Cover-up of the forex scandal under Mahathir’s watch

 |Apr 12, 2017
Mahathir, Daim and Anwar.

Not many Malaysians knew at that time that Bank Negara Malaysia was the biggest forex gambler in the world.

This secret surfaced only in 1993 when the then Opposition Leader Lim Kit Siang raised the matter in Parliament.

The then Finance Minister Anwar Ibrahim, however, denied the ‘malicious lies and rumours’.

Creative cover-up

Internationally, though, this story had been ‘hot news’ for three years and the auditor general’s office had also received quite a bit of information.

So they started investigating the matter further.

P. Kanason, the assistant auditor general, went to London to meet the Bank of England officials and was alarmed at what he discovered.

Not only was there massive wrongdoing and losses, but also a large amount of these losses were hidden and window-dressed using ‘creative-accounting’ methods.

In short, many more crimes were being committed to cover the forex crime.

Further instructions never came

After gathering all the evidence, Kanason brought the matter to the attention of the Attorney General’s Chambers, the department that decides if any crime has been committed and, if so, whether to take action.

Kanason met Ainum Mohamed Saaid who said she would look into the matter and get back to him.

Ainum then brought the matter to the attention of her ‘boss’ Daim Zainuddin, who spoke to Mahathir Mohamad.

When Kanason went to meet Ainum for further instructions, she told him, “Orang atas cakap jangan campur tangan” (Upstairs people said don’t interfere).

That instruction could only have come from Daim who Ainum went to see.

Kanason was perturbed with Ainum’s response because he had been very thorough in his investigation, which took him as far away as to London.

His principles would not allow him to just bury a matter that he considered extremely criminal.

Faced with this ‘wall’, Kanason went to meet Abu Talib Othman, the attorney general, to present his case and show him all the evidence he had gathered.

Abu Talib, who had been the attorney general for more than ten years, knew his job and was known as a man who is very thorough and meticulous.

After carefully studying Kanason’s papers, Abu Talib said that the forex trading was ultra-virus to the Bank Negara Act.

He told Kanason he would write to Bank Negara to seek clarification but nothing happened after that.

Paper loss

Whether that letter is going to surface during the RCI hearing or whether it will remain buried – or the RCI will be told the letter never existed – remains to be seen.

Meanwhile, Daim had already tipped off Mahathir about the matter, who in turn told Abu Talib to back off.

Soon after that Abu Talib retired.

By 1994 the losses became so huge that the matter could no longer be denied.

Even Kit Siang at that time was not aware that the losses were in the region of US$10 billion.

He thought it was merely RM10 billion or less, maybe even just RM7 to RM8 billion.

This was because the losses were very cleverly hidden and what Parliament was told is that they were merely ‘paper losses’.

Fall guy

Parliament was also told that the culprit for the Bank Negara forex losses, Bank Negara Governor Jaafar Hussein, had already been punished and had, in fact, resigned from the bank.

Jaafar was actually just the fall-guy and Kit Siang said so.

According to Kit Siang, the real culprits were Prime Minister Mahathir Mohamad and Finance Minister Daim Zainuddin.

Dr Rosli Yaakop, the then deputy governor of Bank Negara, has since gone public to reveal what many had suspected all along.

Mahathir and Daim were behind this crime.

Anwar replaced Daim as finance minister so that he could help cover up the crime.

Jaafar was just the fall guy.

Kanason, who was so frustrated because he had enough evidence of a crime, but was told by Ainum to back off, took early retirement.

As a reward for this cover-up, Ainum was later made the attorney general in 2000.

Raja Petra Kamarudin or RPK, cousin to the Selangor Sultan, is one of Malaysia's earliest online 'citizen journalists'. He started his website in 1995 before the internet 'explosion' triggered by the Reformasi movement in September 1998. Malaysia Today was launched as a blog in August 2004 and is one of the few pioneer blogs still active and posting articles on a daily basis 24-7. RPK, 66 years old, has been writing since 1990.