Malaysian Maverick: Mahathir Mohamad in Turbulent Times by Barry Wain (fantasy novels to read .TXT) 📕

politicians, knew little of Perwaja's activities and was often left out of major financial, contracts and policy decisions. Spending and business plans apparently were never presented to the board. Large contracts were awarded without any call for tenders or any competitive bidding.[122]

Among the cases mentioned by Anwar was the award of contracts valued at RM957 million to the Man Shoon Group and companies affiliated with businessmen Kok Mew Shoon and Ng Kim Lin. Price Waterhouse could not find documentation for RM103 million of the contracts. Unstated was that Kok, who controlled Man Shoon, was a long-time associate of Eric Chia. Legwork by reporters at the Registrar of Companies office unearthed the fact that the Man Shoon companies had done little business before they began to land the Perwaja contracts. For example, revenue at Man Shoon Enterprise Sdn. Bhd. jumped to RM234 million in 1994 from less than RM2 million in 1991. Another affiliate, Sinar Sdn. Bhd., did not do any business at all in 1991 and had paid-up capital of RM3. But by 1995, the company had annual revenue of more than RM80 million.[123]

With the government destined to be the big loser if Perwaja defaulted, Anwar said the immediate goal was to rescue the company. After considering offers from four companies, the government opted for a joint venture with a private investor, surprisingly selecting a small steel and property group, Maju Holdings Sdn. Bhd., ahead of much stronger candidates to lead the salvage effort. Maju's own steel business had been unprofitable, and it was hard to see how the privately held group would be able to raise the finance necessary to resuscitate Perwaja.[124] Maju, controlled by businessman Abu Sahid Mohamed, known best for driving a shocking pink Volvo stretch limousine, was given 51 per cent of the venture, Equal Concept Sdn. Bhd., and the government retained the rest. Perwaja's steel assets were transferred to Equal Concept free of debt, which was assumed by the government. In echoes of Eric Chia's boosterism, Abu Sahid told reporters the company would show "significant changes" within three years and be profitable within six years.[125]

Four years later, however, Equal Concept-managed Perwaja was mired deeper than ever in a financial swamp. The company had amassed another RM800 million in accumulated losses and was continuing to bleed red ink. Perwaja's net liabilities climbed to more than RM9.1 billion at the end of 1998 from RM6.94 billion three years earlier, while state-guaranteed borrowings rose to RM5.1 billion from RM3.19 billion. The Asian economic crisis had knocked 34 per cent off the value of the ringgit, making imported iron ore and scrap iron much more expensive and depressing demand for steel. Maju, as expected, lacked the financial means to spearhead any turnaround in Perwaja's fortunes.[126] A reporter who visited the site along the coast of northeastern Trengganu in 1999 found the sprawling complex almost deserted, its rusting chimneys smokeless in the blazing sun. To save money, the plant was working only one daily shift, overnight, but was still losing about RM35 million a month on its operations alone.[127]

Reviewing Perwaja, Dr. Mahathir described it as a "good project", but said he "couldn't help it if the management did not know how to run it".[128] He was relaxed about the losses, which he said totaled "maybe RMl billion or RM2 billion", not "RM15 billion or anything like that...It's not something we couldn't overcome".[129]

In fact, based on incomplete public information, RM15 billion was a conservative estimate of Perwaja's losses. Similarly, Bank Bumiputra dropped at least RM10 billion. Bank Negara's foreign exchange forays drained perhaps RM23 billion from Malaysia's reserves. The cost of trying to push up the price of tin seemed paltry by comparison, maybe RMl billion. The total, RM50 billion or so, could have easily doubled if a professional accounting had been made, factoring in all the invisibles, from unrecorded write-offs to blatant embezzlement and opportunity costs.

Notes

V. Kanapathy, "The Mahathir Era: A Brief Overview", in The Mahathir Era: Contributions to National Economic Development (Petaling Jaya: International Investment Consultants, undated), p. 21.

R.S. Milne and Diane K. Mauzy, Malaysian Politics Under Mahathir (London: Routledge, 1999), p. 162.

Ibid., p. 68.

Raphael Pura, "Malaysia Plan to Control Tin Led to Disaster", Asian Wall Street Journal, 22 September 1986. Extensive details of Malaysia's secret plan are drawn from this article.

Dr. Mahathir made his attitude to tin producers crystal clear: "On the one hand, they operate stockpiles, which is a monopolistic activity. On the other, they recently resented the rise in the price of tin, accusing Malaysia of manipulating the market. If placing tin on to the market is not manipulating prices, I don't know what is. I can't understand this double standard in which one can take action to depress the price but nobody can do anything to raise the price. This is something that I just cannot understand." "Interview/Mahathir Mohamad: Problems and Power", Far Eastern Economic Review, 30 October-5 November 1981, p. 31, http://www.feer.com/articles/archive/1981/8111_05/P037.html (accessed 25 January 2006).

Interview with Mahathir Mohamad, 31 March 2008.

Raphael Pura, "Tin Council Approves Price Increase, But Rise Still Short of Producer Goal", Asian Wall Street Journal, 19 October 1981.

Raphael Pura, "Malaysia Protests U.S. Move on Tin Sales", Asian Wall Street Journal, 24 December 1981.

Raphael Pura, "Malaysia Plan to Control Tin Led to Disaster".

Raphael Pura, "Malaysia Tin Mines Facing Hard Times as Glut Persists", Asian Wall Street Journal, 5 August 1982.

Neil Behrman and John Berthelsen, "Sudden Halt to Tin Trading Poses a Threat", Asian Wall Street Journal, 25 October 1985.

John Berthelsen, "Ipoh Hit Hard by Malaysia's Tin Slump", Asian Wall Street Journal, 3 February 1986.

Interview with Mahathir Mohamad, 31 March 2008.

Raphael Pura, "Mystery State Firm Puzzles Malaysians", Asian Wall Street Journal, 10 July 1986.

Raphael Pura, "Malaysia Plan to Control Tin Led to Disaster".

Ibid.

Nick Seaward, "Malaysia Tin Ramp Cost M$660.5 million", Far Eastern Economic Review, 20 November 1986, p. 12, http://www.feer.com/articles/archive/1986/8611_20/P014.html (accessed 26 June 2006).

Vaudine England, "The Credibility Gap: Malaysia Faces Distrust as It Tries to Rally the ATPC", Far Eastern Economic Review, 13 November 1986, p. 115, http://www.feer.com/articles/archive/1986/8611_13/P074.html (accessed 25