RCI grills Daim on Bank Negara’s forex losses

(FMT) – The Royal Commission of Inquiry (RCI) that is probing Bank Negara Malaysia’s (BNM) foreign exchange (forex) trading losses, grilled Daim Zainuddin for two hours about the scandal, that occurred nearly 30 years ago.

In a question-and-answer session following his testimony today, the five-man tribunal rejected the former finance minister’s claim that he was never informed of the forex trading as the information was classified under the Official Secrets Act (OSA).

The RCI panel, chaired by Mohd Sidek Hassan, said while OSA documents may have been inaccessible to the public, it was not to Daim as the then finance minister.

The tribunal also pointed out that BNM was under the purview of his ministry.

To this, Daim said, “Yes, but in this case they didn’t inform me, so I didn’t know.

“If they chose not to inform me, what could I do? Central banks around the world, whether in the United States or Australia, they are all independent.

“We don’t question their decisions. They decide and we don’t interfere. Their role is to inform me. If they don’t, how would I know?”

Daim, who was finance minister from 1984 to 1991, said the ministry had chosen the best candidates to lead the central bank and had relied on their expertise.

He added that there were over 1,000 agencies under his ministry and that he alone couldn’t have known everything these agencies were doing.

“That’s why we relied on the audited reports,” he said.

However, the grilling continued with the tribunal pointing to the fact that BNM’s forex trading was widely reported.

They said Daim should have known about it, at least through these reports, and carried out his duty to protect the country’s economy by investigating this activity which, when specifically meant to make profits, would have been illegal.

“True, it was widely reported, but Bank Negara kept on denying it. They said they were defending the currency,” Daim said in response, insisting that BNM was mostly independent.

“You put people in charge, and you don’t know until later that they did not do their work.

“If I had known about it, I would’ve stepped in and sacked those responsible for it.”

Sidek, citing his experience as a former chief secretary to the government in charge of more than a million civil servants, acknowledged that he too could not have known everything that took place under him.

“But I would have expected to be informed about those that affected and had an impact on the nation.”

To this, Daim responded that there was no market talk on the forex trading at the time.

Speaking to reporters afterwards, Daim said it was easy for the tribunal to point out mistakes “30 years later”.

“As I’ve said, we’re all brilliant after that.”

When asked why the trading wasn’t stopped when he resigned in 1991, Daim said it was because nobody knew about it.

“Even the auditor-general didn’t tell me. They were supposed to come and see me. Everybody must be responsible to the country.

“When you see something wrong, why don’t you come report it to me? Instead, you place it under the OSA,” he said.

A total of 23 witnesses have testified in the RCI proceedings, including former opposition leader Anwar Ibrahim, who was the deputy prime minister and finance minister when BNM’s forex losses took place.

The RCI has been tasked with getting to the bottom of the forex losses of US$10 billion (about RM25 billion based on the exchange rate at the time) incurred by the central bank between 1991 and 1993.

The alleged scandal took place during Dr Mahathir Mohamad’s tenure as prime minister, when Daim and Anwar (1991-1998) were finance ministers.