Malaysia steel probe 'centers on payment'


Mahathir, here at last year's APEC conference, says Swiss banking rules on secrecy are holding up the investigation

KUALA LUMPUR, Malaysia -- The probe into the near-collapse of Malaysia's state-owned steel company has centered on a $31 million payment from the company, according to a report.

The steelmaker, Perwaja Terengganu Sdn. Bhd., ceased operating earlier this year, laying off hundreds of employees, as it attempts to restructure.

The company was initially a pillar of the Malaysian business establishment. But it started to encounter financial trouble in 1988.

Authorities in the Malaysian capital are looking into a $31 million payment to Japanese company Sakyo Corp., according to the Wall Street Journal.

Japanese steel team

Sakyo is owned by Yasuomi Osada, formerly an adviser to the steel company. He helped coordinate a team of Japanese companies contracted to building a steel factory for Perwaja.

According to the Journal, which cited interviews and documents that its staff has seen, the other stock owner in Sakyo is Shahril Shamsuddin, the son of Malaysian executive Shamsuddin Abdul Kadir.

The newspaper reports that the payment was first disclosed during a 1995 internal audit, which alleged that it was illegal.

The Malaysian Anti-Corruption Agency has conducted a prolonged probe into what happened to Perwaja. But the agency declines to comment on whether they have zeroed in on the $31 million payment.

Mahathir: Swiss banks holding up progress

Prime Minister Mahathir Mohamad has stated that Swiss banking laws are holding up the investigation into Perwaja.

Other officials say they have developed insufficient evidence from what they've seen.

Swiss authorities contend that they are cooperating with the investigation, making documents and information available to Malaysian authorities.

As of four years ago, the last time its books were open, Perwaja had debts of 9.1 billion ringgit ($2.4 billion) beyond its assets.