Jailed ex-deputy prime minister Anwar Ibrahim is prepared for a legal battle with Prime Minister Mahathir Mohamad after refusing to pay the costs of a failed defamation suit against the premier, lawyers said today.

"Anwar is willing to fight it in court. He is not going to pay Mahathir," Anwar's counsel Sankara Nair told AFP .

Nair said Mahathir's lawyers had sent three consecutive letters demanding payment after the Court of Appeal in April ordered Anwar to pay the prime minister's legal costs of RM35,381.

The latest letter, dated Sept 5 warned that if the payment was not made, Mahathir would start bankruptcy proceedings against Anwar, he said.

"I met Anwar in prison Friday and he said that he was a victim of Mahathir's defamation" and would not pay as a matter of principle.

"We will see them in court," said Nair.

Alleged homosexual activity

Anwar was sacked by Mahathir as deputy premier on Sept 2, 1998 on the grounds of immorality and detained 18 days later after leading mass anti-government protests.

Two days after Anwar's arrest, Mahathir called a press conference where he detailed his former deputy's alleged homosexual activity, which is a crime in Malaysia.

In January 1999 Anwar lodged a RM100 million defamation suit over the remarks.

But a High Court judge in August 1999 ruled it was Mahathir's right as prime minister to comment on the reasons for which he dismissed Anwar. Both the Appeal Court and Federal Court have upheld the decision.

Nair said bankruptcy laws in Malaysia provide for proceedings against anyone who fails to settle debts exceeding RM10,000.

People declared bankrupt by the courts would have their finances managed by a third party until the amount is settled. They are also barred from political office until they are discharged from bankruptcy.

Anwar is serving a total of 15 years in jail after being convicted for abuse of powers and sodomy. He says he was framed to avert a political challenge to Mahathir, an allegation denied by the government. — AFP