Prime Minister Dr Mahathir Mohamad has withdrawn the bankruptcy proceeding he initiated last September against his jailed former deputy Anwar Ibrahim.

Mahathir's lawyers gave notice of the withdrawal in a letter dated Jan 6. The letter only reached Anwar, who is being held at the Sungai Buloh prison in Selangor, nine days later on Wednesday.

Earlier, the lawyers, through a letter dated Sept 5, had warned Anwar that they would initiate bankruptcy proceedings against him if he further delayed payment of the prime minister's legal costs of RM35,381.

The costs came from the Appellate Court's dismissal of Anwar's appeal against the High Court decision to strike out, without hearing its merits, his RM100 million defamation suit against Mahathir.

Anwar glad

Anwar was pleased and relieved to learn about the withdrawal, said his lawyer Sankara Nair.

Mahathir's lawyers tried to serve the notice last October, but was thwarted by Anwar who refused to accept it.

"I have all along refused to accept the bankruptcy notice earlier, purely as a matter of principle, in that, I have always maintained that my defamation suit had been dismissed by the court unfairly," he said in a statement released by Sankara today.

"Notwithstanding that, my family and I are relieved that Dr Mahathir has withdrawn the suit," he added.

Anwar has also been ordered to pay Mahathir RM103,773 last year after his failed attempts at the Federal Court to appeal against the Appellate Court decision, and the High Court to sue Mahathir for defamation.

Lawyer Karpal Singh who represented Anwar in the civil suit said no demand has been made for the defence costs for the proceedings at the two courts.

Defamation suit

Anwar filed the suit in January 1999, claiming that Mahathir defamed him during a press conference to explain his sacking, held two days after his arrest.

Mahathir sacked Anwar on Sept 2, 1998 on the grounds of immorality and detained him 18 days later under the Internal Security Act (ISA) for leading mass anti-government protests in the capital.

Anwar claimed that Mahathir vilified him, knowing he was in detention and unable to defend himself against the premier's charges.

But a High Court judge in August 1999 ruled it was Mahathir's right as the country's leader to comment on the reasons for the dismissal. Both the appeal and federal courts upheld the decision.

Anwar is serving a total of 15 years in jail after being convicted for abuse of power and sodomy. The Federal Court denied his appeal against the conviction for corruption in July. He has filed a review against that decision. His appeal against the sodomy conviction is yet to be heard.

Since his sacking, Anwar has continually maintained that he was framed to avert a political challenge to Mahathir. Mahathir has denied this.