A former Perwaja Steel corporate director agreed in the Kuala Lumpur Sessions Court today that the company's decision to release payment of RM76.4 million in full to a Japanese firm, rather than in staggered sums, was "not unusual".

Prosecution witness Lawrence Lim said this on the second day of the criminal breach of trust trial against former managing director Eric Chia, who is charged with making an unauthorised payment to Japan's NKK Corporation in 1994 via the accounts of Frilsham Enterprises Incorporated.

On Feb 10, the 71-year-old Chia had claimed trial to a charge that he had wrongly paid RM76.4million into the Frilsham account at American Express Bank Ltd in Hong Kong, for technical assistance rendered by NKK for a 'Beam and Section Mill Plant' project in Gurun, Kedah.

The offence was alleged to have been committed at the office of Perwaja Rolling Mill and Development Sdn Bhd on the 13th floor of Menara UBN, Jalan P Ramlee, Kuala Lumpur, on Feb 18, 1994.

Yesterday, Chia pleaded not guilty to an alternative charge of illegally entering into an agreement with NKK at the same time and place. The trial is presided by sessions judge Akhtar Tahir.

Chia, who was in a wheelchair, appeared calm throughout the day. He was seen chatting with well-wishers in court including several employees of a hotel he owns in Sungai Petani, Kedah.

'Forex losses'

Under cross-examination by Chia's lead counsel Muhammad Shafee Abdullah ( photo ), Lim agreed this morning that the decision to effect payment in full could have been to avoid losses due to foreign exchange fluctuations at the time.

Lim also said he was not aware of any financial loss suffered by another subsidiary company, Perwaja Terengganu, due to such fluctuation prior to the agreement being signed with NKK Corporation.

Lim added Perwaja Rolling Mill's financial state had been given a clean bill of health by auditors Arthur Anderson as depicted in an audit report ending March 31, 1994.

He said the report adduced no evidence of misconduct or slip-ups despite the payment made to NKK Corporation in February 1994.

"The report concluded that the company's financial statement had been properly drawn up in accordance with the provisions of the Companies Act 1965 and that the company had given a true and fair view of its finance status," Lim said.

Re-examined by senior deputy prosecutor Mohd Yusof Zainal Abiden, Lim said the full amount was paid barely four months after Perwaja signed an agreement with NKK in November 1993.

He agreed that full payment was made on Feb 22, 1994 although the agreement stipulated that the technical assistance was to be rendered between 20 and 36 months after the agreement was signed.

Lim further agreed with the prosecutor that Perwaja would not have been able to withhold any amount of payment "if there was to be dispute regarding the services... after Feb 22, 1994" and that the full payment had rendered the arbitration clause in the agreement ineffective.

As to the Perwaja Rolling Mill's audit report dated March 31, 2004, Lim also said that auditors could not have detected any misconduct in the company's accounts when preparing the report if the supporting documents tallied with any payment made.

"They (the auditors) are only there to see whether all payments made are supported with documents. It's not the auditors' duty to investigate whether the supporting documents are false or forged. They are watchdogs, not bloodhounds," he added.

The hearing continues tomorrow.