The Terengganu state government has decided that it will not inject fresh capital into the loss-making Perwaja Terengganu steel plant in which it holds 19 percent equity.

Terengganu executive councillor for Economic Development, Petroleum, Industry and Human Resource Mustafa Ali told malaysiakini today that they would leave the Perwaja case to Anti-Corruption Agency (ACA) to complete its investigation into allegations of mismanagement and irregularities, which resulted into losses running into billions of ringgit.

"We have not started any investigation into Perwaja as ACA is still pursuing it," said Mustafa.

The ACA began its probe into Perwaja in 1996, almost a year after an internal audit found an array of irregularities committed by the company's previous management. This included inaccurate accounting records and millions of ringgit in apparently unauthorised contracts with Malaysian and foreign companies.

In the course of its investigations, the ACA recorded statements from more than 60 people including company chief Eric Chia, who was appointed by Prime Minister Mahathir Mohamad to rescue the ailing company.

However, under Chia, Perwaja's losses ballooned from RM1 billion to RM2.98 billion at end-1995, with another RM6.9 billion recorded as liabilities..

The ACA investigation was largely completed by the end of 1997 and a full report was sent to the Attorney General's Chambers in March, 1998.

Since then, calls from several opposition parties like DAP have been made to hold Chia accountable, but until now, no Perwaja executives had been charged in court.

Asked on whether the state government will continue bearing the RM10 billion losses of Perwaja steel plant, he said Terengganu only holds 19 percent stake and they would leave it to the federal government to take care of the steel plant.

On another case, Mustaffa also revealed that the state government is aware of the reasons for the losses at Gunawan Iron & Steel in which the Terengganu state government has invested RM90 million, amounting to 30 per cent stake.

The company reported incurring a loss of RM3.18 million from January-March 1999 and current liabilities of about RM195 million, with long-term loans of about RM389 million.

Mustaffa said that the state government is not investigating the Gunawan case because it had learned that the losses were due to bad business decisions.

However, he refused to disclose further details.