Malaysia's Ministry of Finance revealed on Tuesday, June 5, that despite 88 percent of contracts for two pipeline projects being paid, only 13 percent of the work has been completed.

The projects are backed by Beijing and cost over RM9.4 billion (~S$3.2 billion).

Here's what happened.

Payment made to Chinese state-owned company

According to The Malaysian insight, the Finance Ministry's subsidiary, Suria Strategic Energy Resources Sdn Bhd (SSER), was set up in May 2016 to undertake two projects.

They are the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects.

State-owned China Petroleum Pipeline Bureau won the contracts for both pipelines.

Work on the three-year projects started in April 2017.

However, 12 months later, only 13 percent of the construction works were done despite Malaysia paying out almost 90 per cent of the projects' value.

Malaysia's finance minister Lim Guan Eng said at a press conference on Tuesday, June 5, that the previous Najib administration had agreed to make payments for the pipeline projects "based almost entirely" on calendar dates rather than the projects' progress.

According to The Star, other than the RM9.4 billion (~S$3.2 billion) expenditure for the two pipeline projects, another RM1 billion (~S$335 million) was allocated to two consultant firms and a company for the maintenance of the pipelines.

All three companies are from China.

All part of "1MDB scam"

Lim also said that they are "strongly suspicious this is all part of the 1MDB scam".

He said:

"The main contractor is from China.

But what's important is why was the agreement signed in the first place by Malaysian leaders and officials?

The contracts were negotiated by the Prime Minister's Department without involving Treasury officials.

The Attorney General's Chambers has also confirmed that these contracts were signed despite numerous unanswered questions and red flags being raised."

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SSER had links to the scandal-ridden state wealth fund 1MDB and Strategic Resources Corp International (SRC).

SSER's president was a board member of Putrajaya Perdana Snd Bhd, a company directly linked to Jho Low. Low has been identified as one of the main figures behind the 1MDB scandal.

SRC, on the other hand, was a subsidiary of 1MDB and was set up in 2011. It took a US$1 billion (~S$1.3 billion) loan with not many assets to show.

The Finance Ministry have since filed a report with the Malaysian Anti-Corruption Commission (MACC).

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