Former prime minister Dr Mahathir Mohamad had on several occasions given former Perwaja Steel managing director Eric Chia the go-ahead to make financial decisions without referring to the Finance Ministry, the Kuala Lumpur Sessions Court heard today.

Prosecution witness, Perwaja Steel chairperson Zainal Abidin Sulong, said he knew that Mahathir had done so in relation to the company's beam and section mill project in Gurun, Kedah.

"Yes, he (Mahathir) may have done that a few times before. But it's my duty and of other members of the board to check (with the ministry)," he said when lead counsel Muhammad Shafee Abdullah referred him to several letters communicated between Mahathir and Chia.

In a letter dated Feb 28, 1992 Mahathir had written to Chia: "I have no objection to your arranging the financing package for the Perwaja Steel Beam and Section Mill in Gurun from (an) external financier. There will be no government guarantee for any loan."

Referring to the letter, Zainal Abidin said the government had later changed its decision and provided a guarantee for loans related to the project.

He said that, like Chia, Mahathir was extremely concerned with the development of the Gurun project.

"I was aware that this project was very close to his (Mahathir's) heart," he said before agreeing with Shafee's suggestion that Mahathir's knowledge on the project was "as good as that of the engineers involved".

"He is aware of everything that happened in the project because the whole thing was his pet project."

He also admitted that Mahathir and Chia were anxious to make the project a success especially after the government had lost millions of ringgit under the company's earlier project in Kemaman, Terengganu, due to constructions-related errors.

"It was a bitter experience that we did not want to repeat," he said.

'Proper training'

Zainal Abidin also said Chia had frequently stressed the importance in providing proper training to Perwaja staff to run the Gurun mill efficiently.

"Yes, the point (proper training) was always hammered by the accused because of the previous experience in Kemaman. He did not want to compromise on standards," he said.

He agreed that Japan's NKK Corporation was to have provided the training as stated in the Technical Assistance Agreement signed between Chia and NKK director N Otani.

The witness also agreed with Shafee's contention "that NKK was supposed to provide the training because Tan Sri (Eric Chia) said that, when the mill was ready, Perwaja staff would be fully trained to run and maintain it".

He said the agreement was implemented by NKK with the knowledge of the company's board of directors as indicated during a meeting on March 30, 1996.

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.

This morning the court had to change venue when part of the court room's ceiling broke and water gushed from the air-conditioning duct. No one was hurt.