Perwaja Steel ex-managing director Eric Chia had claimed that he was given the mandate by then prime minister Dr Mahathir Mohamad to run the company like his own, claimed a prosecution witness today.

Testifying at Chia's criminal breach of trust trial, Perwaja chairperson Zainal Abidin Sulong told the Kuala Lumpur Sessions Court that Chia told him this in a letter (date unknown) in 1996 following investigations into the alleged misappropriation of RM76.4 million belonging to the company.

"There was an investigation against him and he had replied through a letter addressed to me which I had read out to the company's board members in a meeting on Feb 14, 1996," he added.

Not answerable

In the letter, he said Chia stated that as chief executive officer (CEO) of Perwaja, he is not answerable to the board of directors but directly to the prime minister and this was done on a monthly basis.

"He also said he was given a mandate by the prime minister to operate Perwaja as if it belonged to him. He then claimed he will only implement projects that has been approved by the prime minister," added Zainal Abidin.

Apart from this, he said Chia also claimed that his tenure as CEO was determined by the premier and that he (Chia) received no salary or benefits from the company throughout his tenure as CEO.

However, Zainal Abidin said there was no indication in the letter if the prime minister had allowed him (Chia) to disregard the authority of the board.

"If he had said so in the letter, I would have read it out to the board members," said the witness, who claims to have forgotten the whereabouts of the said letter.

Chia has been accused of 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.

Tender committee

In his testimony, Zainal Abidin also agreed with lead prosecutor Mohd Yusof Zainal Abiden's suggestion that Chia's modus operandi (in running the company) was that he did not recognise the authority of the board whose permission is needed before any tender or payment is issued.

He also agreed that Chia's modus operandi went as far back as May 1993 where he (Chia) had questioned the role of the company's tender committee formed to peruse into all tenders worth more than RM15 million prior final approval.

The court was also told that the tender committee - headed by one Zubir Embong- was formed at the request of the Finance Ministry in January 1993.

"In a board meeting on May 30, 1993, he (Chia) questioned the formation of the committee stating that its role may cause confusion to the company's contractors and suppliers who are used to the earlier system. He then asked the board to suspend the committee," said Zainal Abidin.

However, the board, in subsequent meetings, decided to maintain the committee.

"Then in the board meeting on July 4, 1993, the accused reported to the board that he had spoken to the (then) finance minister Anwar Ibrahim who had questioned the procedure for purchase of goods, services and award of contracts," said the witness.

In the meeting, he said Chia claimed that the tender committee reconstituted where he (Chia) was to be made as chairperson while Zubir and another Nik Mohd Affandi Nik Yusoff as committee members.

"He (Chia) further reported that he would be given a free hand to select the people to whom the contracts are to be awarded."

Asked if there was any written instruction from Anwar that substantiated Chia's statement, Zainal Abidin replied: "No. It was based solely on his report."

The hearing before sessions judge Akhtar Tahir resumes tomorrow.