RCI says Dr M helped in concealing RM31.5bil forex losses

RCI on BNM’s 1990s forex losses says it is of the opinion that then prime minister condoned finance minister’s actions in hiding amount from cabinet and parliament.


(FMT) – The Royal Commission of Inquiry (RCI) on Bank Negara Malaysia’s (BNM) forex trading losses in the 1990s today made public its findings, stating that former prime minister Dr Mahathir Mohamad helped in “deliberately concealing” the losses.

This was the conclusion pertaining to the scope of the probe on whether there were elements of hidden facts and information relating to forex losses suffered by BNM and misleading statements given to the cabinet, parliament and the public.

“There was deliberate concealment, as BNM’s annual reports did not state the losses for the years 1992, 1993 and 1994.

“There was also no further action by the then finance minister and treasury secretary-general despite being informed by the auditor-general on the total loss of RM31.5 billion over the three years.

“The commission is of the opinion that the then prime minister condoned the actions of the finance minister in deliberately concealing the information and misleading the cabinet,” the report said.

It said this was based on minutes of cabinet meetings and testimony from the then finance minister and Mahathir himself, which confirmed that the prime minister was aware of the losses because it was reported to him by the finance ministry and the treasury deputy secretary general.

The commission added that the act of concealing the magnitude of the losses was further compounded by shares being discreetly transferred to BNM to absorb losses through capital gain.

RCI recommend police investigate possible CBT

With this, the commission recommended that the police open investigations into possible criminal breach of trust (CBT) or cheating by various parties, including Mahathir, then finance minister Anwar Ibrahim, BNM board of directors, finance ministry officials, BNM officials, and officials from the auditor-general’s office.

The report also said it was “definitive on the losses incurred by BNM due to forex dealings in 1992, 1993, and 1994, being a total of RM31.5 billion”.

“It said this was supported by BNM’s accounting treatment report for the period 1988-1994, audit reports on forex operations for the same period, a letter by the Auditor-General and the BNM Board minutes on February 1995.

“Witness testimony also corroborated the total amount as derived from the documents,” the report said.

The RCI, which was held over nine days from Aug 21 to Sept 19, saw a total of 25 witnesses testifying.

It was led by its chairman Sidek Hassan, who is former chief secretary to the government and current chairman of Petronas.

Other members of the RCI panel were High Court judge Kamaludin Md Said, Bursa Malaysia Bhd chief executive officer Tajuddin Atan, Special Task Force to Facilitate Business co-chairman Saw Choo Boon and Malaysian Institute of Accountants member K Pushpanathan.

The RCI’s scope of inquiry was to:

  • Determine the authenticity of the allegation on the foreign exchange losses suffered by Bank Negara Malaysia (BNM) in the 1990s and its implications on the national economy;
  • Determine whether BNM’s involvement in the foreign exchange activities which caused the losses contradicted with the Central Bank Ordinance 1958 or any relevant laws;
  • Determine whether there were elements of hidden facts and information relating to foreign exchange losses suffered by BNM and misleading statements given to the cabinet, parliament and the public;
  • Recommend suitable actions to be taken against those found to be directly and/or indirectly involved in causing the losses and hiding the facts and information on the losses, and,
  • Recommend appropriate measures to ensure the incident will not recur.