How China’s Belt and Road reportedly funded corruption in Malaysia

Foreign Affairs

The Wall Street Journal has a bombshell story (paywall) about China’s overseas influence, based on recently uncovered meeting minutes of the previous Malaysian government led by Najib Razak, and interviews with “people in position to know the events, among them a former official of Mr. Najib’s government.”

  • The documents reportedly show that “Chinese officials told visiting Malaysians that China would use its influence to try to get the U.S. and other countries to drop their probes of allegations that allies of then-Prime Minister Najib Razak and others plundered the fund known as 1MDB.”
  • This included surveilling WSJ reporters in Hong Kong who had been investigating 1MDB, the Journal reports, including by “full scale residence/office/device tapping, computer/phone/web data retrieval, and full operational surveillance.”
  • But that’s not all: Chinese-funded infrastructure projects were reportedly planned in Malaysia at “above market profitability,” with the excess funds created intended partly to “settle the 1MDB debts.”
  • The East Coast Rail Link, which turned into a $16 billion project, was originally estimated by a Malaysian consultancy to cost just $7.25 billion. The project, a key part of Xi Jinping’s Belt and Road initiative, has been suspended by the new Malaysian government under Prime Minister Mahathir Mohamad. New terms are reportedly being negotiated.There are many other juicy details in the piece, including that Xiào Yàqìng 肖亚庆, chairman of China’s State-owned Assets Supervision and Administration Commission, had said at a meeting on June 28, 2016 that Xi Jinping had personally approved the infrastructure initiatives.

The allegations have been denied by Najib, as well as by the Chinese embassy in Kuala Lumpur, according to Malaysiakini.

  • Lim Guan Eng, the current finance minister of Malaysia, said that he is “interested to have a copy of those minutes” that the WSJ examined, and would “pursue” anything that is “in black and white” regarding improper deals, the FT reports (paywall).
  • “We know that the price (of projects with China) is inflated, but whether there was such a deal, I have to check,” Lim added, according to Channel NewsAsia.