BERN - Prime minister Dr Mahathir Mohamad said after a meeting with the Swiss government here on Monday that there was "good cooperation" between the two countries on a corruption probe into the ailing Perwaja Steel company.

Swiss officials granted judicial assistance to Malaysia in the affair in January 2001 and said that several million dollars from the company were suspected to have been laundered through Swiss accounts.

"Banking secrecy does not protect people who fraudulently obtained funds," Swiss finance minister Kaspar Villiger told reporters.

Swiss foreign ministry spokeswoman Daniela Stoffel said the affair was progressing as before.

"We told the prime minister that we are cooperating fully with the relevant authories, any help from Switzerland is already in place," she added.

A spokesman for the Federal Justice Department Folco Galli told AFP that "no assets were frozen" after the Malaysian authorities declined to have the suspect accounts blocked despite Swiss offers.

Galli said documents relating to the investigation had been sent to Malaysia last year, and a delegation of Malaysian officials was due in Bern to deal with the investigation later this week.

A Swiss newspaper, Le Temps , reported on Monday that about RM72.2 million (US$19 million) was thought to have been siphoned off the steel giant's finances into accounts abroad during the 1990s through a string of front companies abroad.

Abuse of funds

Perwaja's financial troubles were first revealed in 1996, triggering an investigation for abuse of funds.

The company, which has accumulated losses and liabilities estimated by industry officials at RM10.7 billion (US$2.8 billion).

Mahathir last year said the government hoped to revive Perwaja and was considering privatising the ailing company.

Mahathir is due to address the International Labour Organisation's (ILO) annual assembly in Geneva today.