THE Chinese government declined to give the green light to China Railway Engineering Corp (CREC) to complete the RM7.42 billion deal to develop Bandar Malaysia, which led to it being scuppered yesterday.

The Wall Street Journal reported that the deal for the state-owned CREC to bail out 1Malaysia Development Bhd fell apart after the Chinese government refused to authorise the investment.

CREC and Iskandar Waterfront Holdings (IWH) had agreed in December 2015 to take a 60% stake in Bandar Malaysia, a major residential and commercial real-estate project in Kuala Lumpur, which originally was being developed by 1MDB.

The RM7.42 billion deal was a cornerstone of efforts by Putrajaya to sell off 1MDB assets after the fund ran up more than US$13 billion in debt. The fund is now the centre of major corruption probes in a number of countries, including by the United States Justice Department, said WSJ.

The American business daily noted that the failure is a blow to Prime Minister Najib Razak, who in 2015 said the deal was “the final major milestone in the 1MDB rationalisation plan”.

WSJ said it had seen the Finance Ministry’s document on problems with the sale, concluding that a major reason for its failure was the Chinese government’s decision not to give the green light for CREC to make the investment. – May 4, 2017.