PUTRAJAYA has seized more than RM1 billion held by China Petroleum Pipeline Engineering Ltd (CPP), a Chinese state-owned company, The Straits Times reports.

Earlier this month, the Pakatan Harapan government ordered banking giant HSBC to transfer funds held in CPP’s account in Malaysia to Suria Strategic Resources Sdn Bhd.

Suria Strategic Resources is wholly owned by the Finance Ministry.

Sources said the move is linked to a dispute involving two multi-billion-dollar energy pipeline projects suspended in July last year over links to the 1Malaysia Development Bhd (1MDB).

Apart from its HSBC accounts, other CPP bank accounts were also frozen by the Malaysian government.

CPP, which was awarded the contract as lead contractor in November 2016 by the previous government, said the funds had been transferred out.

“CPP firmly abides with the laws of Malaysia and is perplexed by the unilateral transfer of monies without notifying CPP,” CPP said.

HSBC’s Kuala Lumpur headquarters, however, declined to comment, citing client confidentiality.

CPP, a unit of China’s state-owned oil and gas giant China National Petroleum Corp, said it was in discussions with the authorities on the reasons for the transfer.

“Once we have further information, CPP will take the necessary and appropriate actions to protect its rights. We hope that our Malaysian counterparts can resolve this with us through amicable means.” 

The CPP pipeline projects comprises a 600km pipeline along the west coast of Peninsular Malaysia costing RM5.35 billion and a gas pipeline network in Sabah costing RM4.06 billion.

It is believed the PH government is looking to find out why RM8.3 billion, 88% of the contract value of RM9.41 billion, was paid out by the previous government through Suria Strategic Resources despite only 13% of the work completed.

It had been reported that monies initially paid out by Suria Strategic Resources were diverted to third-party Cayman Island companies linked to the 1MDB scandal, an allegation denied by CPP. – July 13, 2019.