Malaysia starts Perwaja Steel trial
Malaysia starts Perwaja Steel trial
Reuters, Kuala Lumpur
The first big businessman arrested in Malaysia's new anti- corruption drive went on trial on Monday and denied charges that he had "dishonestly authorized" a payment of about $20 million to a mysterious overseas firm.
Eric Chia Eng Hock, the former head of state-led Perwaja Steel, was the first major figure to be charged for corruption since Prime Minister Abdullah Ahmad Badawi came to power last October.
Wheelchair-bound Chia, 71, looked tense in a packed court after pleading not guilty to the charges. Arrested in February, he is free on bail.
"I'm happy," Chia said as left the court, adding that he was confident of winning the case.
Chia has been accused of illegally authorizing a payment of 76.4 million ringgit ($20.1 million) in 1994, ostensibly to Hong Kong-based Frilsham Enterprise Inc for technical assistance provided by Japan's NKK Corp for a Perwaja project in the northern state of Kedah.
But no such payment was due to NKK.
The government-controlled New Straits Times has said Frilsham was a fictitious company.
Set up in the 1980s to serve as a cornerstone of Malaysia's industrial development, Perwaja became one of Malaysia's biggest financial scandals, running up debts of $2.6 billion and losses of $790 million.
If convicted, Chia faces a minimum jail term of two years and a maximum of 20 years, a fine and caning. He would be spared the caning because of his age.
"We are always confident of our case. Today has not changed anything," Chia's lawyer Shafee Abdullah told reporters.
About 36 witnesses, including ex-Perwaja officials, will testify at the trial, expected to last for a month.
Abdullah has portrayed himself as a new broom sweeping through Malaysia since taking charge in October, ordering a crackdown on red tape and corruption in business, government and the police.
Besides Chia, the clean government push also netted a serving cabinet minister.
Abdullah's predecessor Mahathir Mohamad, had faced accusations of cronyism over his 22-year rule during which he handpicked businessmen for ambitious industrialization plans, including Chia to head the failed Perwaja steel venture.
Mahathir set up Perwaja and national carmaker Proton in the 1980s to help spearhead Malaysia's heavy industrialization drive.
But the Perwaja project was beset with problems and an iron ore processing plant failed, prompting key Japanese shareholder Nippon Steel to pull out. By 1988, Perwaja was insolvent.
Mahathir then asked Chia, a Singapore-born entrepreneur, to help revive the firm. With fresh capital and official backing, he turned it around and Perwaja made a maiden profit in 1991.
But in 1995, Chia's fortunes changed and he was asked to resign.
The following year, then finance minister Anwar Ibrahim published an auditors' report on alleged irregularities at the steel-maker. By then Perwaja had run up losses of $790 million, including the unauthorized transactions with the Hong Kong firm.
The authorities questioned Chia and more than 50 others, including foreigners, over the case but took no action. The anti- corruption agency later said its cross-border investigations were hampered by international bureaucracy.
Mahathir once said that launching the company, one of his pet projects, was a mistake.