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SDP: Troubling that the HSR MoU was signed in light of the US DoJ’s investigation on 1MDB

The Singapore Democratic Party (SDP) has said that the signing of the Memorandum of Understanding (MOU) of the high-speed railway (HSR) by Singapore and Malaysia is troubling.

This is in light of the recent announcement of the US Department of Justice's (DoJ's) investigation into 1 Malaysia Development Berhad (1MDB) and the alleged corrupt practices in the company

The party also said that while Transport Minister Khaw Boon Wan said that it is time to “pause and celebrate” the green light for the project but given the circumstances, this might be premature.

60% of Bandar Malaysia sold to conglomerate

SDP notes that the terminus of the HSR in Kuala Lumpur will be built in Bandar Malaysia. 1MDB used to own Bandar Malaysia but sold 60% equity (RM7.4 billion or SGD2.5 billion) to a joint venture between China Railway Engineering Corp (CREC) and Iskandar Waterfront Holdings (IWH).

It further pointed out that as CREC-IWH conglomerate has declared its interest to bid for the HSR project .this puts the CREC bid in pole position to secure the HSR contract even though railway companies from Korea, Japan, France, Germany, Spain and Taiwan have also shown interest.

1MDB scandal

The investigation on 1MDB had led to the Monetary Authority of Singapore (MAS) announcing in July 2015 that it was looking into the dealings of 1MDB and pledged “tough action” if banks in Singapore were found to be involved in the growing scandal in 1MDB.

In May this year, the MAS shut down BSI Bank in Singapore for alleged money laundering practices. Last week, Singapore authorities said that DBS and the Singapore branches of Standard Chartered Bank and UBS were being investigated in connection with 1MDB. This came after DoJ announced its seizure of 1MDB assets in the US.

SDP stated that despite knowing the above issues, Singapore's Prime Minister Lee Hsien Loong still saw it fit to travel to KL to sign the MOU with Mr Najib last Tuesday, July 19, 2016.

SDP in its statement, raises the following questions:

  1. Why the rush to put pen to paper given the controversy embroiling 1MDB and the political uncertainty building up in Malaysia? Has the Singapore government exercised due diligence in proceeding with the HSR project?
  2. How comfortable is PAP with the fact that CREC (owning majority control of Bandar Malaysia) is also bidding for the HSR operations? Can the PAP assure Singaporeans that the sale of Bandar Malaysia to CREC was conducted in a transparent manner?
  3. Does Singapore have a say in which company is awarded the contract for the HSR project? How transparent is the award process? From media reports, it seems that the tender process has not even been agreed upon.
  4. If 1MDB is crippled by the impending actions taken by multiple jurisdictions, how will the project proceed and what, if any, are the contingencies?

View SDP's full statement here.