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
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
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
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
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
""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
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
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
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.''