Malaysian finance minister quits

Finance minister Daim's resignation finally confirmed

KUALA LUMPUR, Malaysia -- Malaysian Prime Minister Mahathir Mohamad says his finance minister Daim Zainuddin has resigned.

The announcement made through the official Bernama news agency ended weeks of speculation about the finance minister's future.

Mahathir said Daim's resignation was effective as of June 1 but gave no further explanation for his decision.

Kuala Lumpur has been abuzz with talk of a rift between Mahathir and Daim since the prime minister announced on April 19 that his long-time ally would take a two-month leave due to tiredness.

The finance minister had been going into his office during his leave and attending some official functions.

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"Two months ago, he asked to resign," Bernama quoted Mahathir as saying. "But I told him to go on leave first and reconsider his decision."

On Friday, Mahathir denied he had received any resignation letter from Daim, and Information Minister Khalil Yaakob told Reuters the finance minister would return to work as soon as his holiday was over.

Power figure

A series of government bailouts for Malay tycoons close to Daim have drawn flak from the public and trade unions and media reports had cast doubts about his future.

Daim, widely considered Malaysia's most powerful man after Mahathir, was finance minister from 1984-91.

He was reappointed to the post in January 1999 following the controversial sacking of Anwar Ibrahim who also held the post of deputy prime minister.

Anwar was subsequently jailed following convictions for corruption and illegal sexual activity, although critics say the charges were trumped up by Mahathir and his allies in order to get rid of a political rival.

The government has denied the existence of any plot.

At the time Mahathir was widely reported to have fallen out with Anwar who wanted Malaysia to follow International Monetary Fund-style reform programs in order to deflect some of the impact of the Asian economic downturn.

Reuters contributed to this report.