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‘We Cannot Afford This’: Malaysia Pushes Back on China’s Big Projects

Sitting at his desk during an interview after the election, Mr. Mahathir pointed to a sheaf of papers before him. It was a proposal from a Malaysian construction company that he said contained evidence that the East Coast Rail Link could have been developed by a Malaysian company for less than half of the $ 13.4 billion contract won by the China Communications Construction Company, a state-owned Chinese firm with extensive operations overseas.

Notably, the rail tender process was closed.

Last week, Mr. Lim, the finance minister, told Parliament that Malaysia would not be able to cover the operational cost for the railway, much less the capital expenditure, which he estimated at nearly $ 20 billion rather than $ 13.4 billion.

Neither the Chinese company nor its Malaysian partner responded to requests for comment.

“It looks like not all the money is being used for building the railway line,” Mr. Mahathir said of the East Coast Rail Link deal. “The likelihood is the money has been stolen.”

Malaysian investigators are looking into whether an associate of Mr. Najib’s stepson may have brokered the rail deal to alleviate the debt accrued by 1MDB or to fund Mr. Najib’s re-election campaign.

The United States Treasury Department considers that associate, Jho Low, an exiled financier who has an arrest warrant out on him, to be the prime agent in the 1MDB scandal. On the eve of Mr. Mahathir’s trip to China, Malaysian finance ministry officials said they believed that Mr. Low had been hiding out in China.

Malaysia’s new administration, which unseated a coalition that had ruled, in one form or another, since independence in 1957, has also been scrutinizing the $ 2.5 billion deal for a subsidiary of the China National Petroleum Corporation to build energy pipelines in Malaysia. Mr. Lim said he had discovered upon taking up his post that the Malaysian government had already disbursed more than $ 2 billion for the project.

There was one catch. “From what we understand,” Mr. Lim said, “zero percent of the construction work has been carried out.”

Source: NYT > World

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