News: LLC UPDATE 1-Malaysia to inject $698 mln to complete 1MDB-linked financial district

(Adds minister's comments, details of project)

KUALA LUMPUR, June 21 (Reuters) - Malaysia said on Thursday it will provide up to 2.8 billion ringgit ($697.9 million) to complete an integrated financial district from which more than 3 billion ringgit was diverted to pay debts of scandal-plagued 1Malaysia Development Berhad (1MDB).

Finance Minister Lim Guan Eng said the decision will "help allay concerns" of local and foreign investors on the fate of the TRX City project in Kuala Lumpur. It includes nearly-complete Exchange 106, which will be the tallest building in Southeast Asia.

The TRX City case is an example of how 1MDB used money that was intended for a venture to instead repay debts "not related to the project," Lim told a news conference.

The minister said since 2012, Malaysia's government extended advances and transfers, and bought land from TRX City for a total amount of 3.69 billion ringgit. Of that, 3.07 billion ringgit was "misappropriated" by 1MDB, mainly for 1MDB loan repayments, he said.

Just months from completion, the 492-meter skyscraper Exchange 106 is one of only a few mega-projects cleared by Malaysia's new government, which has pledged to review deals struck by the previous administration of Prime Minister Najib Razak.

Lim said TRX City has sold parcels of land to Mulia Property Development, which is building the landmark Exchange 106, and also to HSBC HSBA.L and Affin Bank. Australian real estate firm Lendlease (LLC) also has a contract to build a lifestyle hub which will include a hotel and a shopping mall.

The finance ministry "will ensure that the injection of funds is spent prudently to protect the interest of Malaysian taxpayers, the existing foreign and local investors of TRXC (TRX City)," Lim said.

($1 = 4.0120 ringgit)