PUTRAJAYA: A remark by the Royal Commission of Inquiry (RCI) chairman that Bank Negara Malaysia (BNM) lost RM31.5 billion in forex losses between 1991 and 1994 drew protests from Dr Mahathir Mohamad’s lawyer.
Mohd Sidek Hassan said this was the conclusion that could be drawn after the first day of proceedings.
He said the figures were hidden somewhere in BNM’s reports.
Sidek said, for example, the 1992 losses were concealed as reserves.
“Who was responsible for asking it to be hidden?” he asked in summarising the day’s hearing.
Lawyer Mohamed Haniff Khatri Abdullah stood up and told Sidek that such a finding on a daily basis would confuse the public.
He said it was premature for the chairman to reach such a conclusion because other witnesses need to be questioned to determine what happened.
Sidek, however, retorted and asked whether Haniff was confused.
The lawyer replied that he was because that was a statement of fact made by a witness.
Earlier in the day, former BNM account manager Abdul Aziz Abdul Manaf told the tribunal that the central bank suffered RM31.5 billion losses due to forex speculation.
The third witness, former BNM assistant governor Abdul Murad Khalid, said then central bank governor Jaffar Hussein was kept in the dark about the forex activities and the losses.
Murad said he was appointed to the position in April 1992 and at that time Nor Mohamed Yakcop was a consultant on forex trading.
“There was no policy, or checks and balances, on forex trading then,” he said, adding there were four forex dealers acting for the central bank.
Murad said according to his estimation, BNM lost about US$10 billion but BNM did not conduct any internal investigation. There was also no probe by any law enforcement agency.
He said the late Jaffar’s successor, Ahmad Mohd Don, was only called by the Public Accounts Committee for an explanation in 1994.
Jaffar and Nor Mohamed resigned following the forex losses.
Murad said his overseas visits later revealed the losses were the world’s biggest forex scandal.
“The United States Reserve Bank authorities also told me that BNM was active in the forex trading and that it should stop its activities,” said Murad, who left BNM in 1999.
Murad said Malaysia would have had RM100 billion more in its foreign reserves if not for the forex losses.
He said during the 1990s, BNM had reserves of about US$20 billion but its exposure was to the tune of US$130 billion.
“This is more than six or seven times its reserves. This is a form of gambling,” he added.
The forex scandal took place when Mahathir was prime minister from 1981 to 2013 while Anwar Ibrahim was the finance minister from 1993 to 1998.
Hearing was adjourned to Thursday.
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