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Government seizes over RM1 billion held by Chinese state-owned unit in HSBC – ST report

CPP pipeline projects - a 600km multi-product pipeline along the west coast of  Peninsular Malaysia costing RM5.35 billion and a gas pipeline network in the east Malaysian state of Sabah costing RM.4.06 billion.

CPP pipeline projects - a 600km multi-product pipeline along the west coast of Peninsular Malaysia costing RM5.35 billion and a gas pipeline network in the east Malaysian state of Sabah costing RM.4.06 billion.

TheMole
Written by TheMole

KUALA LUMPUR, July 13 2019 : The Straits Times (ST) today reported that the government has seized more than RM1 billion held by  China Petroleum Pipeline Engineering Ltd (CPP), a Chinese state-owned company.

Describing the move as “unprecedented”, the Singapore publication stated that the government early this month ordered global banking giant, HSBC, to transfer the funds held in  CPP’s account in Malaysia to  Suria Strategic Resources Sdn Bhd, which is wholly owned by the Ministry of Finance.

The move came against the backdrop of an  ongoing dispute involving two multi-billion-dollar energy pipeline projects that were suspended last July.

CPP, which was the lead contractor for the pipeline projects awarded in November 2016 by the previous Barisan Nasional government confirmed to ST that the funds were transferred out. 

“CPP firmly abides with the laws of Malaysia and is perplexed by the unilateral transfer of monies without notifying CPP,” the company was quoted as saying.

CPP is a unit of China’s state-owned oil and gas giant China National Petroleum Corp.

The HSBC corporate office in Kuala Lumpur was reported to have declined to comment, citing client confidentiality.

CPP is currently speaking to the relevant parties in a bid to understand the basis of the funds 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 company told ST.

The Pakatan Harapan government, which came into power in May last year had reviewed or cancelled a series of high-profile deals with China, reached during the  previous administration such as the multi-billion-dollar East Coast Rail Link (ECRL) and the two CPP-led pipeline projects.

The ECRL project has since been revived under new terms but not the CPP pipeline projects – a 600km multi-product pipeline along the west coast of  Peninsular Malaysia costing RM5.35 billion and a gas pipeline network in the east Malaysian state of Sabah costing RM.4.06 billion.

Citing bankers familiar with the situation, ST reported that following the suspension of the pipeline project certain  bank accounts held by CPP, including the monies in HSBC, were frozen by the government.

CPP has previously denied allegations that the monies initially paid out by Suria Strategic Resources were diverted to third-party Cayman Island companies linked to 1Malaysia Development Bhd (1MDB).

Malaysian Anti-Corruption Commission (MACC) chief Latheefa Koya did not respond to queries by ST about the latest government move.

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