Pergau Dam Affair: 'Sweeteners' row sparked trade ban: 'Sunday Times' story linking Malaysia's prime minister with bribery claims proved the final straw: Rhys Williams recalls the events that led to the trade embargo on British companies

THE SWEEPING trade ban on Britain imposed by Malaysia's irascible prime minister, Mahathir Mohamad, came after a long campaign in the British press suggesting 'sweeteners' were being paid to enable UK firms to win government contracts.

Most prominent was the contention that the British Government had paid pounds 234m in aid for a project its own officials considered unnecessary and 'a bad buy' - the Pergau hydro-electric dam scheme in northern Malaysia.

Sir Tim Lankester, the former permanent secretary at the Overseas Development Administration, told the Public Accounts Committee last January that aid for the Pergau dam was linked to a pounds 1.3bn sale of arms to Malaysia - something the Government had persistently denied. He also told the committee that final approval for the aid package had come from John Major, leading to charges against the Prime Minister of 'abuse of the aid system'.

Under fierce questioning in the Commons, Mr Major conceded that he had rejected the advice of senior civil servants.

The initiative for British involvement in the dam came from the Department of Trade and Industry, with the building work awarded to a company owned by Trafalgar House, which donated pounds 590,000 to the Tory party from 1979 to 1992.

But the crucial moment in press coverage came with an article in the Sunday Times which reported that Dr Mahathir himself was in line for a personal bribe. The newspaper suggested that Wimpey, the construction giant, was involved in negotiating special payments to Malaysian politicians at the highest level to secure a pounds 615m building contract for an aluminium smelter. The company was allegedly prepared to pay Dr Mahathir pounds 35,000.

Wimpey did not challenge the story and despite a last-minute intervention by Mr Major, an incensed Dr Mahathir severed commercial relations with Britain five days later, thus freezing negotiations for Malaysian government contracts worth billions.

Andrew Neil, then editor of the Sunday Times, said yesterday that the article was 'copper-bottomed', but insisted that it was the 'last straw' rather than the clinching factor in the trade ban.

But, as the weeks went by, it was not hard to work out the focus of Dr Mahathir's ire. In March, the Malaysian Prime Minister wrote an open letter to the Financial Times explaining in detail his reasons for calling the ban: 'Alleging, wrongly, that the Malaysian Prime Minister is corrupt may be part of British press freedom,' he wrote. 'But the Malaysian Prime Minister need not subscribe to that, even as Andrew Neil himself did not accept reports on his affair with Pamella Bordes.' It was a strangely tangential point, but left the reader in no doubt as to whom Dr Mahathir saw as the villain.

Six weeks later, a major upheaval in Rupert Murdoch's media empire saw Mr Neil leave the editor's chair at the Sunday Times and move to Fox Television in New York to launch a weekly current affairs programme.

One theory circulating at News International's Wapping headquarters was that the furore over the allegations may have had an adverse bearing on Mr Murdoch's plans to expand his satellite network, Star TV, in Malaysia and the Far East.

The suggestion is flatly denied by News International. Mr Neil said yesterday: 'If you want to create a conspiracy then you can. If there was some secret deal that I know nothing about between NewsCorp and the Malaysian government, then I wish they had struck it sooner - I'd have been a richer and happier sooner. If this (New York) is being sent to Coventry, then it's a pleasant, independent-minded, prosperous place to be.'

He maintains that discussions about a move from the Sunday Times after a decade as editor predated the Malaysian controversy by several months.

Yet when Mr Neil's move to New York was announced, Dr Mahathir said he hoped that British media reports of his country might improve.

How the story reached the pages of the Sunday Times in the first place is as tortuous as the whole arms-for-trade business. A story about alleged bribes from Wimpey to Malaysian politicians had been touted around a number of national newspapers, including the Observer and the Independent. A freelance journalist said he would offer supporting documentary evidence in return for pounds 5,000.

Both papers declined the offer and some weeks later the Sunday Times published a similar story. The paper says it had its own source, but one version of events from inside News International suggests that the allegations emerged by luck out of a Sunday Times Insight investigation into Derek Hatton, the former leader of Liverpool council, and irregularities in the award of building contracts.

Either way, Mr Neil stands by the article and his decision to run it: 'British journalism remains in tact. We cannot be intimidated by governments or big business.'

Leading article, page 13

(Photographs omitted)

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Voices
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
Arts and Entertainment
Chocolat author Joanne Harris has spoken about the financial struggles most authors face
books
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' is based on historical events
News
people
Arts and Entertainment
filmSir Ian McKellen will play retired detective in new film
Life and Style
tech
Arts and Entertainment
'Molecular Man +1+1+1' by Jonathan Borofsky at Yorkshire Sculpture park
tv
News
Glamour magazine hosts a yoga class with Yogalosophy author Mandy Ingber on June 10, 2013 in New York City.
newsFather Padraig O'Baoill said the exercise was 'unsavoury' in a weekly parish newsletter
Extras
indybest
News
people'She is unstoppable', says Jean Paul Gaultier at Paris show
Sport
Alexis Sanchez and apparently his barber Carlos Moles in Barcelona today
football
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Marketing Manager

£36000 - £38000 per annum: Charter Selection: Charter Selection are working wi...

Accounts Assistant, Hammersmith

£25000 per annum: Charter Selection: Exciting sports company with a strong bra...

Financial Accountant-IFRS-Gloucester-£300/day

£250 - £295 per day + competitive: Orgtel: Financial Accountant - IFRS - Glouc...

Technical Support Engineer - Central London - £30,000

£28000 - £30000 per annum: Ashdown Group: IT Support Engineer - Central London...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil