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Malaysia's Anwar Denies Charges; Alleges Conspiracy (Update1)
9/3/98 5:33

     (Adds details and quotes from Anwar, background.)

     Kuala Lumpur, Sept. 3 (Bloomberg) -- Anwar Ibrahim, who was
fired last night as Malaysia's finance minister and deputy prime
minister, denied all allegations against him of improper conduct,
saying they are part of ``a conspiracy at the highest level.''
     ``I will have no choice but to protect my innocence and call
for reforms in the system,'' he said at a press conference at his
home in an affluent Kuala Lumpur suburb. More than 100 of his
supporters were on hand for the briefing, interrupting his talk
with cries of ``Allahhuakbar,'' which means ``God is Great.''
     Anwar -- who was seen as the anointed successor to the top
post -- said Prime Minister Mahathir Mohamad's government has
unjustly used the police force and the courts against him. He
said he expects to be charged with crimes under the Official
Secrets Act or the Internal Securities Act. He urged supporters
to remain calm and not break the law.
     ``I can't establish for now if the prime minister is
directly responsible and involved'' in this conspiracy, Anwar
said.
     He challenged Mahathir to remove him from his post as deputy
president of the ruling the United Malays National Organization,
or Umno, by democratic means. Mahathir is the party's president,
and is also Malaysia's home minister, with direct control over
the country's police force and public prosecutors.
     ``If I (had) continued to show my total loyalty, none of
this would have happened,'' he said. Anwar said he is ``more
liberal, more democratic'' than Mahathir.
     Anwar's sacking -- just one week before Malaysia hosts the
world's second-largest sporting carnival, the Commonwealth Games
-- came amid differences with Mahathir about the direction of
economic policy. On Tuesday the country unveiled a slew of
capital controls that restricts flow of the currency.
     Anwar is also seen as a potential challenger to Mahathir,
who may soon call for a general election. There is speculation
that Mahathir may move to remove Anwar from his party post at a
meeting of the Supreme Council of the party tonight at 8 p.m.
local time. Anwar was elected to the post by the party.

                     Allegations

     Shortly after Anwar was fired last night, Malaysian Police
Chief Rahim Noor said Anwar is under investigation for
allegations raised in the book ``50 Reasons Why Anwar Cannot
Become Prime Minister.''
     The book alludes to Anwar's alleged bisexuality and says
that he conspired with foreigners to undermine Mahathir's
leadership. Anwar has denied the allegations and sued the author.
     ``It's a clear case of abuse of power, using the attorney
general's office to frame and fabricate charges,'' Anwar said.
     Malaysian police filed affidavits in Malaysia's High Court
today that include allegations against Nallakaruppan Solaimalai,
an Anwar associate. Malaysian police said Anwar was given 60
million ringgit ($15.8 million) during the 1995 general election
by Nallakaruppan, a director at Magnum Corporation Bhd. The
documents gave no details on whether this alleged transfer of
money was a criminal act.
     Nallakaruppan, who is now in police custody but has not been
charged, also acted as a ``go-between'' for Anwar and ``evil
foreign elements'' that threaten Malaysia's national security,
the police said in affidavits filed at the Kuala Lumpur High
Court. Further, an unnamed male witness alleged in the affidavit
that he was sodomized by Anwar 15 times at Nallakaruppan's
apartment in Bangsar, a Kuala Lumpur suburb.
     Anwar said he has documents that can prove he's innocent of
all allegations. He also said Nallakaruppan was forced to lie.
     Malaysian police said Anwar is under investigation, but has
not been charged. Anwar said he's been shut out of his government
offices but his movements have not been restricted.

                        Showdown

     Anwar -- a Malay literature graduate -- was jailed for
nearly 2 years in the 1970s for organizing student demonstrations
that championed the plight of the rural poor. Now 51, Anwar rose
to Malaysia's second-highest job within 11 years of joining the
political party. He served as minister in three different
portfolios between 1983 and 1991 -- Youth & Sports, Agriculture,
and Education -- before being appointed finance minister in 1991.
He was made deputy prime minister in 1993.
     Referring to the book, ``50 Reasons Why Anwar Cannot Become
Prime Minister,'' Bernama news service reported that Malaysian
Attorney-General Mohtar Abdullah said in an affidavit filed at
the High Court that if there's a prima facie case, Anwar can be
charged under the Internal Security Act 1960, the Official
Secrets Act 1972, the Penal Code, the Women and Girls Protection
Act 1973 and the Prevention of Corruption Act 1969 and 1970.
     Speaking to reporters today, Anwar said he remains committed
to the political party he joined shortly after graduating from
university. ``I am committed to Umno,'' he said. ``I will be
around for a long time.''

--Jane Lee, Eugene Tang, T.H. Chan and John O'Neill in Kuala
Lumpur (603) 248-7000 through the Singapore newsroom (65) 538-