The highly anticipated on-going Parliamentary Public Accounts Committee (PAC) probe into the controversial merger of investment advisory group ECM Libra Bhd and government-owned financial services company Avenue Capital Resources Bhd reached an anti-climax today when it was cancelled.

The decision was taken after advice from the finance ministry which said the probe would be considered subjudice in light of an ongoing civil suit involving ex-premier Dr Mahathir Mohamad's aide, lawyer Matthias Chang.

"The ministry's legal adviser has made a very wide interpretation of what is subjudice," PAC chief Shahrir Samad said when contacted after chairing the PAC meeting at Parliament House this morning at which finance ministry officials were present.

Agreeing that discussion on the merger could be deemed subjudice, Shahrir - who is also the Johor Baru MP - however said he did not expect examination of the background of Avenue Capital to affect the outcome of the ongoing civil case.

On whether this would be the death knell for the probe, he said the committee "... will wait and look at other avenues" besides seeking other legal advice on what could be considered subjudice.

Yesterday, Shahrir confirmed he had received a letter from Chang's lawyer threatening to cite him for contempt of court if the PAC probe into the ECM Libra-Avenue merger proceeded. Chang is currently a political aide to Mahathir.

The finance ministry was said to have received a similar letter. Shahrir said yesterday the PAC would deal with other aspects of the merger at today's meeting including how the government invested in Avenue Capital in the first place.

The controversial merger raised eyebrows as it was approved shortly after Khairy Jamaluddin bought a direct stake in ECM Libra while his father-in-law, Prime Minister Abdullah Ahmad Badawi, was overseeing government-linked companies in his capacity as the finance minister.

Khairy, the Umno Youth deputy head, was forced by the public pressure to sell off his shares in boutique investment company ECM Libra two weeks ago. Mahathir - in an ongoing verbal war with successor Abdullah - had criticised the merger as inappropriate.

Witness protection

Meanwhile, an observer familiar with developments surrounding the controversy noted that today's development involving the cancelling of the probe could involve more than just legal issues.

"Dr Mahathir's people might be concerned that Shahrir, who is being seen as Abdullah's man, will go deeper into the history of Avenue Capital and dig out more old stories," said the insider in reference to Mahathir's son, Mokhzani who controlled Avenue Assets previously.

Avenue Assets was renamed as Avenue Capital in 2003.

During the last PAC meeting on Aug 10, the committee had found that the merger had been done properly though it said it would be examining whether there was a conflict of interest involving Abdullah and Khairy.

The PAC was also concerned whether the government would be losing its controlling stake in Avenue Capital in wake of the merger which would result in the large government-linked company being 'swallowed up' by a much smaller private firm.

Chang has been embroiled in a RM50 million civil suit filed by Kalimullah Masheerul Hassan - who is The New Straits Times Press deputy chairperson and ECM Libra chairperson. Chang has filed a RM100 million counter-claim.

The suites were over defamatory remarks said to have been made by both parties on one another. Chang's affidavit, among others, touches on the ECM Libra-Avenue merger, questioning how Khairy had raised the RM9.2 million required to acquire the three percent stake in ECM Libra.

In a related development, the PAC said it has set up a committee headed by its member, Kota Melaka MP and lawyer Wong Nai Chee, to look at possibly amending the law to extend protection to witnesses who are summoned to testify before any parliamentary committee.

While MPs enjoy immunity when they speak in the House, this immunity does not extend to others who were asked to appear before a parliamentary committee.