DAP calls for Royal Commission of Inquiry into RM10 billion Perwaja scandal with former ACA director-general Zaki Husin appointed to assist the inquiry to ensure that Malaysia does not get into the Guinness Book of Records in  having the most heinous mega scandals without criminals

Media Statement
by Lim Kit Siang

(Penang,  Tuesday): In London in a a dialogue with Malaysians on Sunday, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad made his admission of the decade when for the first time he publicly admitted to possible misappropriation of funds and mismanagement in the RM10 billion Perwaja scandal when in response to a question, he said:  

“I am not denying that we have lost RM10 billion in Perwaja. It’s a very difficult industry to go into. Most countries which want to develop must have a steel industry but most lose money, and have to be subsidised.  

“We went into Perwaja with our eyes wide open, we were prepared to lose   money but unfortunately, we had made too many mistakes. At first, we   thought that civil servants should run the company but they had no idea about running a steel mill.  

“Subsequently, we brought a businessman to run it, and he too caused a lot of losses. It is believed that he has mismanaged and taken money from the company.  

“We had already investigated this. But unfortunately, the money that was supposed to have been taken out, is not easily located because it is said to be in a Swiss Bank account but the Swiss authorities are not willing to reveal who the account-holders are.  

“They are very secretive about the accounts, and they are not going to co-operate. But they do admit that there were some funds but we need  them to give evidence in our court. This, they are not willing to do. 

“And many of the other things done are done in foreign countries, and we are not getting the kind of co-operation that we need in our investigation. We are still continuing with our investigation, and if there is any evidence at all, we will bring the people to court and they have to face the  consequences of their mismanagement and misappropriation of funds.  

“RM10 billion is a lot of money. But we must accept that losses will be  incurred in industrialising Malaysia.” (NST 26.2.2002)  

Also referring to the police report on MAS mismanagement of the cargo division, Mahathir said:  “We can’t tolerate any deliberate misappropriation of funds or mismanagement, crony or otherwise”.  

It is premature however, as is being done in some quarters, to hail the Prime Minister’s reply as a clear signal of  the  end to cronyism and the protection of cronies from wrongdoings in Malaysia - as what has happened so far are at most actions against ex-cronies particularly of ex-UMNO leaders.  

Although Mahathir has finally admitted that the RM10 billion losses in Perwaja “is a lot of money” - which is more than the entire Health Ministry budget (operating and development)  for this year, which is only RM6.3 billion or enough to wipe out all the debts owed by the 13 State Governments to the Federal Government - the Prime Minister had never given the public the impression that he was very concerned and diligent in wanting to get to the bottom of the RM10 billion Perwaja scandal, for two important reasons.  

Firstly, in July 1999, former deputy Prime Minister Datuk Seri Anwar Ibrahim lodged a police report alleging the Prime Minister’s involvement in  the Perwaja scandal.  

In his police report, Anwar, who was at the relevant time the Finance Minister, said that the Ministry of Finance had to appoint Price Waterhouse as independent auditors into the Perwaja scandal in early 1996 soon after being alerted that Perwaja was almost insolvent and would require massive injection of funds from the Government.  

Anwar said that the appointment of auditors had to be done because several earlier attempts to obtain detailed information from the then management, particularly its Managing Director, Tan Sri Eric Chia failed as he repeatedly claimed that his actions had the support and under the directions of the Prime Minister.  Anwar said that Eric Chia’s claim was further substantiated with letters written by the Prime Minister himself.  

Was Anwar’s allegation of the Prime Minister’s involvement in the Perwaja scandal true, and if not, why wasn’t there a full and convincing public exoneration of Mahathir such as by way of a public inquiry? 

Secondly, why did the Prime Minister make a last-minute decision in March last year not to renew the appointment of the  former Anti-Corruption Agency director-general Datuk Ahmad Zaki Husin, shortly after Zaki announced a breakthrough that   the Swiss government had agreed to co-operate with the ACA in its investigations into the Perwaja Steel scandal.  

Zaki had expressed the hope that with the help of the Swiss authorities, ACA investigations could “shift into top gear” into the Perwaja scandal  in connection with the transfer of RM76.4 million to a non-existent company in Hong Kong via another company in Japan and subsequent final transfer to a Swiss bank account of a firm registered in the British Virgin Islands. 

Instead of giving Zaki the full support so that  the breakthrough in getting the co-operation of the  Swiss government could lead to the solution of one important aspect of the RM10 billion Perwaja scandal, the Prime Minister decided to remove Zaki from the ACA at the most critical stage of the six-year-long ACA investigations into the Perwaja scandal and appoint instead, for the first time in the ACA’s 23-year history, a policeman as its head - resulting in the disappearance of ACA  from the national radar and public consciousness in the past one year! 

Can Mahathir explain why Zaki was not reappointed as ACA director-general at the most crucial stage to crash through the six-year stonewall of ACA  investigations into the Perwaja scandal?  

Mahathir’s statement in London is rather misleading as he gave the impression that  the ACA's investigations into the RM10 billion Perwaja scandal  completely hinges on one item concerning the transfer of RM76.4 million to a non-existent account and that the entire ACA investigations stand or fall on this item - when the RM76.4 million item can only be the tip of an iceberg for a scandal which has cost the country losses more than one-hundred-fold this amount.  

If Mahathir is serious in his London statement that the government would not tolerate “misappropriation of funds or mismanagement, crony or otherwise”, it is still not too late for the government to demonstrate its full commitment to get to the bottom of the RM10 billion Perwaja scandal and  discharge its responsibility of  accountability and transparency to the Malaysian people.

DAP calls on the Cabinet to establish a Royal Commission of Inquiry into the RM10 billion Perwaja scandal with former ACA director-general Zaki Husin appointed to assist the inquiry to ensure that Malaysia does not get into the Guinness Book of Records in  having the most heinous mega scandals without criminals.  If the Commission of Inquiry comes up  against a “stonewall”, then let Malaysians and the world know the full facts and whys of such a “stonewall”!

Such a Royal Commission of Inquiry would also afford Mahathir the opportunity to clear himself of the serious charges of involvement in the Perwaja scandal which had been levelled against him by Anwar Ibrahim in his police report in July 1999.


*Lim Kit Siang - DAP National Chairman