Kota Kinabalu: Deputy Chief Minister I Datuk Seri Dr Jeffrey G Kitingan refuted allegations over the misuse of RM17 billion from a flood mitigation, irrigation and drainage Memorandum of Understanding (MoU).
The Agriculture, Fisheries and Food Industry Minister said no funds were ever received under the MoU signed on March 15, 2024, between the Department of Irrigation and Drainage on behalf of the Ministry and Shaanxi Construction Engineering Malaysia Sdn Bhd (SCEM), a subsidiary of a Chinese Fortune 500 company.
“The potential financing requirement was estimated at RM17 billion, which could have created up to 20,000 job opportunities.
“Contrary to speculation, no funds were ever received under this MoU. The document was merely an expression of interest and did not constitute any binding financial commitment,” he said in a statement.
He said the MoU only permitted the company to carry out due diligence and feasibility studies in 11 river districts identified for flood mitigation, irrigation and drainage projects, namely Moyog, Petagas, Likas, Putatan, Tawau, Bandau, Kadamaian, Membakut, Padas, Pegalan and Dataran Bengkok.
“Discussions then focused on potential repayment structures through carbon credits under the Nature Conservation Agreement (NCA) and the sale of sand.
“The MoU was a bold attempt to break Sabah’s Chain of Dependency on Malaya by utilising and harnessing our God-given resources to resolve our problems and needs, in line with the principle of “Rumah Kita, Kita Jaga”.
“However, these repayment mechanisms did not materialise. The NCA could not be utilised due to opposition from certain local political parties, NGOs with vested interests who also pursued legal action and lodged complaints with the United Nations, as well as resistance from within the civil service.
“The Federal Government, on July 12, 2024, through the Ministry of Natural Resources and Environmental Sustainability, banned the export of sand even though sand is a state resource. Without a confirmed repayment mechanism, SCEM could not proceed, and thus, no funds were disbursed,” he said.
He said any agreement following the due diligence process would also have been subject to thorough evaluation and consultation with relevant stakeholders, including the Ministry of Finance, the State Economic Planning Unit (UPEN), the State Attorney-General’s Chambers, and approval from the State Cabinet.
“Therefore, any claims that RM17 billion has been misused or diverted are completely baseless and without merit. The State Government emphasises that the project was never implemented, and therefore no funds were ever received in the first place,” he said.
He said the inability to move forward with this initiative was due to regulatory and administrative challenges, including opposition from certain NGOs with vested interests, unresolved issues relating to carbon trading frameworks, as well as federal restrictions on resource exports.
These factors prevented the necessary financial arrangements from being finalised.
“As it stands, funding for flood mitigation, irrigation and drainage projects will have to be sourced through allocations under the 13th, 14th, 15th, 16th, and 17th Malaysia Plans. This is indeed a regrettable situation.
“Nevertheless, discussions are ongoing to explore alternative projects and financing mechanisms. The lessons learned highlight the importance of comprehensive regulatory alignment and broader institutional support before pursuing large-scale development agreements, no matter how well-intentioned they may be,” he said.
He reiterates MAFFI and the State Government’s commitment to transparency and accountability in all future projects, and to introducing support measures that will strengthen Sabah’s resilience to climate change, natural disasters, and food security.
“Any claims that RM17 billion has been misused or diverted are completely baseless and without merit,” Jeffrey said, adding that he reserves his right to take legal action against parties spreading falsehoods, unfounded statement and publications.
