ECRL cost inflated by RM30 billion to pay Jho Low, consultants, says report
FMT Reporters
-January 18, 2019 12:18 PM
The RM60 billion ECRL project was suspended last year following Pakatan Harapan’s victory in the 14th general election. (Bernama pic)PETALING JAYA: The Chinese construction giant involved in the East Coast Rail Link (ECRL) had been asked to inflate the project’s worth by billions of dollars to pay 1MDB and entities linked to fugitive businessman Low Taek Jho, an Australian daily reported this week citing documents.
The Australian said the China Communications Construction Company (CCCC) was asked to increase the quote for the ECRL by US$7.5 billion (RM30.8 billion) to “plug the multi-billion dollar hole” in 1MDB, buy over companies linked to Low and pay unnamed consultants.
The revelation came just a week after The Wall Street Journal (WSJ) cited minutes of meetings between Chinese and Malaysian officials, where Beijing allegedly offered to use its influence on Washington to stop a US probe into 1MDB in exchange for lucrative rail and infrastructure projects in Malaysia.
China has denied WSJ’s allegation that its leaders offered to bail out 1MDB in return for contracts, saying Beijing never attached political conditions to its cooperation with other countries.
The ECRL was first approved by the former government in October 2016, with an agreement on its procurement and construction signed with CCCC.
CCCC also owns Australian rail building giant John Holland Group. The Melbourne-based firm was among seven which submitted proposals to become the master-developer for Bandar Malaysia, 1MDB’s turn-key project which has been embroiled in controversy.
The US$15 billion (RM60 billion) ECRL was planned as a 688km-long rail link connecting Port Klang in Selangor with the Kuantan Port in Pahang and Pengkalan Kubor in Kelantan.
China was to finance the project with a 20-year loan at 3.25%.
The project was suspended in July last year, two months after the May 9 election which saw Pakatan Harapan’s victory on the back of a promise to cancel Chinese mega projects which the coalition said were wasteful and linked to scandal-ridden 1MDB.
Citing “undated and unsigned” documents which it said could have been prepared before July 2016, The Australian said of the RM60 billion, the project delivery cost was stated as RM27 billion, with the balance being the “additional differential”.
“To finance the project, the ‘China government (is) to provide attractive financing terms given globally, 20-year loan at 2% with a project budget of MYR60b with no prepayment penalty’,” the daily said, quoting from the documents.
It was also proposed that some RM23 billion (US$5.63 billion) from the deal would be used to pay back bonds issued by 1MDB, at a time when 1MDB was chasing a deadline to pay back billions of dollars to Abu Dhabi’s IPIC which guaranteed the bonds.
“In return for taking over the bond payments, CCCC’s nominee was to receive assets valued in the document at $US5.63 billion,” the report added
