The Guillotines of Power: Why Mahathir Prefers Anwar In Jail, Part 2


In the unlikelihood that Anwar drives Pakatan Rakyat to Putrajaya, the tables would turn indefinitely against Mahathir’s favour. 

Raggie Jessy

4. The one with Mahathir and Perwaja Steel

Almost as soon as he took office, Mahathir launched a large scaled initiative to drive Malaysia into heavy industries. His look-east policy brought to pass several state sponsored projects as he struck bargains with select Japanese transnational corporations. And central to these covenants was our very own Heavy Industries Corporation of Malaysia Berhad (HICOM), a 100% Government owned corporation.

Perwaja Steel was borne out of an agreement HICOM and a consortium of eight Japanese firms led by Nippon Steel Corporation (NSC). The concord cemented Malaysia’s shift from an agro-intensive industry to one that was centred on heavy industries.

But not even a maverick of a statesman could possibly have prognosticated what was to come. And Mahathir wasn’t the exception to that rule.

In what appears to be a twist of fate, the Japanese Yen appreciated significantly against the US dollar soon after the inception of Perwaja. This meant that interest payments to Japanese firms soared on the local front. Call it bad karma or whatever you like; Perwaja began facing production problems as it became saddled with huge debts. The already chaotic debt pattern was accentuated in 1985 following the Plaza Accord between France, Japan, West Germany and the US. An upshot of the accord was the sudden appreciation of the Yen, which prompted a hive of activity as Japanese manufacturers took advantage of the fall in raw material prices.

That’s right. The Plaza Accord put the zippity in Japan’s doo dah.

As the Yen appreciated, interest payments began to soar. Japan’s NSC gradually pulled out of the undertaking, raising eyebrows among Mahathirian sceptics. Many perceived this to be a rough patch that would do Mahathir in. But Mahathir had his own think.

In 1988, Mahathir ushered Eric Chia into Perwaja and strapped him firmly in the driver’s seat. Mahathir lubricated Perwaja’s pistons with Government funds (RM 1.01 billion) and loans from EPF (RM 130 million) and BBMB (RM 860 million). He then gave Chia a free hand at doing whatever he deemed necessary in turning Perwaja around. For some years, Chia appeared triumphant in ameliorating circumstances, granting Mahathir seven years of calm before a storm that was to further undermine his regime.

When Chia resigned abruptly in 1995, the nation was jolted with reports of corruption as auditors revealed accounts with colossal arrears. Mahathir’s handpicked chieftain had apparently plunged Perwaja further into debt, with losses estimated at RM1.49 billion in excess of the amount owed when Chia first took over.

Ironically, both the police and the ACA dragged their feet over Perwaja during Mahathir’s remaining tenure. Mahathir defended their hesitance by implicating the Swiss authorities, who he accused of withholding information pertinent to fraud investigations involving Chia. Mahathir was referring to the details of an account to which RM76 million was allegedly channelled to after being siphoned off from Perwaja’s coffers.

But the alleged wheeling and dealing that took place in Perwaja went beyond RM76 million. A year before handing over the baton to Abdullah Badawi, Mahathir came clean on the incidence of mismanagement and fraud during a dialogue with some Malaysians in London, estimating losses at a staggering RM10 billion. But his reluctance in implicating Chia convinced many of his complicity in a massive conspiracy to whitewash Chia’s alleged crime. Compounding to the air of scepticism that wafted around Mahathir was an internal report by the corporation’s new management which listed out several irregularities. Among them were:

– inaccurate accounting records
– unauthorized contracts (hundreds of millions of ringgit worth)
– dubious maintenance contracts amounting to RM292 milliion
– RM 957 million in contracts to long time associates of Chia

Mahathir’s claims appeared to be nothing but sophistry aimed at pacifying dissenters. Datuk Ahmad Zaki of the ACA claimed it impossible to ascertain when investigations on Perwaja would wrap up. According to Zaki, the ACA was prepared to continue investigations “even if it took 10 or 20 years.” Now, this is coming from a body that otherwise burned rubber in getting to alleged fraudsters.

5. The one where Anwar cried Perwaja

On the 21 July, 1999, Anwar lodged a police report (report no. 19625/99) at the Tun H.S. Lee police station. In his report, Anwar accused Mahathir of controlling Chia, whose integrity was the focal point of investigations by the ACA. Rumour had it that Mahathir held Perwaja’s fort by having his leash on Chia. Indeed, Chia did report to Mahathir throughout his tenure as Perwaja’s chieftain.

In his report, Anwar had stated the following:

Eric Chia has in fact repeatedly claimed that he was under the orders of and his actions had the support of the PM. And this is further substantiated with letters written by the PM himself. With the so-called mandate, the board was sidelined, tender procedures were blatantly ignored and there were questionable, unsatisfactory payments made to certain parties.

The authorities did eventually charge Chia for the embezzlement of RM76 million from Perwaja’s coffers. On Feb 10 2004, Chia, 74, pleaded not guilty to a charge of CBT involving the said amount. He was alleged to have dishonestly authorised payment to Frilsham Enterprise Incorporated and American Express Bank Ltd in Hong Kong for technical assistance provided in Gurun. However, records showed that no such payment was ever due.

He was charged some six months later for dishonestly disposing of the funds by entering into an agreement with NKK Corporation of Japan and authorising payment of the amount without the approval of the board of directors or tender committee of Perwaja Rolling Mill and Development Sdn Bhd. He was charged with having committed both offences in his capacity as managing director of Perwaja Rolling Mill and Development Sdn Bhd at its office in Menara UBN in Jalan P. Ramlee between 4 Nov, 1993 and 22 Feb, 1994.

Chia was acquitted and discharged three years later without his defence ever being called in, on grounds that the prosecution failed to adduce sufficient evidence in bringing a prima facie case against him.

The fact that the police failed to record a statement from Anwar or Mahathir stretches the mile on allegations of partiality by the Government. The police report aside, Anwar was Finance Minister back when investigations into alleged irregularities involving Perwaja and Chia began. One can begin to fathom the likelihood of there being skeletons in Mahathir’s closet. Perchance, it was Chia who donned a skeleton suit and got into Mahathir’s closet.

6. The one where Anwar drags Perwaja into the mud

Chia’s abrupt resignation brought Anwar too close to Mahathir’s lair for comfort. With an 81% stake in Perwaja, the Finance Ministry’s holding unit served as a thorn in Mahathir’s arse when Anwar began heaving sighs down his neck. You see, Anwar immediately postured himself in Perwaja’s affairs the day Chia took off. Had Mahathir anticipated Anwar’s bent for power, he’d never have assigned the Finance Ministry to him.

Anwar told the August House of losses amounting to RM376.5 million in the year that ended 31 March, 1995. According to him, the Government would undertake to honour Perwaja’s commitments and repayments in full. Following this, Anwar assigned Price Waterhouse and Company the arduous task of auditing Perwaja’s finances and management.

Perwaja’s new Managing Director, Wan Abdul Ghani, handed over a confidential report to Anwar, detailing the precarious posture Perwaja had assumed following Chia’s departure. The report revealed a company that was “over-borrowed, over-geared and insolvent”, one that was unable to pay off creditors.

The report denounced Chia for his role in the mismanagement of Perwaja and misappropriation of funds. According to the report, Chia was culpable for inaccurate accounting records and hundreds of millions of ringgit in unauthorized and lopsided contracts with Malaysian and foreign establishments, all of which severely damaged Perwaja’s finances.

Preliminary findings of the audit firm seemed to confirm internal assessments made by Perwaja’s new management. Anwar disclosed the findings to Parliament in mid-1996, where he was quoted as saying that “The practices and the way business was carried out by the Perwaja group is very disappointing, and it is no surprise that Perwaja is facing a financial crisis.”

Anwar seemed to favour a Government mediated rescue package for Perwaja. Although he did not suggest a bailout, his conviction to salvaging Perwaja was in sharp contrast to his free-market advocacy in the years that followed. Going by his theatrics of the here and now, Anwar should have called for a cessation of operations by a company that failed almost as soon as it took off.

But he didn’t. It’s even more perplexing how Anwar acquiesced to a joint-venture between the Government and Maju Holdings Sdn. Bhd., with commitments by both factions consolidated under the banner of Equal Concept Sdn. Bhd. Maju stood irrefutably wanting against much larger establishments with the required competencies to turn Perwaja around. Despite Maju’s own steel business being in shambles, it secured a whopping 51% stake in Equal Concept Sdn. Bhd.

A surprisingly small and unprofitable company, Maju is run by a long time associate of Mahathir, Abu Sahid Mohamed. This brought to perspective Anwar’s purported commitment towards transparency and accountability, considering that it was he who solemnized the undertaking in his capacity as the then Finance Minister. One begins to wonder why or how Anwar turned a blind eye on the possible element of cronyism that seemed conspicuously at play in the venture. In the years following his acquittal in 2004, Anwar was instrumental in further undermining Mahathir’s credibility over the Perwaja fuck-up. Ironically, his sanction for Sahid’s Maju to acquire large stakes in Equal Concept was never perched on his lips. Perchance, he intended to let Maju slip from his memory, given that the company plunged Perwaja further into a financial swamp some four years after it got involved.

In a manner of speaking, Anwar had become equally culpable of fucking Perwaja up.

7. The one where Mahathir struck back

Political succession in Malaysia has always been marred by rumours of conspiracies and under the counter deals. These collusions almost always seem associated with business magnates and giant corporations. In some instances, corporate capitalists are said to have helped politicians secure positions by manipulating odds, while in others, their associations with political figures sounded the death knells for party aspirants.

For instance, Tengku Razaleigh Hamzah’s close association with Khoo Kay Peng sent shivers down the spines of hardcore Malay supremacists, hampering his chances at UMNO’s Deputy Presidency. The supremacist faction believed his association with Khoo to mark the onset of a Chinese ascendance further up the rungs of economic supremacy.

Anwar’s ascend to Deputy Presidency wasn’t without its fair share of conspiracies. In fact, it was Anwar who may have put the word ‘money’ in politics, particularly when he was rumoured to have spent a sizeable fortune in ousting Ghafar Baba. His move followed a span many believe to have involved intense power brokering, with favours traded under the counter.

Anwar had amassed a legion comprising largely of UMNO contemporaries who denied Ghafar nominations required to defend his seat. His contrivance engendered a culture of deceit as his minions expected him to reciprocate their support. Anwar is believed to have positioned his cabal on that note, having his henchmen adequately recompensed with anything that would secure their unwavering support. With that, Anwar effectively ripped UMNO apart at its seam, the one which had contemporaries and old stagers meeting halfway on Mahathir.

But Anwar had made a production of his ascend. In due time, his minions had him wagging, as much as a dog would, its tail. You see, when you have your foot in a cabal that comprises political backscratchers, you’re bound to find yourself on the horns of a dilemma each time your henchmen tip their glasses. His apologists really had their leash on him. Before long, they got the hang of his brand of treachery and sophistry, and were beginning to sing many tunes all at once.

Anwar appeared to have overestimated his cabal during the 1998 UMNO General Assembly, when he openly charged Mahathir’s regime over fiscal prudence and administrative policies in a manner that debilitated Mahathir’s imperia. To Anwar, he as yet had his leash on many of his henchmen, who were once willing associates in taking Ghafar’s bullet for him. But he was wrong.

By this time, Mahathir had pretty much had it with Anwar. To dabble in Perwaja’s affairs in a manner that threatened to debilitate him was one thing, but to publically denounce his policies and administrative potency was another.

What Mahathir did next shocked many; he splashed lists of Government contract recipients in major dailies, with trails that led to none other than Anwar. You see, when Anwar accused his boss of nepotism and cronyism, he had embellished the truth by failing to mention how he benefited from a Government superstructure spawn off the very policies he criminalized.

That’s right. There had been a fair share of wheeling and dealing that may have gone on right under Anwar’s nose. Many believe that he had a hand in some of these conspiracies.

For instance, many believe that Anwar had a hand in transactions involving Sports Toto via his crony, Nallakaruppan. In fact, there may be a trail of conspiracies extending beyond just Renong, Nallakaruppan and MPHB that is far too tedious to be presented in this article. Withal, Nalla’s arrest following the circulation of a book alleging wrongdoings by Anwar wasn’t a chance-medley. These allegations were brought before Mahathir much earlier than is believed by many.

That’s right. The corridors of power were treated with a potpourri of rumours as early as 1997, alleging instances of corruption and despotism by Anwar. It is said that many a minister was chagrined as Anwar began sticking his oars in the affairs of ministries other than his. Piqued, these ministers confided their resentment in Mahathir, who appeared to turn a deaf ear to their allegations.

As the story goes, Mahathir surreptitiously assembled a team of informants who began probing into allegations against Anwar, including those that pegged Anwar down as a homosexual. It is said that Mahathir was convinced of Anwar’s guilt in many of these instances. But what appeared to captivate Mahathir most was Anwar’s alleged homosexuality, which may have served to his advantage in ways many may not have yet conceived.

You see, Anwar and Mahathir were fairly square where conspiracies were concerned. But it was Anwar’s acquiescence to Maju’s partaking in a joint-venture to salvage Perwaja that really set the stage for Mahathir to begin contemplating an eye for an eye and a tooth for a tooth. Mahathir then threw in sodomy allegations that were brought to his knowledge, which set the score at 2-1 in his favour.

Should the courts decide to jail Anwar on 10 February, the score would hold at 2-1. This is precisely why Mahathir prefers that Anwar be kept under lock and key. In the unlikelihood that Anwar drives Pakatan Rakyat to Putrajaya, the tables would turn indefinitely against Mahathir’s favour.

All said, when Anwar gets overconfident, he fucks up. And Mahathir knew this better than anyone else. Perchance, this explains just why Mahathir took his time, because not only did he know of Anwar’s susceptibility to fuck-up, he knew that revenge is a dish best served cold.

Read Part 1 at: