Malaysia court dismisses high-profile graft case

KUALA LUMPUR, Jun 26 (Reuters) A Malaysian court dismissed corruption charges against a prominent businessman today, setting free one of the few high-profile figures to have been netted in a 3-1/2-year anti-graft campaign.

The acquittal of Eric Chia Eng Hock, ex-boss of state-owned Perwaja Steel, was the second collapse of a major corruption case in four months, dealing a blow to the prime minister's flagging campaign and shaking confidence in prosecutors and investigators.

The opposition Parti Keadilan Rakyat called the verdict ''scandalous'' while corruption watchdog Transparency International queried Malaysia's ability to wage a war against corruption.

''The prosecution's case has been negated by their own evidence and crippled by the non-calling of essential witnesses,'' Sessions Court judge Akhtar Tahir said in dismissing the case.

''I feel in this case a total lack of direction on the prosecution's side,'' he added.

Singapore-born Chia, 74, who had been accused of dishonestly authorising a payment of about million to a mysterious overseas firm, smiled as he left the courtroom a free man.

''Yes, but I wasted 11 years,'' the wheelchair-bound Chia told reporters, when asked if he felt vindicated by the decision, and then likened the prosecution to a blind man playing cricket.

Asked how he would react if the prosecution decided to appeal against the decision, he retorted, ''Go ahead, I am not afraid.'' Anti-corruption officials had spent months gathering evidence in Hong Kong, Japan and Switzerland for the case.

''It raises a valid question as to the quality and efficiency of the authorities in bringing people alleged of corruption to book,'' said Ramon Navaratnam, the Malaysian head of Transparency International.

In February, one of Abdullah's friends was acquitted of corruption on appeal. The judge in that case was also critical of investigators, noting that it had taken three years to arrest the accused and take his statement.

Parti Keadilan, led by the wife of opposition figure Anwar Ibrahim, said the Chia case showed the need for the anti-corruption agency to be made independent, answerable to parliament instead of the prime minister's department.

''It is scandalous that the prosecution, with all its resources, could have fumbled in what should have been a straightforward and iron-clad case,'' it said in a statement.

Chia's problems date back to 1996 when Anwar, then finance minister, accused him of almost sending Perwaja broke.

Chia was charged in 2004, soon after Prime Minister Abdullah Ahmad Badawi came to power promising to clean up corruption.

He was accused of illegally authorising the payment in 1994, ostensibly to Hong Kong-based Frilsham Enterprise Inc for technical assistance provided by Japan's NKK Corp for a Perwaja project in the northern state of Kedah. But no such payment was due to NKK.

Newspapers had said Frilsham was a fictitious firm.

Set up in the 1980s as a cornerstone of Malaysia's industrial development, Perwaja ran into financial scandal in the 1990s, running up debts of 2.6 billion dollar and losses of 790 million dollar.

If convicted, Chia would have faced a minimum jail term of two years and a maximum of 20 years, a fine and caning, though he would have escaped the caning because of his age.

Chia is one of just two prominent Malaysians to face prosecution since Abdullah took power in late 2003.

Former lands minister Kasitah Gaddam, the most senior official prosecuted for graft so far, was charged in 2004, and his case is still wending its way through the courts.

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