Jailed former deputy premier Anwar Ibrahim today denied over-ruling the decision by Telekom Malaysia to award a multibillion ringgit digital exchange supply contract to a number of international companies in 1992 when he was finance minister.

Stating the decision to award the contract to five companies was made by the Telekom board, Anwar told malaysiakini that he was forced to uphold the decision as one of the successful bidders was a son of Prime Minister Mahathir Mohamad.

Anwar was responding to a story "Mitsui scandal a small piece in a wider controversy" (Feb 25) by malaysiakini which reported that Anwar over-ruled the decision by Telekom to award the RM2.07 billion contract originally to three companies, by replacing one of them and adding two more companies.

The alleged interference by the Finance Ministry sparked widespread allegations of political meddling and favouritism, especially since the successful bidders had local partners with powerful political connections to Umno.

Anwar's alleged order came in the wake of Telekom's decision to award the contract to three out of the nine bidders - Swedish-based Ericsson, Japan's Nippon Electric Company (NEC) and Germany's Siemens.

The other bidders were Fujitsu (Japan), Alcatel (France), Nokia Finland), AT&T (US), Samsung (South Korea) and Italtel (Italy). All the nine bidders had local partners.

However, the Finance Ministry, which has a 76 per cent stake in Telekom then, was reported to have ordered the board to replace Siemens with Fujitsu, and to add another two bidders, Alcatel and Nokia.

While Fujitsu's bid was submitted by Koperasi Usaha Bersatu, a cooperative run by Umno, Alcatel's local partner, Yayasan Bumiputra Pulau Pinang, is a foundation headed by former Anwar's stalwart, Ibrahim Saad.

Another bidder which was added at the last minute on the award list, Nokia, was alleged to have secured the contract through its local partner Sapura Holdings. Sapura's major shareholder, Shamsuddin Kadir, is said to be closely linked with Prime Minister Mahathir Mohamad.

Japanese newspaper Asahi Shimbun had reported on Feb 11 that Mitsui paid kickbacks of 300 million yen (RM10.64 million) to Telekom via a consultant firm in Malaysia that turned out to be a dummy company in order to secure the contract.

Mitsui appeared to have made its bid in the Telekom contract through a local subsidiary, Pernas NEC, which was in a joint venture with NEC Corp. This contract was for the supply of switchboards with capacity of 800,000 circuits which were delivered by Mitsui between 1996 and 1998, while the kickbacks were allegedly paid in 1997.

Malaysiakini reported on Feb 25 that the Mitsui kickbacks scandal is merely a small part in a larger controversy dating back to 1992 when the contract was awarded.

The digital exchange, the basis of modern telecommunication system, is a lucrative contract sought by major companies worldwide.