Zulhilmi Ramli, of the Malaysian Anti-Corruption Commission, said this during former Penang chief minister Lim Guan Eng’s corruption trial.

Zulhilmi said MACC’s investigations found that two plots of state land were transferred to businessman Zarul Ahmad Zulkifli, and subsequently sold to a firm owned by the late tycoon Ewe Swee Kheng.

He said Zarul’s firm, Consortium Zenith BUCG Sdn Bhd, received the plots of land as payment for conducting feasibility studies and preparing detailed design plans for the tunnel.

However, the studies were never carried out and the design plans were not prepared.

“A luxury apartment was constructed on Lot 702. Datuk Ewe was the developer,” Zulhilmi said.

He said the Penang government also paid a law firm RM100,000 to draft and execute a “preliminary agreement for the privatisation of the major roads and tunnel project” between the state government and Zarul’s company.

However, under the contract terms, there was no mention of the construction of an undersea tunnel.

“It only mentioned the Penang Outer Ring Road or three main roads, and for feasibility studies and detailed design work to be conducted,” he said.

Lim is standing trial on charges of using his position as then Penang chief minister to ask Zarul for a 10% cut of profits from the undersea tunnel project and accepting RM3.3 million in kickbacks from the businessman.

He is also accused of two counts of dishonestly misappropriating state land worth RM208.7 million.

The hearing before judge Azura Alwi continues on Thursday.