PUTRAJAYA: More than RM3bil of government funds were misappropriated from the Tun Razak Exchange (TRX) project to pay off 1Malaysia Development Berhad (1MDB) debts, says Lim Guan Eng.

The Finance Minister said that since 2012, the Federal Government had guaranteed borrowings, extended advances and provided transfers to as well as purchased land from TRX City Sdn Bhd (TXRC) amounting to RM3.688bil.

"Of this sum of transfers, a total of RM 3,067mil were misappropriated by 1MDB, mainly for 1MDB loan repayments," said Lim here on Thursday (June 20).

He said that due to this misappropriation of funds, TRXC does not have enough money to fulfil its obligations as the Master Developer for TRX.

Lim said the Cabinet has decided to support the TRX project with Government funding of up to RM2.8bil, to allay any concerns of local and foreign investors.

The additional RM2.8bil injection, on top of the RM3.7bil transferred earlier to TRXC, would make up total funding by the government to be RM6.5bil.

Lim also instructed the TRXC management – including chief executive officer Datuk Haji Azmar Talib and executive director Tan Hwa Min who were present at the press conference – to lodge a report with the investigative panel of 1MDB and the police on the RM3bil misappropriated by 1MDB.

"The Finance Ministry will ensure that the injection of funds is spent prudently to protect the interest of Malaysian tax-payers, the existing foreign and local investors of TRXC," he added.

TRX City Sdn Bhd (TRXC) is currently a wholly-owned subsidiary of the Finance Ministry.

The company was formerly known as 1MDB Real Estate Sdn Bhd, formerly a subsidiary of 1MDB.

TRXC was transferred to the Finance Ministry on Mar 31, 2017 as advised by the Parliamentary Public Accounts Committee.

According to Lim, this was because TRXC was unable to secure land sales or bank financing, due to its association with 1MDB.