Pergau Payoff

Kuala Yong near Jeli, Kelantan is a laid back but picturesque place. Located some 100 kilometres west of Kota Bharu, the village was once the seat of a global controversy that is still being spoken about today – the Pergau Dam affair.

I touched briefly on the Pergau Dam affair in a recent posting. It talked about how Malaysia took advantage of the weak British economy to conduct the infamous ‘Dawn Raid’, almost bringing Margaret Thatcher to kowtow before Mahathir.

The Pergau Dam affair was about treachery – Mahathir’s style.

It involved an arms scandal as well as aid for the poor that turned into what is now the Pergau Dam.

Allegations of bribes being passed to the then-Prime Minister of Malaysia was abound. But as with the allegations of tens of billions of Ringgits squandered by Mahathir, he never challenged these allegations either.

The Pergau Dam story started with then Secretary of State for Defense George Younger’s agreement with the government of Malaysia in 1988 that the Britain would provide aid in the amount of 20 percent the value of arms sales from Britain to Malaysia. This aid would come in the form of a dam project, despite a subsequent assessment from economists and engineers of the Overseas Development Administration (ODA – the UK’s development arm at the time, which reported to the Foreign Secretary) who found that the dam would not be a cost-efficient way to increase the production of electricity.

In 1991, then Foreign Secretary, Douglas Hurd, authorised the expenditure of £234 million from the aid budget anyway, to maintain a deal made by the defence secretary and approved by Prime Minister Margaret Thatcher, and later John Major.  The World Development Movement called for a judicial review of the funding of Pergau Dam on the grounds of a law which states that aid can only be used for “promoting the development or maintaining the economy of a country….or the welfare of its people”.

The British High Court ruled in 1994 that the project was not of economic benefit to the Malaysian people; the deal linked aid directly to commercial contracts and was unlawful.

The Sunday Times ran a story that the dam contractor, George Wimpey International, had paid an initial bribe meant for Mahathir to the tune of USD500,000 (approximately RM1.25 million then). Instead of challenging the newspaper in a court of law, Mahathir got Anwar, who was his Deputy then, to announce ‘Buy British Last II‘.

Lim Kit Siang, Mahathir’s present best friend, jumped at the opportunity to slam the latter. He openly challenged Mahathir to sue the Sunday Times in a court of law – something Mahathir never did.

Although the amount of bribe stated by Lim Kit Siang varied from what was reported by the Sunday Times the last two lines of the above screen capture of Kit Siang’s article shows that monies were transferred to ‘account numbers in Switzerland to which fees related to contract award are to be paid.

When the Pergau deal and alleged bribes transfers took place in 1984-85, Mahathir’s right-hand man Daim Zainuddin was the Finance Minister. Coincidentally, it was said that Daim owned, or was in control of, at least a bank in Switzerland, if not more. This was also how, according to Edmund Terence Gomez and Jomo Kwame Sundaram, Daim’s company called Baktimu Sdn Bhd was able to obtain a RM40 million loan from the Union Bank of Switzerland to buy a 33 percent stake in Sime UEP for RM75 million in CASH!

Daim only recently divested from the banking business in Switzerland through his company, ICB Financial Group AG.

Could Daim have been involved in providing the accounts into which these payments were credited?

Neither Mahathir nor Daim has come forth to explain, let alone sue especially the Sunday Times for running that story.

In the words of Lim Kit Siang when his struggle then was for the people: