NZ ignores AML/CTF obligations to favour Malaysia's PM Najib and Saudi prince Turki's 1MDB theft: Allegation of bias against Obama's UN Resolution against Israel deepens

by Ganesh Sahathevan 




New Zealand Prime Minister John Key presented Datuk Seri Najib Razak with a

 nostalgic gift after their bilateral meeting on the sidelines of the Apec Summit. 

Pix courtesy of Prime Minister's Office

This writer has previously shown how Obama's UNSC Israel Resolution is tainted by bias because co-sponsors New Zealand and Malaysia are both compromised by  the 1MDB scandal.


The New Zealand Government has since become further compromised by refusing to enforce its own anti-money laundering and counter-terrorist financing laws against the family of one Low Hock Peng, which includes eldest son Jho Low who is said to be a central figure in the 1MDB theft.



The Lows have gone before the High Court in Auckland, New Zealand ,in order to substitute the trustees of a trust used to hide 1MDB related assets,so that the US DOJ's seizure of those assets might be challenged. They have succeeded in obtaining those orders against their trustees Rothschild Trust New Zealand, who feared being found criminally liable if they challenged the DOJ seizure.




The decision of the court in granting the Lows the orders they sought is a technical one based on the law of trusts and has little if anything to do with US DOJ action:




"Given the true nature of this proceeding, the background and extensive news media interest," Justice Toogood said it would be necessary for him to give a judgment which contains background "and perhaps emphasises what this proceeding does not involve".

"The central issue here is whether or not the beneficiaries are entitled to seek replacement of the trustees so they can resist the US proceedings, without this court needing to express any view about the merits" of the US allegations, Justice Toogood said. "The judgment would simply reflect the general nature of the allegations."




However, regardless of those orders , the fact remains that the New Zealand Government despite now being clearly made aware of the matter of the Lows using New Zealand as a shelter for their tainted assets, refuses to enforce its own AML/CTF regulations and seems determined to ensure that the Lows are unhindered in their criminal enterprise.



It is a matter of public record  that the beneficiaries of the 1MDB scandal include Malaysia's PM Najib and well as Saudi prince Turki Abdullah , a son of the late King Abdullah.



The case against New Zealand as a party tainted by bias when it moved Obama's UN Resolution against Israeli settlements grows even stronger. That case may now include elements of terrorist financing.

END 

Sultan of Johor's Forest City reclamation may be in an area where reclamation is not viable, if not impossible

by Ganesh Sahathevan

(Note:Click on images to enlarge)



The following satellite  images show how the Sultan of Johor's Forest City development, that is to be built on re-claimed land, may not be viable for it appears the proposed site will be in a particularly "weak" or "soggy" area.

Using the example of Singapore ,the first two images show that Singapore, which itself
comprises much reclaimed land,sits atop a subsurface not very different from that which
is found beneath Peninsular Malaysia. In other words, Singapore sits atop the yellow areas, much like Peninsular Malaysia.

Readers can easily see that the Strait of Malacca, or rather the earth under the Strait, is green or green-yellow, indicating a weaker subsurface, or weaker region.

The second image shows that where the subsurface is green ,ie not as hard as the yellow areas,Singapore's planners have been careful not to build, and where they have ensured that building is limited to ports and the airport.

The proposed Forest City development on the other hand is an area that is dark green, almost blue suggesting a particularly weak area where reclamation may not be possible, or if possible not commercially viable.

END 

Sutlan Of Johor appears to have misunderstood what the sale of Forest City strata title entails;and Mahathir is not the only person with concerns about the project.

by Ganesh Sahathevan 

The Star reported this morning:

Johor Ruler slams Dr M over Chinese investment comments

The Sultan of Johor has said he is “deeply offended and hurt” by the political spin used by certain politicians against mainland Chinese investments in the state, saying if this is left unchecked, it would drive away investors.

In a no-holds barred interview, a visibly upset Sultan Ibrahim Ibni Almarhum Sultan Iskandar singled out Tun Dr Mahathir Mohamad for “putting political interests above Malaysian interests, particularly Johor”.

“Enough is enough. I have so far restrained myself from commenting on the controversy on Forest City generated by Dr Mahathir and his supporters.

“But Dr Mahathir has gone too far with his twisting of the issue. He is making allegations that 700,000 mainland Chinese will stay in JB, and that citizenships will be given away, and that huge tracts of land have been sold to the Chinese.

“He is giving the impression that Johor is surrendering land to the Chinese and that we are giving up our sovereignty, comparing even how we gave up Singapore to the British,” he said in an interview at Istana Bukit Serene here.

His Royal Highness said he did not wish to intervene in politics but he had to set the record straight as “the facts have been twisted by people with twisted minds and intentions”.

“Let me ask him this – Forest City is to be built on reclamation land and most of these units are condominiums. In simple language, these units are up in the air. They are strata units.“I would like to ask Dr Mahathir if these foreign buyers can just take their apartments back home or carry off an inch of the reclaimed land.

While His Highness is right in asserting that these units are up in the air,  these units are part of  strata developments  where the owners' corporation will have effective control of the land. Even if the majority of owners are loyal Malaysians (or better still loyal subjects of His Highness) it is the Malaysian experience that the developer , in this case China's Country Garden Pacific View (CGPV), and not the owners , that will  control the owners' corporation. 

That control of the land  can have many consequences, which  the Malay Rulers ought to have learnt from their past experience with British Advisers. 

Finally, while this writer's history would show that he not exactly a Mahathir apologist, the Bloomberg article below shows that Mahathir is not the only one who has concerns about the Forest City Development.

END 

$100 Billion Chinese-Made City Near Singapore 'Scares the Hell Out of Everybody

'Planeloads of buyers fly in as condos rise from the seaNovember 22, 2016

Pooja Thakur Mahrotri

En Han Choong

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The landscaped lawns and flowering shrubs of Country Garden Holdings Co.’s huge property showroom in southern Malaysia end abruptly at a small wire fence. Beyond, a desert of dirt stretches into the distance, filled with cranes and piling towers that the Chinese developer is using to build a $100 billion city in the sea.


While Chinese home buyers have sent prices soaring from Vancouver to Sydney, in this corner of Southeast Asia it’s China’s developers that are swamping the market, pushing prices lower with a glut of hundreds of thousands of new homes. They’re betting that the city of Johor Bahru, bordering Singapore, will eventually become the next Shenzhen.


“These Chinese players build by the thousands at one go, and they scare the hell out of everybody,” said Siva Shanker, head of investments at Axis-REIT Managers Bhd. and a former president of the Malaysian Institute of Estate Agents. “God only knows who is going to buy all these units, and when it’s completed, the bigger question is, who is going to stay in them?”


The Chinese companies have come to Malaysia as growth in many of their home cities is slowing, forcing some of the world’s biggest builders to look abroad to keep erecting the giant residential complexes that sprouted across China during the boom years. They found a prime spot in this special economic zone, three times the size of Singapore, on the southern tip of the Asian mainland.










The Forest City project will span four artificial islands.


Photographer: Ore Huiying/Bloomberg




The scale of the projects is dizzying. Country Garden’s Forest City, on four artificial islands, will house 700,000 people on an area four times the size of New York’s Central Park. It will have office towers, parks, hotels, shopping malls and an international school, all draped with greenery. Construction began in February and about 8,000 apartments have been sold, the company said.


It’s the biggest of about 60 projects in the Iskandar Malaysia zone around Johor Bahru, known as JB, that could add more than half-a-million homes. The influx has contributed to a drop of almost one-third in the value of residential sales in the state last year, with some developers offering discounts of 20 percent or more. Average resale prices per square foot for high-rise flats in JB fell 10 percent last year, according to property consultant CH Williams Talhar & Wong.


Country Garden, which has partnered with the investment arm of Johor state, launched another waterfront project down the coast in 2013 called Danga Bay, where it has sold all 9,539 apartments. China state-owned Greenland Group is building office towers, apartments and shops on 128 acres in Tebrau, about 20 minutes from the city center. Guangzhou R&F Properties Co. has begun construction on the first phase of Princess Cove, with about 3,000 homes.


Country Garden said in an e-mail it was “optimistic on the outlook of Forest City” because of the region’s growing economy and location next to Singapore. R&F didn’t respond to questions about the effects of so many new units and Greenland declined to comment.







Singapore Draw


“The Chinese are attracted by lower prices and the proximity to Singapore,” said Alice Tan, Singapore-based head of consultancy and research at real-estate brokers Knight Frank LLP. “It remains to be seen if the upcoming supply of homes can be absorbed in the next five years.”


The influx of Chinese competition has affected local developers like UEM Sunrise Bhd., Sunway Bhd. and SP Setia Bhd., who have been building projects around JB for years as part of a government plan to promote the area. First-half profit slumped 58 percent at UEM, the largest landowner in JB.












A decade ago, Malaysia decided to leverage Singapore’s success by building the Iskandar zone across the causeway that connects the two countries. It was modeled on Shenzhen, the neighbor of Hong Kong that grew from a fishing village to a city of 10 million people in three decades. Malaysian sovereign fund Khazanah Nasional Bhd. unveiled a 20-year plan in 2006 that required a total investment of 383 billion ringgit ($87 billion).


Singapore’s high costs and property prices encouraged some companies to relocate to Iskandar, while JB’s shopping malls and amusement parks have become a favorite for day-tripping Singaporeans. In the old city center, young Malaysians hang out in cafes and ice cream parlors on hipster street Jalan Dhoby, where the inflow of new money is refurbishing the colonial-era shophouses.


Outside the city, swathes of palm-oil plantations separate isolated gated developments like Horizon Hills, a 1,200-acre township with an 18-hole golf course.












“The Chinese developers see this as an opportunity. A lot of them say Iskandar is just like Shenzhen was 10 years ago,” said Jonathan Lo, manager of valuations at CH Williams Talhar & Wong, a property broker based in Johor Bahru. “Overseas investors coming to Malaysia is a new phenomenon so it’s hard to predict.”


Construction soon outpaced demand. To sell the hundreds of new units being built every month, some companies took to flying in planeloads of potential buyers from China, prompting low-cost carrier AirAsia Bhd. to start direct flights in May connecting JB with the southern Chinese city of Guangzhou.


On the first such flight, 150 of the 180 seats were taken by a subsidized tour group organized by Country Garden. Almost half of them ended up buying a residence, the developer said in an e-mail.



“A lot of [Chinese developers] say Iskandar is just like Shenzhen was 10 years ago”















Potential buyers at the Country Garden sales office.


Photographer: Ore Huiying/Bloomberg




Buses disgorging Chinese tourists at Forest City in November were met by dozens of sales agents, with the women dressed in traditional Sarong Kebaya outfits similar to those worn by Singapore Airlines Ltd. stewardesses.


The visitors filed into a vast sales gallery where agents explained the enormity of the project using a replica of the finished town, with model buildings as tall as people. They viewed show flats with marble floors and golden-trimmed furniture, dined on a buffet spread and were encouraged to sign on the spot. A two-bedroom apartment cost as little as 1.25 million yuan ($181,400), about one-fifth of the price of a similar-sized private apartment in central Singapore.


But JB is not Shenzhen. The billions poured into the economic zone in southern Guangdong in the 1980s and 1990s by Hong Kong and Taiwanese firms was soon dwarfed by Chinese investment as factories sprang up all along China’s coast.


In Malaysia, investment growth is slowing, slipping to 2 percent year on year in the third quarter, from more than 6 percent in the previous quarter. The value of residential sales in Malaysia fell almost 11 percent last year, while in Johor the drop was 32 percent, according to government data.


“I am very concerned because the market is joined at the hip, if Johor goes down, the rest of Malaysia would follow,” said Shanker, at Axis-REIT Managers, who estimates that about half the units in Iskandar may remain empty. “If the developers stop building today, I think it would take 10 years for the condos to fill up the current supply. But they won’t stop.”
















Ongoing construction of the Country Garden Danga Bay project.


Photographer: Ore Huiying/Bloomberg




Property Pipeline


Developers have a pipeline of more than 350,000 private homes planned or under construction in Johor state, according to data from Malaysia’s National Property Information Centre. That’s more than all the privately built homes in Singapore. Forest City could add another 160,000 over its 30-year construction period, according to Bloomberg estimates, based on the projected population.


“Land is plentiful and cheap,” said Alan Cheong, senior director of research & consultancy at Savills Singapore. “But buyers don’t understand how real estate values play out when there is no shortage of land.”


The developers haven’t been helped by government measures designed to prevent overseas investors pushing up prices. In 2014, Malaysia doubled the minimum price of homes that foreigners can buy to 1 million ringgit, and raised capital gains tax to as much as 30 per cent for most properties resold by foreigners within five years.


The stream of new developments has scared away some investors, pushing developers to concentrate more on finding families who will live in the apartments, said Lo at CH Williams. Profit margins have fallen to around 20 percent, from 30 percent when land was cheap a few years ago, according to his firm.










Ongoing construction of the Tropicana Corp's Danga Bay project.


Photographer: Ore Huiying/Bloomberg




Singapore billionaire Peter Lim’s Rowsley Ltd. said last year it will no longer build homes in Iskandar and will instead turn its Vantage Bay site into a healthcare and wellness center.


“The Chinese players have deep financial resources and are building residential projects ahead of demand,” Ho Kiam Kheong, managing director of real estate at Rowsley said in an interview. “If we do residential in Iskandar, we would be only a drop in the ocean. We can’t compete with them on such a large scale.”


UEM Group Bhd., the biggest landowner in Iskandar, is selling plots to manufacturers to boost economic activity in the area.



“The market is joined at the hip, if Johor goes down, the rest of Malaysia would follow”















A Country Gardens ad outside the sales gallery.


Photographer: Ore Huiying/Bloomberg




“Industries are the queen bee,” creating jobs and wealth for local residents, said Chief Executive Officer Izzaddin Idris. “That will bring a demand for the houses we are building.”


U.S.-based chocolate maker Hershey Co. is among those building a plant in Iskandar, joining tenants such as amusement park Legoland Malaysia and Pinewood Iskandar Malaysia Studios—a franchise of the U.K.-based movie studio.


Meanwhile, sales reps sell a Utopian dream—a city of the future with smart, leafy buildings and offices full of happy, rich residents.


“It will take a while for all the parts to fall into place: infrastructure, manufacturing, education, healthcare and growth in population,” said Ho at Rowsley. “But I have no doubt it will happen eventually.”




—With assistance from Emma Dong.

Read These Next:

• World's Biggest Real Estate Frenzy Is Coming to a City Near You
• Chinese Pile Into London Properties on Post-Brexit Pound

Why did Obama meet Riza Aziz, and why did the CIA not advise against that meeting, or did it?

 

Mohd Najib Tun RazakVerified account‏@NajibRazak

My selfie with President Obama !

by Ganesh Sahathevan 

The WSJ  reported in 2016:


Malaysia’s government-fund scandal, one of the world’s biggest alleged white-collar crimes, has been connected to a Hollywood studio, high-end U.S. real estate—and now, a visit to the White House.

Federal investigators are looking into whether money improperly obtained from the Malaysian fund was paid to a businessman who later arranged an Oval Office visit for relatives of the Malaysian prime minister, according to people familiar with the probe.

The businessman is Frank White Jr., an entrepreneur who helped start an investment firm called DuSable Capital Management LLC, along with partners including a rap star. Mr. White has also raised funds for President Barack Obama and Hillary Clinton.
Mr. White’s Malaysian connections were on display in December 2013 when he escorted to the Oval Office a delegation that included the son and stepson of Malaysia’s prime minister, according to visitor records. Actor Leonardo DiCaprio and director Martin Scorsese accompanied them to present to the president a copy of “The Wolf of Wall Street,” a film the stepson, Riza Aziz, co-produced.


By December 2013 Riza Aziz was already in the news,in the US and elsewhere for all the wrong reasons,including money laundering and use of state funds to finance his movie making career. Some examples of what was already in the public domain have been copied and pasted below.

A junior open source (OSINT) analyst would have picked all or any of this up with a simple Google search.One assumes of course that the CIA and other US intelligence services backgrounded these visitors to the Oval Office.If they did not,they need to explain why.

Assuming that they did, why then did they not advise against the meeting? Or did they ,but were ignored by Obama and his advisers?
END 

This should have alerted the CIA to the issue:

From the Hollywood Reporter, May 2012:

Red Granite was formed by Riza Aziz — the 35-year-old son of Malaysian Prime Minster Tun Abdul Razak and among the new generation of film financiers flocking to Hollywood — and Joey McFarland, 40

THR: How much money are you backed by?

McFarland: We do not talk about that. 

Aziz: I will say that I have money invested in the company. It shows that I have skin in the game and am committed from a financial point of view. We also have a group of investors, mainly from the Middle East and Asia.

A simple Internet search would have revealed Riza's Linkedin profile ,and shown  that Riza was ,  prior to becoming a Hollywood movie producer,  a UK bank officer.. That alone should have raised questions about his "skin", especially after his partner Joey McFraland insisted that they "do not talk" about their source of funds. 




There was then this article from a well known celebrity blogger in Malaysia, which should have raised immediate concerns:

Kee Hua Chee Live!

Dec 13, 2012

RIZA AZIZ, 35 YEAR OLD SON OF PRIME MINISTER DATUK SERI NAJIB TUN 

RAZAK, BUYS RM 100 MILLION CONDO IN NEW YORK CITY

KEE@FSWMAG.COM

CNN REPORTED RIZA AZIZ PAID A STAGGERING US$ 33.5 MILLION (RM 100.5 MILLION) FOR A HIGHCLASS NEW YORK CITY CONDO BUT WRONGLY MENTIONED "MR AZIZ IS A SON OF TUN ABDUL RAZAK, THE MALAYSIA PRIME MINISTER FROM 1970 TO 1976".

See, even CNN can make foolish mistakes and get their facts seriously wrong!

Isn't Riza Aziz, based on his age of only 35, the son of Datuk Seri Najib Tun Razak rather than his grandfather? Well, Riza is an investment banker who worked in London for the last 10 years and accumulated a vast fortune there 

by investing in houses and properties and the stock market. 

A million ringgit house ( a mere L 200,000) bought 10 years ago 

can now be worth a million pounds (RM 5 million) and if you had 

bought 10 such houses, you could have made a profit of 

RM 40 million!

This fabulous 15-room, 7,738 sq ft condo has fantastic views from 

its wraparound 1,244 sq ft balcony and is one of the most exclusive 

and expensive condos not only in New York City but the world. In fact, 

even if I am given this condo totally free, I still cannot afford to live in it?

Why?

The monthly maintenance fee is RM 60,000!

Riza Aziz is also the founder owner of Red Granite, a production house

 which makes him a Hollywood movie producer. Riza is a close friend of 

Leonardo diCapracio and funded the RM 300 million movie 

'The Wolf of Wall Street' which begun shooting in New York last August.

Red Granite was launched at Cannes Film Festival in 2010 in what

 was dubbed the 'hottest party in years' and attended by all the hottest stars attending the Cannes Film Festival.

Riza Aziz also met Kris Aquino, sister of the President of the 

Philippines and she tweeted she was surprised to learn "he is a 

Hollywood producer. 

Napayasosyal." Well, based on Kris's acting career, don't be 

surprised if she asked to be in his next movie which may star 

Daniel Radcliffe of 'Harry Potter' fame.

---

This 2012 article confirms and adds to stories about Riza Aziz's investment 

portfolio, which seems to have come out of nowhere:

Housing & Economy December 7, 2012, 3:00 pm

Big Ticket | Sold for $33.5 Million

By ROBIN FINN

Librado Romero/The New York Times The Park Laurel condominium

From Real Estate

• 
  

A large and lavish duplex penthouse that dominates one of the asymmetrical towers at the Park Laurel, a luxury condominium residence built in 2000 and anchored by the historic McBurney School, sold for $33.5 million and was the most expensive sale of the week, according to city records.

The penthouse, No. 29A, a sprawling 15-room combination of three units designed by the architect Alan Wanzenberg for a previous owner, occupies 7,738 square feet of interior space and has a 1,244-square-foot wraparound trophy terrace that faces south and captures both park and city views. There are seven bedrooms, five bathrooms, two powder rooms and a personal elevator entrance.

Special attention was paid to soundproofing: a 2010 listing for the apartment noted that, in addition to radiant-heated tiles in the master bath, the unit had been soundproofed by JRH Acoustical Consulting, with all pipes insulated to achieve “sound elimination.” Carrying charges are around $20,000 per month. 

The Park Laurel, at 15 West 63rd Street, was designed by Beyer Blinder Belle and Costas Kondylis with an eye to the Modernist architecture at Lincoln Center nearby. Previous residents include J. Michael Evans, a Goldman Sachs vice chairman and potential successor to Lloyd C. Blankfein. His 5,000-square-foot Gwathmey Siegel-designed duplex penthouse, No. 40/41, is currently listedfor sale with Douglas Elliman Real Estate for $26.5 million. For $29.25 million, Mr. Evans, who decamped to 995 Fifth Avenue this summer, will throw in an auxiliary two-bedroom unit he owns on the 14th floor.

When No. 29A changed hands in 2010, the seller was the hedge-fund honcho Ephraim F. Gildor, the asking price was $28 million, and the Swiss buyers, Peter Edward Chadney and Simone Cecile Von Graffenried Simperl, paid $23.98 million. Agents from Douglas Elliman represented both parties in the deal. This time around, there was apparently no formal listing; both Janice Chang and Raphael De Niro, who were involved in the 2010 transaction, confirmed that they had no connection to the $33.5 million deal.

Mr. Chadney and Ms. Simperl used Park Laurel Ltd., a company based in Zurich, to identify themselves in city records, and the buyer, based in Los Angeles, acquired the penthouse under the shield of a limited-liability company, Park Laurel Acquisition.

The sale appeared in city records on Dec. 4 and a post that day on the Web site of The Real Deal identified the buyer as Riza Aziz, an investment banker and a founder of Red Granite Pictures, a fledgling film company in Beverly Hills, Calif. Mr. Aziz is a son of Tun Abdul Razak, the Malaysian prime minister from 1970 to 1976. His film company’s debut offering was “Friends With Kids”; it is currently producing “The Wolf of Wall Street,” a $100 million venture directed by Martin Scorsese, starring Leonardo DiCaprio and filming in New York City. According to The Hollywood Reporter, Mr. Aziz and Mr. DiCaprio are fast friends.
Big Ticket includes closed sales from the previous week, ending Wednesday.

A version of this article appeared in print on 12/09/2012, on page 

RE2 of the NewYork edition with the headline: $33,500,000.

Big Ticket, real estate

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• Big Ticket | Sold for $24,000,00

  
  
  

  
  

  
  

Rex Tillerson is exactly what Lee Kuan Yew ordered-Keating's attack on Tillerson best treated as the pleading of a lobbyist

Comment
Paul Keating leads the charge for China once again, and again betraying his role as a lobbyist for the Chinese.
Best ignored, and instead pay heed to the words of Lee Kuan Yew, a real statesman who ,being himself Chinese , understood China and the Chinese in a way Keating cannot.So as, LKY said:

China will not let an international court arbitrate territorial disputes in the South China Sea, so the presence of U.S. firepower in the Asia-Pacific will be necessary if the U.N. Law of the Sea is to prevail.

A warning as that now issued by Secretary of State designate Rex Tillerson is long overdue.

END 

South China Sea: Paul Keating says Rex Tillerson threatening to involve Australia in war

By political reporter Henry Belot

Updated 13 minutes ago

PHOTO: Paul Keating (R) has hit out at Rex Tillerson's remarks. (Reuters: Daniel Kramer/AAP: Luis Enrique Ascui)

RELATED STORY: US, Australia urged to get tough over South China Sea

RELATED STORY: 'Expect' Trump to ask Australia to go to South China Sea

RELATED STORY: What Trump's pick for secretary of state thinks on key issues

MAP: Australia

Former prime minister Paul Keating has accused United States secretary of state nominee Rex Tillerson of threatening to involve Australia in war.

Key points:

• Rex Tillerson says US will send "clear signal" to China its access will be blocked
• He says US' allies should provide "back up" in the region
• Australians should take note of Mr Tillerson's "ludicrous" statements, Paul Keating says

Earlier this week, the former Exxon Mobil chief executive said the US would send a "clear signal" to China that its access to artificial islands in the South China Sea would be blocked.

In a confirmation hearing before the US Senate and Foreign Relations Committee, Mr Tillerson also said the US's traditional allies in South-East Asia should also provide "back up" in the region.

In a statement, Mr Keating said the Australian people needed to take note of Mr Tillerson's statements, which he described as "simply ludicrous".

"When the US secretary of state-designate threatens to involve Australia in war with China, the Australian people need to take note," he said.

"That is the only way Rex Tillerson's testimony that a 'signal' should be sent to China that 'access to these islands is not going to be allowed', and that US allies in the region should be there 'to show back-up', can be read."

China has laid claim to a swathe of shoals and islands inside what is known as the "Nine-Dash Line", which represents about 90 per cent of the South China Sea.

In his statement, Mr Keating rejected Mr Tillerson's claim that China's control of access the South China Sea would be a threat to the entire global economy.

"No country would be more badly affected than China if it moved to impede navigation," he said.

"On the other hand, Australia's prosperity and the security of the world would be devastated by war."

China plays down comments

China's Foreign Ministry has issued a measured response to Mr Tillerson's statements — which have been described by some commentators as confrontation — calling for continued cooperation with Washington.

Impasse 'could lead to conflict'

One of the United States' most senior ex-military officers warns that misunderstandings between China and the US may lead to open conflict over the South China Sea.

Foreign Ministry spokesman Lu Kang reiterated Beijing's view that it had indisputable sovereignty in the South China Sea, but he also sought some common ground.

"We went through Mr Rex Tillerson's responses at his Senate confirmation hearing," Mr Lu said.

"I'd agree with one of his points when he said that China and the US have some divergences but the two countries also share a lot of common interests and consensus.

"I appreciate his concluding that both sides should not let divergences hinder the China-US cooperation which is in line with a wide range of shared interests."

Time to 'cut the tag': Keating

Mr Keating has previously called on Australia to "cut the tag" with American foreign policy and focus more on building relationships in Asia.

In December, Mr Keating told 7.30 that Australia's alliance with the US had taken on a "reverential, sacramental quality" and the nation should build a more independent foreign policy.

In his statement issued on Friday, he called on Government to make it clear that Australia would not take part in "adventurism" in the South China Sea.

"We should tell the US administration from the get-go that Australia will not be part of such adventurism, just as we should have done in Iraq 15 years ago," he said.

"That means no naval commitment to joint operations in the South China Sea and no enhanced US military facilitation of such operations.