Last summer, Malaysia halted a contract for the China Communications Construction Company to build an East Coast Rail Link, a sprawling rail line linking vast swathes of the country, citing the high costs of the deal.
Representatives from the Chinese side have been negotiating with Malaysian counterparts to revive the deal. Under the current terms, officials in Kuala Lumpur estimate that Malaysia would be making annual interest payments of 2 billion ringgit, roughly $488 million, a person with direct knowledge of the government’s estimates said. The rail, once built, is also expected to lose about $122 million a year, that person said.
Last week, The Wall Street Journal reported that Chinese officials offered to help bail Mr. Najib out of a growing debt hole related to 1MDB in exchange for stakes in the ECRL project and a pipeline project.
Chinese officials also offered to get the United States and other countries to drop their early investigations into 1MDB in exchange, The Journal reported, citing documents and the minutes of meetings between Chinese and Malaysian officials.
CCCC did not respond to an emailed request for comment.
Mr. Lim said the Malaysian government was looking into the allegations.
“For us to be able to initiate any investigation, we need the documents,” he said, adding that the government had sought documents from The Journal.
The revelations could add to tensions between Malaysia, the United States and China at a time when Malaysia is hoping to raise money through the bond market and strike new deals. The United States has grown increasingly skeptical of China’s One Belt One Road campaign, which it sees as a campaign for political influence overseas.
Mr. Lim sought to play down rising tensions.
“You have to look past these instances,” he said. “Just like Goldman Sachs is an outlier and doesn’t reflect the entire financial industry in the United States, it is similar for this case vis a vis China.”