Flap over gold coin hits Anglo-Malaysian ties

Flap over gold coin hits Anglo-Malaysian ties

By Bill Tarrant

KUALA LUMPUR (Reuter): Controversy over a gold coin has put new strains on ties between Malaysia and Britain just as it appeared the Malaysians may have been moving towards lifting a punishing ban against British business.

The coin became an issue after British-based bank Standard Chartered Plc said this month that two officials of its Mocatta bullion division in Hong Kong had resigned for offering bribes to Malaysian and Philippines officials.

Britain's Financial Times later reported that bank officials investigating the matter found US$10,000 in gold coins had gone missing, and said they had allegedly been given to a Malaysian minister as a "trade sample".

The Malaysian government is fuming over the story because Standard Chartered says the minister returned a gold coin after receiving it in 1991.

Malaysia's Youth and Sports Minister, Abdul Ghani Othman, said he was given a one-kilogram gold coin three years ago when he was deputy finance minister for use as an exhibit.

Standard Chartered Bank in Kuala Lumpur issued a statement confirming Abdul Ghani's account, saying the case was closed. The bank said it regretted that "a distorted leak of an internal investigation" had embarrassed Malaysia.

Malaysia's Justice Minister, Syed Hamid Albar, said at the weekend that the government should sue the Financial Times and ban its distribution in Malaysia in retaliation.

The incident may threaten to delay the lifting of a ban on government contracts for British business, imposed six months ago in retaliation against British media reports about corruption in Malaysia, analysts said.

The national news agency, Bernama, quoted the justice minister as saying at the weekend: "We should seriously consider taking action against the newspaper and its editor for being irresponsible in reporting such stories."

"The victim is not simply the person but the country. They are tarnishing the good name of the country and they have got their own reasons for doing it to bring disrepute to Malaysia," Hamid told reporters in the southern state of Johor.

The issue will be discussed at the weekly cabinet meeting tomorrow, he said.

Deputy Prime Minister Anwar Ibrahim hinted that the matter could affect the timing of the lifting of the ban.

"We have to study the implications and intention of the media in harping on the issues in such an irresponsible manner," Anwar told reporters at the weekend.

Officials and diplomats said the cabinet decided in early June to lift the ban -- which could cost British firms billions of dollars in lost contracts -- but left it to Prime Minister Mahathir Mohamad to decide the time.

Mahathir was particularly incensed about a story in the Sunday Times of London in late February that said a British construction company was prepared to offer him a US$50,000 bribe to secure a building contract.

Mahathir said then that the story betrayed the "colonial brain" of the British press which thought "brown Moslems" were incompetent and their leaders corrupt.

More of that sort of rhetoric was used by the pro-government New Straits Times in an editorial on Monday entitled "Fool's Gold of Fleet Street".

"The Financial Times has shown that the come-down to fair reporting involves too much pride to swallow for Fleet Street's blabber-mouths," the newspaper said.

"While ministers of the crown visited Kuala Lumpur with caps in hand... while leading City banks and businesses pooled for advertisements and other exorbitant gestures of contrition, and diplomats bowed low... the witch hunt was only held at bay."

The newspaper said Malaysia need not fear trade retaliation if the ban remained.

"Having given over that power to Brussels (as a member of the European Union) Britain has little muscle left over external trade, a fact that would leave Malaysia free to select from a queue of alternative foreign partners at its ease and leisure."