Malaysia seizes money from Chinese pipeline firm

Forced asset seizure . . .

Malaysia’s seizure of US$240 million from a Chinese HSBC account has spurred controversy in what has been a largely friendly China-Malaysia relationship. Malaysian Prime Minister Mahathir Mohamad’s decision to seize the money from China Petroleum Pipeline Engineering (CPP) comes a year after his cancellation of two incomplete pipeline projects suspected of being connected to the 1MDB money-laundering scandal that brought down Najib Razak, Mahathi’s predecessor. Mahathir claimed the asset seizure is justified as 80% of the project had been paid for but only 13% had been completed. China has issued statements claiming pipeline work was “carried out in accordance with the contract” before its cancellation.

Justifiable political agenda . . .

The move is in line with Mahathir’s pledge to recuperate funds lost through the 1MDB scandal and to stamp out corruption. Despite the pipeline project having been signed while Najib was in power, the CPP has strongly denied that any funds paid had been re-routed inappropriately.

A shift in China’s geopolitical stance?

Even though Mahathir has criticized his predecessor’s pro-China foreign policy, the countries are likely to co-operate on this issue. Malaysia has welcomed Huawei into its 5G networks despite Western criticism and China’s soft approach to this seizure is a reflection of the long-standing positive bilateral relationship. Beijing has issued a statement seeking “friendly consultation,” while Malaysia has claimed the issue is strictly “company specific.” While China-U.S. tensions remain, this could signal a softening of Chinese approaches in the region as it seeks to strengthen partnerships as negotiations on the RCEP trade agreement progress.