Business tycoon and former managing director of Perwaja Steel, Eric Chia, has filed a defamation suit against politician Lim Guan Eng for a police report lodged in April 1996 alleging Chia's involvement in the company's multi-million ringgit scandal.

In his 15-page civil suit filed in January this year, Chia said he had been accused by Lim of being dishonest and acting in a manner detrimental to the interests of Perwaja when serving as managing director.

Chia said he was accused of being "corrupt and unfit" to serve Perwaja and that he had acted in conflict of his duties when he caused the transmission of RM76.4 million to another company called Frilsham Enterprise Inc in Hong Kong.

Lim, when contacted by malaysiakini , said the suit was served on him on Feb 8 and he will be filing his defence this week.

In his statement of claim, Chia said Lim had insinuated that he was in breach of criminal law and deserving of a prison sentence and that Chia's conduct was such as to cause loss and prejudice to Perwaja.

Incapable, fraudulent and improper

"The conduct of the plaintiff was selfish and improper. The plaintiff was incapable of performing his duties as a managing director of the said companies," Lim had written in his police report, said Chia.

He added that Lim also wrote, "The plaintiff had fraudulently operated the business of the said companies, thereby, causing immense losses."

In his report lodged on April 11, 1996, Lim claimed that Chia had approved payment of RM76.4 million on Feb 22, 1994 to Frilsham, said to be an associate of NKK Corporation of Japan.

Lim said Chia had signed a "technical assistance agreement on beam and section mill plant project" on behalf of a Perwaja-owned subsidiary, Perwaja Rolling Mill and Development Sdn Bhd (PRMD), with NKK.

NKK was to provide spare parts and services for the beam and section mill plant project undertaken by Perwaja in Gurun, Kedah.

The payment, Lim claimed, was made based on a letter from NKK director of consultant engineering department of iron and steel engineering division, N Otani, on Feb 17 the same year to PRMD for its services and payment was to be made to Frilsham.

Shocking

Lim added that Chia then authorised Bank Bumiputra to make the payment on Feb 22 to Frilsham's American Express Bank Account, about one week later.

"What is shocking is that Chia did not even verify and confirm with NKK Japan that he had sent such a letter. How can he authorise RM76.4 million to Frilsham when it was not even a party to the agreement signed with NKK Japan?" Lim had said in his report.

"What is more shocking is that neither NKK nor Otani ever made a request for RM76.4 million. Until now, Perwaja is unable to trace payment or recover even a single cent," added Lim.

Lim also questioned in his report why no action was taken by Perwaja when it was a victim of gigantic fraud or whether its officers were also involved in a "gigantic fraud" to cheat the company.

Lim stated that he made the report because none had been lodged at the ACA or the police almost two years after the fraud occurred.

He urged for stern action not only against Chia, but all those responsible for the "cover-up" of the missing RM76.4 million.

"Chia must also be questioned on his role in this missing RM76.4 million and why he approved payment for such a big sum without first obtaining the necessary confirmation from NKK," said Lim.

In the suit, Chia is asking for an order to prohibit Lim, whether by himself or through employees, his agents or through some other method, from writing, printing, publishing and circulating the contents of the report.

He is also asking for general, aggravated or exemplary damages and cost to be assessed by the court and an interest at the rate of eight percent per annum for all sums awarded from the date the summons was filed.

PM allegedly involved

On Sunday, during a dialogue with Malaysians in London, Mahathir admitted that there was possible misappropriation of funds and mismanagement in Perwaja which has suffered several billion ringgit in losses.

He said the government had already investigated the matter but the missing money was not easily recovered as it was reported to be in a Swiss bank account. Swiss monetary authorities were not willing to reveal who the account-holders were.

In July 1999, former deputy premier Anwar Ibrahim had lodged a police report alleging Mahathir's involvement in the matter.

In his police report, Anwar, who was then finance minister, said international accountant Price Waterhouse was appointed as the independent auditor in early 1996 soon after being alerted that Perwaja was almost insolvent and would require massive injection of funds from the government.

Anwar had said that the appointment of auditors had to be done because several earlier attempts to obtain detailed information from the management, particularly Chia, failed as he repeatedly claimed that his action had the support and was under the direction of the premier.

Anwar also revealed that Chia's claim was further substantiated with letters written by the prime minister himself.

Price Waterhouse was believed to have found serious irregularities in the management of Perwaja under Chia.