The Public Accounts Committee (PAC) is all set to carry on with its probe into the controversial merger of investment advisory group ECM Libra Bhd and government-owned financial services company Avenue Capital Resources Bhd amid a threat of legal action.

"Our view - which is supported by precedents in Commonwealth countries - is that for matters to be discussed behind closed-door like the one in PAC, the matter of subjudice doesn't arise.

"There is no way it (the PAC probe) can influence the court decision or a fair trial," PAC chief Shahrir Samad told reporters after chairing a two-hour committee meeting at the Parliament building today.

The PAC - which is tasked to ensure government funds are well spent - will be examining how the government had invested in Avenue Capital years ago in its next meeting scheduled for November.

A further probe into the ECM Libra-Avenue merger could be an explosive one, especially its effect on the ongoing verbal war between Prime Minister Abdullah Ahmad Badawi and his predecessor, Dr Mahathir Mohamad.

Shift of attention

Observers familiar with developments surrounding the controversy see that the PAC's intention to dig into the background of Avenue Capital will shift public attention from Abdullah's son-in-law Khairy Jamaluddin to Mahathir's son, Mokhzani.

Mokhzani had held control of Avenue Assets, which was renamed as Avenue Capital in 2003.

However, the ECM Libra-Avenue merger had first raised eyebrows as the controversial deal was approved shortly after Khairy bought a RM9.2 million worth of direct stake in ECM Libra.

This led to wide criticisms - including Mahathir who said it was inappropriate - as Abdullah was overseeing the government-linked companies in his capacity as the finance minister.

Khairy was forced by public pressures to sell off his shares in ECM Libra subsequently in August.

Mahathir's aide, lawyer Matthias Chang had tried to stop the probe by threatening to cite Shahrir for contempt of court since Chang argued the PAC probe will be considered as subjudice in light of an ongoing civil suit that he has filed.

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.

Witnesses protected

Meanwhile, Shahrir said he will be writing to Abdullah to ask for the presence of a minister or deputy minister in the Finance Ministry during the next meeting in order to testify before the PAC on the government's investment in Avenue Capital.

In relation to that, the PAC chief said immunity protection will be extended to witnesses who testify before the committee as provided under Article 63 (2) of the Federal Constitution. This can spare them from facing charges such as contempt of court.

Questioned if Chang continue to threaten to cite the PAC for contempt of court, Shahrir replied: "If we going to be cited for contempt (despite the matter being discussed behind closed-door), we will meet him in court."

The last PAC meeting on August 25 was put to a halt after the Finance Ministry - which was called to testify before the committee and also threatened by Chang for contempt of court - considered the probe as subjudice.

Seen as unhappy with this advice, the PAC later set up its own legal committee to deal with the study of the subjudice issue.

The PAC earlier found that the ECM Libra-Avenue 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 the wake of the merger which would result in the large government-linked company being 'swallowed up' by a much smaller private firm.