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Perwaja & Eric CHIA

From The Singapore Straits Times
8th September 2000

The story behind the Perwaja affair
By BRENDAN PEREIRA MALAYSIA CORRESPONDENT

KUALA LUMPUR -- For a man who has been blamed for the failure of Malaysia's national steel company and whose name these days attracts nothing but scorn, Tan Sri Eric Chia is remarkably self-assured and contented.

He says that for four years he has been painted as a villain following a disclosure in Parliament by former Finance Minister Anwar Ibrahim in 1996 that Perwaja Steel was insolvent and had losses totalling RM2.9 billion (S$1.3 billion).

Anwar attributed the dismal performance to poor management and irregularities in the payment and award of contracts.

Shortly after, the Anti-Corruption Agency (ACA) started investigating the affair and has periodically acknowledged that the probe is continuing.

Tan Sri Chia has not been accused of any wrongdoing, but in the court of public perception, he has been found guilty and convicted.

""Now, no one wants to know Eric Chia. I can count the number of my friends. But that's life,'' says the burly industrialist, holding up ten fingers.

Speaking at length for the first time since his resignation from Perwaja in 1995, he recalled being spat upon by a taxi driver at the airport after being accused of stealing ""the national wealth''.

""I just wiped my face and told him that one day he will know the truth.''

Tan Sri Chia says he will not tell the whole story surrounding the national steel company unless asked to give evidence in court.

Washing dirty linen in public will only earn him the title of national traitor.

""I will not talk unless I am forced to talk. If I speak in court, which human being will say that Eric Chia betrayed his country.''

Perwaja was to be the cornerstone of the industrialisation drive that Prime Minister Mahathir Mohamad began in the early 1980s.

But the project was wracked with problems -- a plant that processed iron ore to pure iron had failed, leading Japanese shareholder Nippon Steel to abandon the project.

Also, interest payments on a yen loan totalling RM815 million were bleeding the company. By 1988, Perwaja Terengganu was insolvent.

Enter Tan Sri Chia.

Dr Mahathir asked the businessman to spend six months and find out why the project bombed.

The Singapore-born entrepreneur said he was reluctant but acceded after the PM told him that he owed it to God and country to give back something after becoming successful here.

At the time, he was drawing a salary of RM72,000 a month from UMW, owned three cars, had his own plane and a yacht.

Based on a new 10-year-plan, a new company, Perwaja Steel, was set up.

With fresh capital, commercial loans and official sanction, he and his board of directors, including representatives of the Finance Ministry, went about rehabilitating the project.

In 1991, the company recorded its first profit and Tan Sri Chia was the toast of the town.

He recalls: ""Everywhere Dr Mahathir went, he mentioned my name and Perwaja. That may not have been a good thing.''

His critics say that the company's putative turnaround was an illusion that masked deepening financial woes and widespread management irregularities.

His reply: ""You asked me to run an 800 metres race, but at the 600-metre point, you blew the whistle and said that Eric Chia you have lost the race. I have got 200 metres to run.''

He says that the bulk of the RM2.9 billion losses laid at his door was incurred by Perwaja Steel's predecessor, Perwaja Terengganu.

He traces the start of his woes to a report prepared by him on the privatisation of Perwaja Steel.

He said that by selling 60 per cent of its shares, all the capital could be recouped.

There was a mad scramble for the report and many attractive offers, he recalled.

By mid-1995, he sensed that his fortunes were changing. His fears were confirmed when he received a letter from a senior government official asking him to resign because of ill health.

In 1996, Anwar made public an audit report on the alleged irregularities at Perwaja Steel.

Rumours abounded that Tan Sri Chia had absconded, while some wondered why he did not come forward to defend himself.

He gave his rationale: ""When Anwar spoke in Parliament, I was taken by surprise. I had no documents, not a single document. How could I have reacted? I was attacked by a very prominent politician.''

He kept quiet, spent a couple of million ringgit, kept some of his old staff on the payroll and started collecting documents detailing transactions involving Perwaja from Chile, Brazil, Germany, Italy and Japan.

In eight months, he completed his war chest. ""Now I have got all the documents. You just give me the platform. The best platform you can give me is the courtroom.''

He says he wrote to Anwar twice in 1996 seeking an open inquiry into the affair to be chaired by a retired judge. There was no reply.

Is he upset? He says: ""In 1996, Anwar announced the findings, Three years later, he went to jail. What do you call this? The Christians and the Muslims will say this is the act of God. The Hindus and Buddhists will say this is fate.''


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