The chairperson of Proton Holdings has stepped down over former premier Dr Mahathir Mohamad's continuing influence in the company, a report said Friday.

Abu Hassan Kendut resigned early this week because he felt Mahathir, as an adviser to Proton with no formal executive position, was interfering with management efforts to revamp the long-protected automaker to face foreign competition as trade barriers come down in Southeast Asia, the Asian Wall Street Journal said.

Mahathir was appointed as adviser to Proton in April last year. He created the company in 1983 as part of Malaysia's drive into heavy industry.

Citing unnamed government officials, the newspaper said that Abu Hassan handed in his resignation after Prime Minister Abdullah Ahmad Badawi overruled a plan by the board to remove chief executive Tengku Mahaleel Ariff.

Abdullah had earlier backed the decision to replace Tengku Mahaleel, a Mahathir protege, but changed his mind after Mahathir asked that Mahaleel be retained, it said.

Still influential

It said the exchange clearly showed that Mahathir, who retired in October 2003 after 22 years in power, continued to wield influence in both Malaysia's political and corporate affairs.

In April, Abdullah had said that "(Mahathir) himself has said that he is only to advise and it is not for him to interfere in the executive work of Proton. The board will have the final say."

Asked about the report, a spokesperson at Proton said the company would not comment on the matter.

Proton has seen a sharp drop in its dominant market share in recent years as competition has increased. - AFP