Terengganu executive councillor for Economic Development, Petroleum, Industry and Human Resource Mustafa Ali said the state government would investigate the scandal-ridden steel company Perwaja Terengganu.

The state-owned company had recorded losses amounting to RM2.985 billion and had RM6.9 billion in liabilities at Dec 31, 1995, making it one of the biggest financial scandals in recent history.

"We are presently looking at what other actions the state government can take," Mustafa told malaysiakini. The Terengganu government has a 19 per cent stake in Perwaja.

However, he stressed that the federal government must also cooperate in the probe.

"It is difficult for the state government to investigate the issue alone," he said. "And if the federal government refuse to punish those responsible for the mismanagement of the company, then it proves that there is no transparency."

He added that the Perwaja investigation had been dragging for too long.

The Anti-Corruption Agency began its probe into Perwaja in 1996, almost a year after an internal audit found an array of irregularities committed by the company's previous management. This included inaccurate accounting records and millions of ringgit in apparently unauthorised contracts with Malaysian and foreign companies.

In the course of its investigation, the ACA recorded statements from more than 60 people including former company chief Eric Chia, who was appointed by Prime Minister Mahathir Mohamad to rescue the ailing company.

However, under Chia, Perwaja's losses ballooned from RM1 billion to RM2.9 billion.

ACA had also gone to Japan, Hong Kong and Switzerland to gather evidence relating to a RM76.4 million payment that Perwaja made to NKK Corporation through a non-existent company, Frilsham Enterprises in Hong Kong.

DAP Chairman Lim Kit Siang urged the PAS-led Terengganu government to expose "the biggest financial fiasco of Mahathir's 18-year premiership" by establishing an independent commission of inquiry to investigate into the mismanagement of the state's oil money, which had been used to prop up the company.

"To date, nobody had been charged in court for the wrongdoing, making Perwaja the greatest 'heinous crime without criminals'," he said.

The ACA investigation was largely completed by the end of 1997 and a full report was sent to the Attorney General's Chambers in March, 1998. Since then, calls have been made to hold Chia accountable. But until now, no Perwaja executives had been charged in court.

Lim pointed out that the Terengganu state govenment can do the right thing by insisting on proper accounting for all the Perwaja mismanagement and irregularities.

Recently, Terengganu Menteri Besar Abdul Hadi Awang told Asian Wall Street Journal that his government would not continue to prop up the bankrupt steel facility.

"We have begun the investigations into Perwaja and action will be taken on those who caused the mismanagement and irregularities," he said.

Sacked deputy prime minister Anwar Ibrahim had lodged a police report in July against the alleged involvement of Mahathir in the Perwaja scandal.

He said when he was finance minister, several attempts were made to obtain detailed information from the then management, particularly managing director Chia. However, Chia had repeatedly claimed that his actions had the support and were under the directions of Mahathir.

Anwar added that his claims were substantiated with letters written by Mahathir.

"Besides Chia, Mahathir was directly responsible for the approval of projects and the awarding of contracts without tender and without compliance to financial procedures," Anwar said in his police report.

"Mahathir's personal involvement in this regard cannot be used as an excuse for not instituting proper investigation," he added.