the government action because Kuala Lumpur was only “taking back” money for work “they have not done”.
Malaysian Prime Minister Mahathir Mohamad said he saw no reason for the Chinese firm to be unhappy. Photo: DPA
That elicited a response from Beijing, with Chinese foreign ministry spokesman Geng Shuang saying on Tuesday that the mainland government hoped for a “ friendly consultation” on the matter, to which Mahathir responded that Malaysia was ready to hold talks, according to state news agency Bernama.

Mahathir cancelled the two pipelines, worth some US$2.3 billion, last year after it was revealed that 80 per cent of China-Exim Bank loans undertaken by the previous administration had been disbursed even though only 13 per cent of the development was completed.

The Mahathir administration, victors in a general election last May, has publicly said empty state coffers were behind its decision to axe the projects.

What Mahathir really plans for China-backed projects (but can’t admit)

But government insiders have privately said that they believe the projects were linked to money laundering and the 1MDB financial scandal, over which former prime minister Najib Razak is currently facing multiple criminal trials.

Answering questions in parliament on Wednesday, Lim said the asset seizure was “conducted against a company, and not its country [of origin]”.

While the Malaysian Anti-Corruption Commission declined to comment when asked by This Week in Asia on Monday whether it was behind the asset seizure – from a Malaysian HSBC account – Lim revealed that the agency was the one that initiated the transfer of funds.
China Petroleum Pipeline Engineering is a subsidiary of China National Petroleum Corporation. Photo: Reuters
A spokesman from CPP – a subsidiary of state-owned China National Petroleum Corporation – previously told Singapore’s Straits Times newspaper that the company was “perplexed” by what it termed a “unilateral transfer of monies without informing CPP”.

According to local media reports, Lim told parliament that talks are continuing for the government to recover money “overpaid” for cancelled projects.

CPP won the contracts in November 2016 – during the Najib era – to build the 600km petroleum pipeline along the west coast of Malaysia and the 662km Trans-Sabah Pipeline in the Bornean state of Sabah.

Mahathir confirms US$240m seizure from Chinese firm

The firm has strongly denied media reports claiming that funds paid for the pipelines were diverted to third-party Cayman Islands companies involved in money laundering.

In June, the Malaysian Anti-Corruption Commission’s newly installed chief commissioner, Latheefa Koya, said authorities had made significant headway in regaining hundreds of millions of dollars linked to the 1MDB scandal, with help from the US Department of Justice.

Geng Shuang, the Chinese foreign ministry spokesman, said the pipeline works were being “carried out in accordance with the contract” before they were terminated by Malaysia last year.

Chinese Foreign Ministry spokesman Geng Shuang stressed the countries’ friendly relations. Photo: Handout

He stressed that the two countries enjoy a “long-term friendly cooperative relationship” and that Beijing is confident of working with Malaysia to further deepen economic and trade ties.

Malaysia has sought to recalibrate ties with Beijing after last year’s election.

Mahathir’s Pakatan Harapan coalition came to power on a platform that attacked Najib for a variety of reasons including a foreign policy that moved the country away from its decades-old neutral stance to one that favoured China over the West.

Connect with us on Twitter and Facebook