Malaysia Bars British Firms From Contracts

In an extraordinary display of official anger at foreign press coverage, Malaysia announced Friday that British companies will be banned from government contracts because of reports in Britain’s media about official corruption in past business deals.

Deputy Prime Minister Anwar Ibrahim, who announced the new policy at a press conference in Kuala Lumpur, said the government had canceled contracts with British firms in an Anglo-Japanese consortium building a $3.5-billion international airport in the capital. The loss of the deal is expected to cost British companies $600 million.

Anwar, who is also the country’s finance minister, said the “final blow” was a report in London’s Sunday Times last week alleging that Prime Minister Mahathir Mohammed had solicited and received a $50,000 payment from a British construction company in return for a contract to build an aluminum smelter.

“Personally, I am disgusted with the attack on the person of the prime minister, who while leading Malaysia in its current, most rapid and successful period of economic development has not amassed wealth for himself,” Anwar said.

Anwar said the Malaysian Cabinet had agreed to the trade ban Wednesday because the British press had made Malaysia “an object of derision and scorn.”

In an interview with the British Broadcasting Corp., Malaysia’s international trade minister, Rafidah Aziz, said her government’s policy toward British firms would not affect trade with private companies in Malaysia. Two-way trade between Britain and Malaysia was more than $1.8 billion in the first 10 months of last year.

Rafidah said the trade ban will remain in force until the problem with the British press had been remedied, but she did not indicate what that meant. She scoffed when an interviewer suggested that the British press was independent of the government.

But Rafidah ruled out the possibility that Mahathir or other members of the government would file a lawsuit for libel; they are too busy, she said. British law does not prevent public figures from filing libel cases, as U.S. statutes do.

Mahathir is notoriously sensitive to perceived slights from the West.

Diplomats said, for example, that he has never forgiven the U.S. government for the fact that after he requested an audience with former President George Bush during a stopover in Boston, Bush met him in a locker room at Boston College instead of in more luxurious surroundings.

Mahathir refused to attend the Asia Pacific Economic Cooperation summit meeting called by President Clinton last November in Seattle.