The Finance Ministry did not strictly enforce the implementation of a tender committee which bars ex-Perwaja Steel managing director Eric Chia from approving contracts at will as it wanted the business tycoon's service, the Kuala Lumpur sessions court heard today.

Prosecution witness Nik Mohd Affandi Nik Yusoff said the ministry chose to use a "persuasive approach" to implement the committee after Chia objected to the ruling introduced by the ministry.

"The ministry was not strong to insist that the company implement the tender committee because the company needs him.

"We believed that a strong approach was not suitable in dealing with the problem," he said when cross-examined by Chia's counsel Azhar Azizan Harun.

He said the decision was made after the matter was discussed with his superiors including the then finance minister Anwar Ibrahim.

He also admitted that the had never "categorically insisted to Perwaja's board of directors to implement the committee at all cost".

"I discussed it with the minister and he said that it was best for us to let it be for a while. We did not want him to leave the company," said Nik Mohd Affandi who was appointed into Perwaja's board to represent the ministry.

Ministry had faith in Chia

Asked if this meant that the ministry had faith in Chia managing the company, the witness said: " Yes we had faith in him then...at that time."

In an earlier trial, the court was told that Chia told Perwaja's board of directors that the implementation of the committee would hurt his pride as he had been given the freedom to award contracts.

The business tycoon asked that the committee be implemented after he resigns from the company.

Nik Mohd Affandi was testifying against Chia who is charged with making an unauthorised payment of RM76.4 million to NKK Corporation (Japan) 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 from Perwaja's board of directors.

He is charged under section 409 of the Penal Code which carries a maximum 20-year jail sentence

In his testimony, Nik Mohd Affandi - who was then the director of the public sector companies monitoring division - also said he sat in the company's board to protect the interest of the finance ministry which holds a major stake in Perwaja.

He disagreed with Azhar's contention that a company's interest outweighs the interest of the shareholder.

"When the company's interest is in conflict with that of the shareholder, I believe that the shareholder's interest is superior. So in this case, I have to take care of the ministry's interests. Because if the problems in the company persist, I would have to resign," he said.

The hearing continues tomorrow.