THE Finance Ministry has filed a report with the Malaysian Anti-Corruption Commission (MACC) against its own subsidiary, Suria Strategic Energy Resources Sdn Bhd (SSER), over a RM9.4 billion scandal.

Finance Minister Lim Guan Eng in a statement today revealed that SSER, which was set up in May 2016 to undertake the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects, had made payment for the project despite work only reaching an average 13% completion.

He also said SSER was an offshoot of the same people behind SRC International, a former subsidiary of 1Malaysia Development Bhd.

SSER president Mohammed Azhar Osman Khairuddin was also a director in a company with links to businessman Low Taek Jho.

A total of RM8.3 billion has been paid out so far, which was 87.7% of the project value, Lim said in a statement today.

The ministry was shocked to discover the huge amounts drawn down for the MPP and TSGP projects when they were hardly completed.

“During a briefing provided to Treasury officials on May 28, SSER reported that the three-year projects had commenced in April 2017. 

“As at the end of March or exactly a year later, the MPP and TSGP projects had achieved only 14.5% and 11.4% progress completion, respectively. The above completion rates have yet to be verified or audited.

“We were shocked to discover that RM4.71 billion and RM3.54 billion for the MPP and TSGP projects had already been drawn down and paid,” Lim said.

The money was paid to China Petroleum Pipeline Bureau (CPPB), which was awarded both projects totalling RM9.41 billion, in November 2016.

The agreements were signed by the then treasurer-general Irwan Serigar Abdullah, who was also SSER chairman. Irwan recently resigned on May 23.

Lim said the payment schedule for the contracts were based almost entirely on timeline milestones, not on progressive work completion. There was still another two years of contracts to go, he added.

Based on these agreements, 85% of the project value would be paid by March 1, 2018. This did not include another RM1 billion to be paid to Chinese companies for two consultancy agreements worth about RM312 million and RM213 million, as well as a maintenance agreement worth RM476 million for the two projects.

The MPP involved a 600km-long multi-product petroleum pipeline connecting Malacca and Port Dickson to Jitra, Kedah, costing RM5.35 billion while the TSGP was to build a 662km-long gas pipeline from Kimanis Gas Terminal to Sandakan and Tawau at a cost of RM4.06 billion.

SSER secured funding for the projects from China EXIM Bank at 85% of the projects’ value in March last year. The remaining 15% were raised via sukuk insurance. Both the loan from China and sukuk are guaranteed by the federal government.

Lim said the contracts were dealt with by the former administration’s Prime Minister’s Department without involving Treasury officials. 

“The Attorney-General’s Chambers have also confirmed that these contracts were signed despite numerous unanswered questions and red flags raised.

“Based on the highly suspicious transactions above, I have instructed my officers to file a report with the MACC last week. Prime Minister Dr Mahathir Mohamad has been briefed on the scandal,” he said.

Lim said as the sole shareholder of SSER, the ministry would be taking control over the company pending investigations.

He said the board of directors, especially Irwan Serigar, must answer for why SSER signed such a “lopsided contract that clearly jeopardised the interest of Malaysians and the government”.

“If necessary, we would seek the assistance of the government of China to help trace the flow of funds in the country to investigate the possibility of money laundering,” Lim said. – June 5, 2018.