KUALA LUMPUR — Former Malaysian Transport Minister Ling Liong Sik was yesterday acquitted of cheating the government in a billion-dollar port deal that sparked a major financial scandal, a ruling that opposition leaders said was a setback to Malaysian Prime Minister Najib Razak’s battle against corruption.

The High Court said prosecutors had not proven their case against Dr Ling, who had been charged with misleading the Cabinet in a land deal for the Port Klang free trade zone, a 400-hectare industrial and trading hub that suffered massive cost overruns. The project, initially estimated to cost 1.1 billion ringgit (S$432 million) after it was mooted by Dr Ling in 1997, more than quadrupled in cost to 4.6 billion ringgit by 2007.

Prosecutors had alleged that Dr Ling — a former Malaysian Chinese Association President — had deceived the Cabinet by hiding the fact that there was an additional interest rate of 7.5 per cent to the purchase price of 25 ringgit per square foot in the deal, despite knowing that the interest rate was already included in the price.

Dr Ling, 70, then allegedly induced the Cabinet to approve the land purchase, which caused losses to the government. He had also faced two alternative charges of deceiving the Cabinet that the terms of the purchase of the land were acknowledged and agreed to by the Valuation and Property Services Department despite knowing that there was no such agreement.

The police started probing the land deal in early 2009 after then Port Klang Authority Chairman Lee Hwa Beng lodged a report following a financial audit of the project. Dr Ling was first charged in a Sessions Court in Putrajaya in 2009, but the public prosecutor transferred the case to the High Court the following year.

The prosecutors charged that Dr Ling had committed the offence in 2002, a period when former Prime Minister Mahathir Mohamad was Finance Minister. Dr Ling had been the Transport Minister between 1986 and 2003. Several former Cabinet ministers, including Dr Mahathir, had given evidence in the case.

Yesterday, High Court Judge Ahmadi Asnawi said Dr Mahathir had testified that the 25 ringgit psf price was the basis to purchase the land for the project.

“Dr Mahathir had testified that the land would cost 1.088 billion ringgit while the whole project, 2.440 billion ringgit. In my view, the Ministry of Finance officials would not have been in a position to come to these figures until they have sighted the Valuation and Property Services Department’s report,” the judge said.

He said evidence by the defence revealed that Dr Ling did not conceal anything from the Cabinet. “It lends credence to the accused’s contention that he had no part in determining the land price and was only interested in getting the land fast,” he said.

Dr Ling declined to speak to the media after the verdict.

The prosecution has said it will study the judgement before deciding whether to appeal.

Opposition lawmakers, however, criticised the ruling saying it has dented Mr Najib’s efforts to stamp out corruption.

Corruption was among the voter grievances that caused the ruling Barisan Nasional coalition to suffer its worst election result in the May polls. Mr Najib’s ruling coalition won the most seats, but lost the popular vote to the opposition.

“Until such big fishes are caught and punished by the Najib administration, all the bells and whistles attached to the reform programmes, such as the war against corruption will just be mere rhetoric without action,” Democratic Action Party lawmaker Tony Pua said. Agencies