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Malaysia in transition

Malaysia to probe claims that China bailed out 1MDB

Scandal-hit state fund supported by overvalued deals, according to WSJ report

State investment fund 1Malaysia Development Berhad's Tun Razak Exchange development in Kuala Lumpur in May 2015.    © AP

KUALA LUMPUR -- The Malaysian government vowed on Tuesday to investigate whether Beijing provided kickbacks through infrastructure projects to bail out scandal-hit state fund 1Malaysia Development Berhad.

Responding to a Monday report by the Wall Street Journal that detailed secret talks between officials of both countries, Finance Minister Lim Guan Eng said the government would study the claims, which are based on documents and interviews with current and former Malaysian officials.

"I have to refer back, and if any details were explicitly said in black and white, then it is something we will pursue," Lim told reporters.

According to the WSJ report, former Prime Minister Najib Razak sent officials to China in 2016 to seek help for funding infrastructure projects at mark-up rate to repay 1MDB debts.

The projects, worth some $34 billion, included a railway and pipelines that were supposed to be built by Chinese state companies under the country's Belt and Road Initiative. Some of these projects have since been suspended by the current government led by Prime Minister Mahathir Mohamad, pending renegotiation with Beijing.

Najib is facing nearly 40 charges of corruption and money laundering linked to 1MDB.

Citing minutes of meetings in China recorded by Malaysian officials, the report said the projects were "political in nature" and both countries did not need to "waste time studying the actual project financials to see if they can sustain the debt." The report did not specify whether actual money was channeled to 1MDB.

One former minister in Najib's government said on Tuesday that the cabinet at the time was never informed that the Chinese deals were meant to rescue 1MDB.

In suspending the projects, the Malaysian government said payments made by Najib's government to Chinese contractors were not commensurate with the work carried out.

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