Finance Minister Lim Guan Eng said he has directed ministry officials to file a report with the Malaysian Anti-Corruption Commission (MACC) against its own subsidiary, Suria Strategic Energy Resources Sdn Bhd (SSER) earlier today, 5 June
The Malaysian Insight reported Guan Eng as revealing a RM9.4 billion scandal involving SSER, which was set up in May 2016 to take on the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects.
"I have instructed my officers to file a report (against SSER) with the MACC last week. Prime Minister Tun Dr Mahathir Mohamad has been briefed on the scandal," Guan Eng was quoted as saying by The Malaysian Insight.
According to Malay Mail, the projects were hidden among the ministry's "red files" that were restricted to a handful of officials.
SSER was discovered to have paid the China Petroleum Pipeline Bureau (CPPB) 88% of the RM9.4 billion, when only 13% of the work required had been done
CPPB was awarded the MPP and TSGP projects in November 2016, which totalled RM9.41 billion. The Malaysian Insight reported that the agreements were signed by former treasurer-general Tan Sri Irwan Serigar Abdullah, who was also the chairman of SSER.
The MPP and TSGP projects, which were to be completed over a three-year period, had commenced in April 2017. A year later, the projects stood at 14.5% and 11.4% progress completion.
Nonetheless, 88% (RM8.3 billion) of the payment had already been made to CPPB.
According to Malay Mail, the Finance Minister was also informed that an official who worked on SSER was the same person who dealt with SRC International, the former subsidiary of 1Malaysia Development Bhd (1MDB). Furthermore, the president of SSER Datuk Mohammed Azhar Osman Khairuddin is also on the board of a company with links to businessman Low Taek Jho, better known as Jho Low.
On top of that, the compensation schedule for the MPP and TSGP projects was not based on milestones of work completion
"We have discovered that the payment schedule for the above contracts is based almost entirely on timeline milestones, and not on progressive work completion milestones," Guan Eng was quoted as saying by Malay Mail.
The Finance Minister also announced an additional cost of RM1 billion from consultancy and maintenance agreements, which was awarded to companies from China.
Guan Eng then called on SSER's Board of Directors and Irwan Serigar to justify signing a "lopsided" contract, and welcomed an explanation from former Finance Minister Datuk Seri Najib Razak for approving the payments
The Finance Minister said the contracts were negotiated by the Prime Minister's Department under the former administration, without involving Treasury officials. According to him, the Attorney-General's Chambers have also confirmed that the contracts were signed in the midst of unanswered questions and red flags raised.
"The Board of Directors, and Tan Sri Irwan Serigar in particular, must answer as to why SSER signed such a lopsided contract that clearly jeopardises the interest of the Malaysian people and government," Guan Eng said.
"In addition, we would welcome the former Finance and Prime Minister, Datuk Seri Najib Razak, who has been active on Facebook recently, to explain how he could possibly approve the above transactions," he added.
Guan Eng also noted that the Finance Ministry will seek assistance from the China government to track the flow of funds, in order to look into the possibility of money laundering.