Mahathir should present a White Paper on the Perwaja scandal to justify the government’s "bail-out of the bailor" and explain whether Malaysian taxpayers have lost another RM800 million  since Anwar’s  disclosures in May 1996, chalking the total losses to close to RM11 billion

Media Statement
by Lim Kit Siang

(Petaling Jaya, Monday): The Asian Wall Street Journal today in a front-page report headlined "Malaysia’s Perwaja Sees Losses Mount" reported that since the admission by Datuk Seri Anwar Ibrahim, then Deputy Finance Minister and  Finance Minister, in Parliament during the debate on the Seventh Malaysia Plan in May 1996 that Perwaja Terengganu Sdn Bhd. as end of 1995 had suffered   RM2.9 billion in accumulated losses and RM6.9 billion in liabilities, Perwaja had chalked up another RM800 million in accumulated losses.

The Prime Minister, Datuk Seri Dr. Mahathir Mohamad should present a White Paper to explain whether Malaysian taxpayers have lost another RM800 million in the Perwaja steel project since Anwar’s disclosures four years ago, bringing Perwaja’s  total losses to close to RM11 billion and making it the biggest financial scandal in the nation’s history.

In December 1996, I had questioned the government decision to approve the "bail-out" plan for Perwaja by a consortium headed by Maju Holdings Sdn. Bhd., as it was a modest-sized company which lacked the financial resources and technical expertise to spearhead such a complex job.

DAP’s reservations at the time about the wisdom of the decision to approve the "bail-out plan" by Maju Holdings Sdn. Bhd. has now been proved right, as the government and the taxpayers have now been placed in a position of having to bail out the bailor!

In 1996, the government assumed full responsibility for Perwaja’s RM9.9 billion in accumulated losses and other liabilities to allow Maju Holdings Sdn. Bhd. to start all over on a clean slate in Perwaja through Equal Concept Sdn. Bhd. which is 51% owned  by Maju Holdings and 49% by the government.

ASWJ reported that Perwaja’s steel business under Equal Concept posted a loss of RM340 million in 1998 and the company continues to run in the red.

Malaysian taxpayers are continuing to pay a big bill for Perwaja. Federal Public Accounts 1998 prepared by the Accountant-General and tabled in  Parliament for the budget debate shows that as at the end of 1998, Malaysian taxpayers are burdened with Perwaja’s RM9.1 billion liabilities, comprising RM4.01 billion direct loans to Perwaja Terengganu Sdn. Bhd., RM105 million direct loan to Equal Concept Sdn. Bhd. and RM5.1 billion in government-guaranteed borrowings from local and foreign banks.

Perwaja’s RM4.1 billion direct loans from the government is the single largest government loan to a company as at the end of 1998, exceeding the other billion-ringgit loans such as RM2.75 billion to Projek Lebuhraya Utara-Selatan Bhd. (PLUS) and  RM1.5 billion to Projek UsahasamaTransit Ringan.

In July last year, I had unsuccessfully sought to adjourn Parliament to debate a motion of urgent, definite public importance on  the police report lodged by Anwar Ibrahim on July 21, 1999, implicating for the first time the involvement of the Prime Minister in the Perwaja scandal, as the former Deputy Prime Minister and Finance Minister alleged that several attempts by the Finance Ministry  from early 1996 to obtain detailed information about the Perwaja management, particularly its Managing Director Eric Chia failed as he (Eric Cheah) repeatedly claimed that his actions had the support and were under the directions of the Prime Minister, and that these claims were substantiated with letters written by the Prime Minister himself.

The White Paper which should be entitled "Perwaja Scandal: Bailing Out the Bailor" should not only give the latest update of the long-running but fruitless Anti-Corruption Agency investigations into the Perwaja scandal, but why the government could never learn from its past mistakes and mismanagements to the extent that taxpayers are now burdened with some RM11 billion losses with the government having to "bail out the bailor" of Perwaja!


*Lim Kit Siang - DAP National Chairman