Malaysia Prime Minister Mahathir Mohamad revealed that Malaysia would have to pay US$125 million in compensation to Singapore for breaking the High Speed Rail contract. Lee Hsien Loong has earlier threatened Malaysia that the HSR contract is “legally binding between the two countries regardless of who is government”, but is it really so?
No actually. States Times Review present four solutions to Malaysia:
First, it is indisputable that former PM Najib Razak hid billions of stolen 1MDB state funds in Singapore banks. Mahathir can simply invalidate the HSR contract because Najib Razak used the HSR contract to reward Singapore for their assistance in the money laundering. Singapore will of course pretend and cry foul saying that this allegation is baseless, but it is without doubt that Singapore has benefited from the money laundering of 1MDB. It does not matter what Singapore says, the HSR deal is linked to the 1MDB. All Mahathir need to do is to invalidate the HSR contract, on the basis that the contract is based off corrupted underhanded dealings.
Second, Malaysia’s investigation into the HSR construction has found that the contract value is over-inflated due to kickbacks and other underhanded conditions furnishing the tender specification. Crony companies are getting kickbacks from the HSR tenders, and this is valid enough a basis to invalidate the corrupted contract. Again, it does not matter if Singapore is a direct beneficiary of these kickbacks (would be better if proven any of these companies have a Singaporean interest).
Third, Malaysia could still let the HSR die a natural death, simply stopping all funding of the state-owned company, MyHSR corp. Like any commercial deals, when a company goes bankrupt, Singapore would then need to seek it’s US$125 million from MyHSR instead of the Malaysia government. State-owned companies can go bankrupt from it’s own business failure, there is no obligation from the Malaysia’s Ministry of Finance to bailout the company.
Fourth, on the scenario US$125 million is payable, Malaysia can play delay tactic. Do it the Singapore CPF style: US$125 million, made payable over 20 years. From then, there are many ways Malaysia can recover the money back from Singapore. Like Mahathir once said: there are many ways to skin a cat. Singapore is heavily dependent on Malaysia for food and water import. With China’s assistance, Singapore can be easily crushed.
In any case, Malaysia will need to honour the HSR deal to avoid damages to it’s international standing. There are many ways to work around the problem, which I have faith the wise Malaysian PM is definitely capable of. Worst-case scenario, just don’t pay and slug it out in the Hague. Singapore would get their money, probably some 20 years later.
Alex Tan
STR Editor