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Tycoon's arrest boosts corruption
crusade
By Anil Netto
PENANG,
Malaysia - It's a huge mansion with several wings, so
large it takes up several lots stretching almost half
the length of a quiet, narrow lane in the residential
satellite town of Petaling Jaya bordering Kuala Lumpur.
In some ways, the opulent, imposing home describes the
man - one portion of the lavishly designed building
looks like a grand office building, with a rock-garden
fountain in front.
Along the perimeter of the
premises, a 4.5-meter-high wall covered with white tiles
- "they look more like bathroom tiles", said a neighbor
- seems to reflect the reclusive nature of its owner.
Private security guards on the premises keep a sharp
lookout at each of several entranceways. This was
obviously an owner who did not fancy prying eyes.
But those high walls could not save its owner,
the former managing director of loss-saddled steel giant
Perwaja Steel Sdn Bhd, Eric Chia Eng Hock. He was
stopped by senior Anti-Corruption Agency (ACA) officers,
accompanied by police, while buying food at a highway
interchange on Monday afternoon.
Chia is being
charged with dishonestly authorizing Perwaja's payment
of RM76.4 million (US$20.1 million) to Japan's NKK Corp
through a non-existent Hong Kong-based firm, Frilsham
Enterprises Inc.
A diabetic, Chia, 71, was
reportedly inspected by a government doctor accompanying
the arresting team, and put in a wheelchair. He was then
whisked away to the relative seclusion of the new
Putrajaya Hospital in the sparsely populated new
administrative capital of Putrajaya, farther outside of
Kuala Lumpur, instead of a hospital in Petaling Jaya.
On Tuesday morning, Chia was wheeled into court
and charged with criminal breach of trust. If found
guilty, he could be jailed for up to 20 years, whipped
or fined. He posted bail of RM2 million using property
as collateral. His trial has been fixed for August.
The government-controlled press splashed the
news of his arrest on its front page on the same day
that top leaders of the ruling coalition and its
dominant party, the United Malays National Organization
(UMNO), were due to meet to discuss preparations for a
general election, widely expected to be held within a
couple of months.
The ACA probe of Chia was
launched in 1996 after then finance minister Anwar
Ibrahim, who fell out spectacularly with prime minister
Mahathir Mohamad two years later and is now in jail,
revealed that Perwaja Steel had suffered losses of
almost RM3 billion as of December 1995, with outstanding
loans totaling RM7 billion. The firm was also burdened
with high interest payments on loans denominated in yen.
Since then, its accumulated losses have spiraled to RM11
billion. (Ironically, Anwar was denied bail during his
own trial for corruption.)
Perwaja was an
integral part of former premier Mahathir Mohammed's plan
to race Malaysia down the road to heavy
industrialization. And Chia was no ordinary man - in
fact, he was Mahathir's man. A no-nonsense, some say
arrogant, manager, Chia was personally asked in 1988 by
his good friend Mahathir to take charge of Malaysia's
ailing state-owned industrial steel giant.
Critics complained then that he lacked
experience in the steel sector after having served out
an uncontroversial stint as managing director of Edaran
Otomobil Nasional, the distributor of the national
Proton cars.
And despite an encouraging start at
Perwaja that saw production levels rise - the company
even expanded from the east-coast state of Terengganu to
open a new plant in Gurun in Mahathir's home state of
Kedah - the firm suffered management and financing
problems as debts mounted. Chia stepped down in 1995, a
year before Anwar's revelation in parliament.
The arrest of Chia, one of Malaysia's leading
industrialists from the boom-time era of the early
1990s, appears to be Prime Minister Abdullah Badawi's
way of telling Malaysians that his focus on tackling
corruption is not just rhetoric, he means business.
Indeed, few in the business community come with better
connections than those Chia had.
Initial public
reaction appears favorable. Many Malaysians regard
political corruption as the main governance issue facing
Malaysians, and until now, critics had complained that
Abdullah was all talk and no action; so Chia's arrest is
likely to provide a fillip for the ruling coalition's
election campaign.
But skeptics say Chia is
yesterday's man - and the high-profile arrest masks the
fact that it took the government and the ACA eight long
years to get their man - even after it became clear that
funds had been diverted to a Swiss account. "It [Chia's
arrest] is all a show before the elections," said a
Penang-based 80-year-old retired contractor, reflecting
another widely held view among the public. Officials
said the ACA was hampered in its probe as foreign
intermediaries were used to divert funds.
Perwaja's predicament and Chia's arrest show
that haste without proper planning, experience and
transparency brings along its own problems that, in the
end, stymied the realization of Mahathir's
heavy-industrialization goal.
One key question
has remained unanswered: What role did Mahathir himself
play in the Perwaja fiasco? Last October, the opposition
Democratic Action Party called on the police to launch
an investigation into Mahathir's role in the Perwaja
scandal, arguing that the former premier had been
closely involved in the running of Perwaja since the
company was set up in 1982.
But Abdullah, whom
Mahathir chose as his successor probably for his
loyalty, is unlikely to turn against his predecessor.
Instead, the new premier will prefer to ride on a crest
after Chia's arrest, believing that he has convinced
some Malaysians that he is serious about corruption
ahead of a general election. But more shrewd observers
will realize that Abdullah has not yet dealt with the
larger issue of how to disengage the close link between
business and politics, which has brought about money
politics, shady deals, corruption and abuse of power.
(Copyright 2004 Asia Times Online Co, Ltd. All
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