PUTRAJAYA, June 5 — Suria Strategic Energy Resources Sdn Bhd (SSER) was paid RM8.3 billion from two projects worth RM9.4 billion despite only completing 13 per cent of the work, the Finance Ministry said today.
The irregularity was discovered among the ministry’s so-called “red files” that were previously restricted to a select few officials and within which was buried the full extent of the 1Malaysia Development Bhd (1MDB) scandal.
“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,” Finance Minister Lim Guan Eng said today.
“Worse, based on the agreements signed, 85 per cent of the project value would be paid by March 1, 2018.”
According to Lim, SSER was incorporated as a wholly-owned unit of the Finance Ministry in 2016 to undertake two projects: the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP).
The MPP is a RM5.35 billion project to build a 600km oil pipeline from Jitra to Port Dickson while the TSGP is a 662km gas line connecting the Kimanis Gas Terminal to Sandakan and Tawau at a cost of RM4.06 billion.
Both contracts were awarded to China Petroleum Pipeline Bureau (CPPB) in November 2016 in contracts signed by former Treasury secretary-general Tan Sri Irwan Serigar, who is also SSER chairman.
According to Lim, the Treasury was informed in March that progress for the MPP was 14.5 per cent complete and 11.4 per cent for the TSGP.
“However, RM4.71 billion has been paid to CPPB for the MPP and RM3.54 billion for the TSGP.
“This was something that is shocking to us at the Treasury,” Lim said.
Rather than payment for work completed, Lim said the compensation schedule used time-based milestones for which payment outstripped progress by several magnitudes.
He pointed out that the agreement directly negotiated by the Prime Minister’s Department during the Najib administration meant the entire project was almost completely paid for despite only being 13 per cent done.
Lim added that he was informed that a Treasury official who worked on SSER was the same one who dealt with SRC International, the former 1MDB unit under investigation over a RM42 million deposit into Datuk Seri Najib Razak’s account previously.
“The president of SSER is Datuk Mohammed Azhar bin Osman Khairuddin, who is also a company director.
“He is also on the board of Putrajaya Perdana Sdn Bhd, a company with direct ties to Mr Low Taek Jho,” Lim said, referring to the billionaire commonly called Jho Low and who is intricately linked to the 1MDB scandal.
The minister added that he has directed ministry officials to file a formal complaint over the suspicious agreement with the Malaysian Anti-Corruption Commission.
Lim also said he will inform Prime Minister Tun Dr Mahathir Mohamad about the discovery of this latest scandal.
Dr Mahathir previously said his administration would honour existing deals from the Najib administration, but would correct those with “mistakes”.