Former Perwaja managing director Eric Chia's repeated calls for an open inquiry to investigate misappropriation of company funds were ignored by former finance minister Anwar Ibrahim, the Kuala Lumpur Sessions Court heard today.

Prosecution witness Perwaja Group chairperson Zainal Abidin Sulong said that Chia had informed via a letter dated June 28, 1996 that Anwar had not responded to requests for an open inquiry into the allegations of financial misappropriation.

Chia, who had by then already resigned from Perwaja, had suggested that the company itself conduct an inquiry since the minister had not replied on the matter.

"Perhaps, Tan Sri, as the chairman, you should call for an internal inquiry where members of the MoF (Ministry of Finance) could be present, representing the shareholder and all the executives," wrote Chia in the letter which was tendered in court as evidence.

Asked by lead counsel Muhammad Shafee Abdullah, if Perwaja's board of directors had conducted any inquiry as suggested by Chia, Zainal replied they had not.

"This issue was discussed not only by Perwaja's audit committee. It was also a public issue. By that time we got the impression that it was best handled by the government," said Zainal.

Letters tendered

He was testifying against Chia who is charged with making an unauthorised payment of RM76.4 million to Japanese firm NKK Corporation on Feb 22, 1994 via the accounts 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.

In 1995, Anwar as the deputy premier and finance minister had ordered an independent audit of the troubled state-owned company after it was revealed that Perwaja had suffered losses totalling RM2.98 billion as of Dec 31, 1995, excluding bank loans amounting to about RM7 billion.

After Chia was charged in court early this year, Anwar criticised the prosecution saying that the amount allegedly embezzled as stated on Chia's charge sheet was disproportionate to the amount established by the Anti-Corruption Agency.

Chia's defence team today also tendered two letters written by him after his resignation to Anwar dated June 10, 1996 and Sept 6, 1996.

In the first letter, Chia had expressed his surprise on Anwar's statement on Perwaja Group's losses and liabilities and claimed that he (Anwar) '... was perhaps misinformed of the financial position of the Perwaja Group'.

He had also urged the minister to conduct an inquiry based on the "... so-called wrongdoings and unauthorised payments alleged by (accounting firm) Price Waterhouse during his (Chia's) tenure" and offered himself to be the first witness.

Auditor's report

In the second letter, Chia suggested that no further statements on Perwaja matter be made by Anwar until his ministry had probed the matter.

"I heard that the Price Waterhouse report which (Anwar) quoted in parliament is about to be classified under the Official Secrets Act. Is this true? If so, then there is no way an inquiry can be called as there will be no basis to do so.

"Therefore, Price Waterhouse's allegations will remain baseless and cannot be contested. YAB (the right honourable) has often professed your belief in fairness and I ask that this be extended to me," wrote Chia in the second letter.

Continuing his testimony, Zainal said that Chia had tendered his resignation letter on Aug 31, 1995.

When asked what prompted Chia to tender his resignation, Zainal replied: "It was found that Perwaja was financially in bad shape. At the same time there were allegations of misappropriation of funds. I think he was asked by the finance minister to resign."

'Health factor'

Zainal then referred to a letter written dated June 7, 1995 by the then Economic Advisor to the Government Daim Zainuddin, to Chia, relating to the latter's resignation.

In the letter Daim stated: "I suggest that you make the announcement (Chia's resignation) that in view of your health, the prime minister has decided to release you from the post of managing director of Perwaja and he has appointed you as advisor and that you have recommended Wan Abdul Ghani Wan Ahmad to take over from you. Please see the prime minister on this."

To a question from Shafee, Zainal agreed that the letter indicated that it was Daim who had asked Chia to resign, and not Anwar who was the finance minister.

Hearing before sessions judge Akhtar Tahir continues tomorrow.