On Tuesday last week Kuala Lumpur Sessions court acquitted Eric Chia, the former steel tycoon who was involved in Malaysia’s biggest financial scandal and alleged of corruption. It was stated by the trial judge that the prosecution’s arguments failed to be sufficient as they had not called crucial witnesses who could strengthen their accusations.
Eric Chia, who had been closely tied to the government of former Prime Minister Mahathir Mohamad, has been charged for graft since the time when current Malaysian leader Abdullah Ahmad Badawi took office in October 2003 and pledged to fix Malaysia’s reputation for corruption and protectionism. Chia was the managing director of Malaysia’s top steel company, Perwaja, when in 1990s it became close to collapse and its debts and losses exceeded 10 billion ringgit (US$3 billion). He was charged with criminal breach of trust in February 2004 for allegedly misapplication of 76.4 million ringgit (US$22 million) from Perwaja. The illegal payment of 76.4 million ringgit perhaps was made to the BVI company offshore account in Hong Kong.
It was stated by prosecutors that Chia approved the payment of this amount in February 1994, into a Hong Kong account held by Frilsham Enterprise Inc. for “technical assistance” provided by Japanese steelmaker NKK Corp. However, no such payment was owed to NKK. Prosecutors say Frilsham Enterprise was a bogus company; tracing the payment took investigators to Switzerland and the Virgin Islands.
Eric Chia has been let out on bail immediately after he was charged. He was the only person arrested in connection with a government-led investigation into fraud and malpractice at Perwaja that was initiated in 1996. Perwaja was a national project launched in 1982 in the industrialization course launched by Mahathir Mohamad. His government invested billions of ringgit into the company to keep it alive, until in 1997 it was purchased by privately held Maju Holding.