The Real Deal New York

China offered to help kill investigations into 1MDB: report

In return, Malaysia offered stakes in pipeline and railway projects
January 07, 2019 06:27PM

Former Malaysian Prime Minister Najib Razak and Chinese official Xiao Yaqing (Credit: Getty Images)

In 2016, Chinese leaders offered to help bail out 1MDB, the controversial Malaysian state fund that was at the center of a billion-dollar scandal, according to a new report.

China offered to use its influence to persuade the U.S. and other countries to drop their investigations into the fund and then-Prime Minister Najib Razak, the Wall Street Journal reported on Monday. It further offered to bug the offices and homes of Journal reporters reporting on the fund and leak information, according to the newspaper.

In 2015, it was reported that $681 million of funds originating with 1MDB — formally 1Malaysia Development Bhd. — went to Mr. Najib’s personal bank accounts, masterminded by an alleged playboy conman named Jho Low. Najib’s office said the money was a gift from a Saudi Arabian and most of it was returned. When the U.S. Justice Department began investigated, that damaged the countries’ relationship, the report said. And helped Malaysia turn toward China.

In return for China’s bailout, Malaysia offered stakes in railway and pipeline projects for China’s One Belt, One Road program of building infrastructure abroad. Najib signed $34 billion of rail and pipeline deals with Chinese state companies, the Journal reported.

Current Malaysian Prime Minister Mahathir Mohamad replaced Najib in an election last May and put the Chinese projects on hold. Najib has been crimes including money laundering, which he has denied, and will face trial this year.

According to the Journal, Low, who is accused of laundering money through real estate in New York and Los Angeles, is hiding in China. [WSJ] — Meenal Vamburkar