The Prime Minister, Datuk Seri Dr. Mahathir Mohamed, formally announced yesterday that Maju Holdings Sdn. Bhd has been given 51 per cent stake in Perwaja Steel Sdn. Bhd., with Trengganu Government continue to hold 19 per cent with the remaining 30 per cent by the Federal Government. Maju Holdings will also be managing the steel company.
The Prime Minister said that the Government would also take over Perwaja’s debts to enable the company to operate on a clean slate.
Mahathir’s announcement is a matter of grave public concern for at least four reasons:
Firstly, what is there to guarantee that there would not be a third Perwaja financial scandal down the road in a few years’ time, doubling or trebling the accumulated losses, requiring a third Perwaja rescue operation?
This is the second time that the government is absorbing all the losses of the ailing steel complex so that it could be given a “clean slate” to start all over again.
Malaysians can still remember that when the Government launched its first rescue operation of Perwaja Trengganu in 1990, injecting RM250 million into a new subsidiary Perwaja Steel to start “with a clean slate of accounts” after Perwaja Trengganu had transferred its assets of RM500 million and its operations to Perwaja Steel, and installing Tan Sri Eri Chia as the managing director, the country was promised a new beginning for Perwaja.
During the first few years of Eric Chia’s stewardship, the country was repeatedly told about the “miraculous turn-around” of Perwaja Steel, that it had started making profits and would even be publicly listed.
However, at the end of the day, Perwaja’s losses exploded from RM1 billion before Eric Chia took over to RM2.9 billion at the end of 1995, as well as recording RM6.9 billion in liabilities.
The question uppermost in the minds of Malaysians at Mahathir’s announcement is whether the Malaysian taxpayers, through the government, would now have to bear the burden of RM2.9 billion losses and RM6.9 billion in liabilities incurred by Perwaja under the stewardship of Tan Sri Eric Chia - which comes to an astronomical total of some RM10 billion!
The second public concern is whether the Government had chosen a rescue plan for Perwaja which would involve the minimal public cost and avert the need for the government to bear full responsibility for the accumulated losses and liabilities amounting to some RM10 billion.
The Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim, had told Parliament in May last year that Price Waterhouse had made four proposals on the rescue operation for Perwaja. They were:
Anwar said four companies had shown interest to revive Perwaja, and they were the Lion Group, Renong Bhd, Syarikat Maju Holding Bhd and Wing Tiek Holding Bhd.
The Goverment does not seem to have picked on anyone of the four options presented by Price Waterhouse, as acceptance of Syarikat Maju Holdings Bhd does not fulfil the caveat of finding a company with “sound capital and experience in the steel industry”.
The Government should make public the proposals submitted by these four interested companies to demonstrate that it had chosen a plan which would involve the least public burden and with the best chance of success - and in particular, ruling out all possibility of a third Perwaja financial scandal requiring a third Perwaja bail-out down the road in the next few years - with even bigger losses and liabilities than at present!
The third public concern is the failure of the government to give a full public accounting as to why the second Perwaja rescue operation had failed despite repeated public assurances given by the Prime Minister and other government leaders about the “miraculous turnaround” of Perwaja Steel.
The Cabinet should seriously consider making public the Price Waterhouse report into the second Perwaja financial scandal in the same way that the Price Waterhouse report into the Bank Rakyat scandal was made public in 1978.
The publication of the Price Waterhouse report into the second Perwaja financial scandal will not only demonstrate the government’s seriousness in upholding the principles of accountability and transparency, but will serve as a great deterrent to prevent the recurrence of a third Perwaja financial scandal - a clear warning that full public accountability would be expected of those who are now involved in starting Perwaja on a new clean slate a second time!
Fourthly, the shocking inaction all these months, whether by the Anti-Corruption Agency or other government agencies, to bring to book those responsible for the Perwaja billion-ringgit losses, whether for financial mismanagement, irregularities, abuses or criminal breach of trust.
It is tragic for Malaysia and a shocking commentary on public accountability in the country if the second Perwaja financial scandal ends up as another Bumiputra Malaysia Financial Scandal - where it is a “heinous crime without criminals”.