Malaysia to Investigate Decades-Old Foreign-Exchange Scandal

(Reuters) – Malaysia will form a royal commission to investigate a multi-billion-dollar foreign-exchange scandal involving the central bank, over two decades after the issue first came to light, the government said on Wednesday.

A preliminary investigation found evidence of a possible cover-up of the case, which occurred during the tenure of then-Prime Minister Mahathir Mohamed, in the 1980s and 1990s, the government said.

The task force that carried out that investigation was set up to find out how much the central bank, Bank Negara Malaysia, lost during a foray into currency trading more than 20 years ago, the office of Prime Minister Najib Razak said in a statement.

The task force “found that the extent of losses is larger than what was reported to Cabinet and Parliament,” the statement said.

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The investigation came just months after Mahathir formed a new political party aimed at toppling Najib, his former protégé, who has been linked to a multi-billion-dollar financial scandal tied to state fund 1Malaysia Development Berhad (1MDB).

The 1MDB scandal is at the centre of a clutch of civil suits filed by the U.S. Department of Justice, which is seeking to seize assets believed to have been bought using money stolen from the state fund.

Najib has denied any wrongdoing and has been cleared of any wrongdoing by Malaysia’s attorney-general.