MALAYSIAN Prime Minister Mahathir Mohamad made a series of blunders over the Anwar Ibrahim affair "that cost him dearly," Senior Minister Lee Kuan Yew said today.

Lee, in frank comments on the two-year saga, described it as an "unmitigated disaster and said he felt more sorry for Mahathir than for the sacked and jailed ex-deputy premier.

"I felt more sorry for Dr Mahathir than I did for Anwar," Lee said.

"I think Dr Mahathir paid a very heavy price and I feel sorry for him. He made several errors of judgment which I felt were most unfortunate."

Lee, speaking at a press conference on the last day of his visit to Malaysia, said he met Mahathir in early 1999 in Davos and asked him why Anwar had been arrested in September 1998 under the Internal Security Act, which allows detention without trial.

"I said, 'Why did you arrest him under ISA? How can he be a threat to national security when only four weeks earlier he was your deputy?'"

Lee said he was "flabbergasted" when Mahathir told him he did not know Anwar was going to be arrested under the ISA, that it was the prerogative of the police chief.

"I thought that was the beginning of a series of blunders that cost him dearly. It should never have been that way, it should have been a straightforward criminal charge...

"Next disaster was the blue (black) eye. I said (to Mahathir), 'Why not a commission of inquiry immediately?'

"It would not have absolved him from blame but it would have cleared the doubt that he was a party to it.

"He (Mahathir) said to me, 'What benefit do I get out of it?' I agree but these are things that have been done and I am afraid he has paid very dearly for it.

"My sympathies are with him. I am sorry for Anwar too because he had so many things going for him. He was set to take over and all these things now have happened, damaging both of them.

"It's just sad."

Mahathir sacked his heir apparent Anwar on September 2, 1998. Eighteen days later, after Anwar led a mass anti-government protest, police arrested him under the ISA.

The then-police chief Rahim Noor attacked him in the cells that night, inflicting the black eye that became a powerful opposition symbol.

When an inquiry commission was eventually set up Rahim admitted the attack but said he acted on impulse. He was later ordered jailed for two months.

Anwar in April 1999 was jailed for six years for abuse of official powers and last week was imprisoned for nine years for sodomy. The second sentence will not start till the first has finished.

The sentence, seen by some overseas leaders as politically motivated, sparked outrage at home and abroad but Lee declined comment on it.

Mahathir's United Malays National Organisation lost 22 seats in the November 1999 general election after Anwar's treatment split the ethnic Malay community.