Perwaja Steel had acute financial problems even before Eric Chia took over the reigns in 1993, the Kuala Lumpur Sessions Court hearing the tycoon's criminal breach of trust case, was told today.

Prosecution witness and Perwaja's ex-corporate banking general manager Ahmad Zaini Othman said half of the multi-billion ringgit loss faced by Perwaja in1995 had accumulated before Chia took over as managing director two years earlier.

"In 1995, Perwaja was in acute financial difficulties and at least 50 percent of the liabilities amounting to billions of ringgit even before the accused (Chia) took office," he said when cross-examined by Chia's lead counsel Muhammad Shafee Abdullah.

He also agreed with Shafee's suggestion that Perwaja's finance was so bad that " loans had to be re-financed and interests had accumulated".

No salary

The court was also told that due to the bad financial status, Chia had voluntarily chose not to receive any money from the company.

"Do you agree that because of the brittle state of financial situation, the accused had never taken any salary from the company," Shafee asked the witness who replied that he was told of the matter then.

Asked if he knew that Chia had always used his personal car while performing his duties as the company's managing director, Ahmad Zaini said he was unaware of this.

"I was only told that the accused had no salary while working for Perwaja, that's all," he added.

Chia is charged with making an unauthorised payment of RM76.4 million to Japanese firm NKK Corporation on Feb 22, 1994 via the account of Frilsham Enterprises Incorporated.

He also faces an alternative charge of illegally entering into an agreement with NKK to dispose the RM76.4 million without the approval of Perwaja's board of directors.

He is charged under section 409 of the Penal Code which carries the maximum penalty of 20 years jail.

Open inquiry

Meanwhile, co-counsel Azhar Azizan Harun when cross-examining Ahmad Zaini said in June 1996, Chia had written to Perwaja chairperson Zainal Abidin Sulong for an open inquiry into the alleged misappropriation.

"Did you know that Tan Sri Eric had offered himself to be part of an inquiry regarding this matter?" he asked the witness who replied that this was the first time he had heard of it.

The witness also said that by the time Chia made the request, he had already left the company.

The hearing before sessions judge Akhtar Tahir continues on Monday.