Malaysia seized more than 1 billion ringgit (HK$1.9 billion) from a bank account of state-owned China Petroleum Pipeline Engineering over incomplete pipeline projects, Prime Minister Mahathir Mohamad said.
The seizure comes nearly a year after Malaysia suspended two pipeline projects, valued at US$2.3 billion (HK$18 billion), on which CPP was the lead contractor. CPP is a unit of state energy giant China National Petroleum Corp.
"I understand that money for 80 percent of the pipeline was paid, but the work completed was only 13 percent," Mahathir said.
"So the government is entitled to get back the money, since the project was cancelled."
His comments followed a report on Saturday from Singapore-based Straits Times, which said that Malaysia had seized the funds from CPP's account at HSBC Malaysia.
In 2016 CPP won a contract from the government of former prime minister Najib Razak to build a 600-kilometer petroleum pipeline along the west coast of peninsular Malaysia and a 662km gas pipeline in Sabah on Borneo island. Both projects were suspended by Mahathir in July last year after defeating Najib in the national election.
Mahathir had vowed to renegotiate or cancel what he calls "unfair" Chinese projects authorized by Najib, straining ties with Malaysia's biggest trading partner. The two countries this year agreed to resume a multibillion-dollar rail project after shaving off nearly a third of its cost to 44 billion ringgit.
Mahathir yesterday said he was not concerned about a fallout with China for seizing money from a state-owned Chinese firm. "I don't see why the Chinese would feel unhappy about it because we are not taking back money for what they have done," he said.