Bank Negara forex scandal, a case of deliberate fraud

 |Feb 27, 2017
The trio who knew all about the forex scandal – (from l;eft) Mahathir Mohamad, Anwar Ibrahim and Daim Zainuddin.

The cabinet’s decision to set up a special task force to lay the groundwork for the formation of a Royal Commission of Inquiry (RCI) to investigate the US$10 billion forex losses suffered by Bank Negara from 1987 to 1992 is finally going to reveal the truth regarding what really happened and who benefitted from the US$10 billion that the central bank lost.

Yes, this was not a simple case of bad judgement or adventurism turned sour.

If it was then at best the crime here would be of stupidity.

This case was actually worse than that.

This was a case of fraud involving the syphoning out of Bank Negara’s money using forex trading as the camouflage and the ‘trading losses’ as the disguise to steal billions.

To deflect the fallout from the special task force’s finding and what the RCI is going to discover, the Pakatuns and DAPsters are flooding the internet with comments such as this was an old issue, the government should investigate the more current issues, if it wants to investigate the Bank Negara forex scandal, then it should also investigate 1MDB, and so on.

The strategy here is very obvious.

They are trying to imply and insinuate that the government was practicing ‘selective investigation’ and ‘distraction tactics’.

The target is Mahathir and anything that hurts Mahathir is being investigated while at the same time this investigation will distract Malaysians from bigger issues.

1MDB a going concern

What these people are not mentioning is that 1MDB was a going concern and has not ‘died’ like what happened in the Bank Negara forex matter.

Secondly, various investigations have already been conducted on 1MDB by various bodies and agencies while no such investigation has ever been done in 25 years on the US$10 billion forex losses.

Third, there is no new story regarding 1MDB other than what has already been said in 2015 while last month, in January 2017, new evidence has surfaced regarding the Bank Negara forex losses.

If the Pakatuns and DAPsters want to spin this matter, they have to be cleverer than that because they are not comparing apples to apples.

1MDB has already been investigated many times and the reports are out there for all and sundry to read.

On the other hand, the Bank Negara US$10 billion forex scandal has never been investigated.

Mahathir (left) blamed George Soros for Bank Negara’s forex losses.

Deliberate fraud

We know what happened in the 1MDB case.

We don’t know what happened in the Bank Negara US$10 billion forex scandal case.

Now we are going to find out that in the Bank Negara US$10 billion forex scandal matter it was not a simple case of bad judgement but a case of deliberate fraud.

This is something that has never been revealed in 25 years.

Was there actually a collaboration between Soros and Mahathir?

The question would be is the RCI going to get to the bottom of the matter or are they going to find out that much of the evidence has mysteriously disappeared?

Are the witnesses who are going to be called to testify in front of the RCI going to plead ignorance or say that they are suffering a memory lapse and have forgotten?

People like Mahathir can talk for hours about Umno in 1946 and what happened from 1946 up to Merdeka in 1957 and then will tell you he has forgotten about what happened 10 years ago.

Warning unheeded

The fact that the United States and Japan had warned the Malaysian government in 1989 that Bank Negara was taking a huge risk playing the forex market and that what Bank Negara plays in one day exceeds what Japan does in six months was very revealing.

Even the two top countries then, the US and Japan, were shuddering at what Bank Negara was doing and they warned Malaysia to cool it.

Bank Negara, however, did not cool it.

It continued being the biggest forex gambler in the world.

Bank Negara was trading though 50-100 agents and proxies all over the world.

Basically Bank Negara was both buying and selling at the same time, and also making and losing money both at the same time.

But the weird thing about this whole episode is that while Bank Negara was losing money, there were certain people who were making money.

This reminds me of George Tan who was buying and selling property at huge profits but the only thing is he was buying from and selling to his own companies.

That was how they syphoned out huge sums of money from BMF Hong Kong.

Bank Negara was led and let to bleed in the forex market because ‘someone’ seems wanted to make money.

In the Bank Negara case it was more or less the same.

They lost and made money both at the same time.

But the losses went to Bank Negara while the profits were made by certain proxies.

So that was how they transferred Bank Negara’s money into private pockets.

The US and Japan knew what was going on.

That was why, when they warned the Malaysian government about it, nothing was done and Bank Negara continued gambling for another three or four years before the whole thing collapsed.

Even more important is that not only did the US and Japan knew about it, George Soros also knew about it.

He knew that Bank Negara was being heavily exposed and was in danger of collapsing if someone else joined the game and bet against Bank Negara.

So, in 1992, Soros borrowed US$8 billion and quietly entered the market.

But he did it slowly over a few months so as to not attract any attention.

Then, on September 16, 1992, Soros suddenly bailed out and in just a few days he made a profit of US$1.2 billion.

Bank Negara was caught with its pants down, and while its agents made billions, the central bank suffered losses of US$10 billion.

Will Anwar testify in front of the RCI and reveal the truth that Bank Negara suffered fraud?

Umno presidential battle between Tengku Razaleigh (left) and Mahathir is said to be the main reason why Bank Negara was dragged into the forex gambling.

Umno internal strife

Actually this whole thing was mooted in 1987, although the US and Japan did not warn Malaysia about it until 1989.

The reason they embarked on this exercise was because Mahathir Mohamad needed money to finance the Team A – Team B tussle that same year.

Tengku Razaleigh Hamzah’s Team B wanted to oust Mahathir and billions were being allocated for this.

Tengku Razaleigh had a lot of money (still has, in fact) while, at that time, Mahathir was not yet rich, like he is now.

Tengku Razaleigh was prepared to spend billions to become the prime minister of Malaysia.

Mahathir knew he was going to lose if he did not match Tengku Razaleigh’s billions.

That was when Mahathir and Daim Zainuddin came out with the scheme to syphon out billions from Bank Negara through forex trading.

The impression given is that Bank Negara gambled on the forex market to make money.

Of course that in itself was wrong because the job of Bank Negara was not to gamble and make money.

One’s gain, one’s lose

Nevertheless, that is not even the real reason for Bank Negara gambling on the forex market.

The real reason was to lose money so that someone else can make money because one person’s loss is another person’s gain.

I mean it is just like when you lose money on the stock market someone, somewhere would be making money.

So Mahathir and Daim made billions.

How much they made the RCI will have to determine but it was billions for sure.

According to those in Mahathir’s and Daim’s circle, the amount was around US$8 billion or so.

If the RCI does its job properly, it is going to discover that the US$10 billion forex losses was not a simple case of bad judgement or stupidity but a case of deliberate fraud to syphon out Bank Negara’s money by buying and selling currency through 50-100 agents all over the world.

Nor Mohamed Yakcop (pic) is said to be the key player in the Bank Negara forex scam.

That was why when Anwar wanted to take action against Nor Mohamed, Mahathir stopped him from doing so.

Instead of punishing Nor Mohamed, as he should have, he was later promoted to a minister.

Lim Kit Siang has been keeping very quiet since he made his deal with Mahathir in December 2016 but he, too, knows this was just a scam to syphon out Bank Negara’s money, which was why Kit Siang wanted the RCI to be set up.

Anwar, on the other hand, claims he was not aware of this, even when he took over as the finance minister in 1991, until he was told about it when he traveled overseas and someone told him about it.

It seems everyone in the world knew that Bank Negara had been gambling and losing money since 1987 but Anwar knew about it only the following year after Soros has walked away with US$1.2 billion and Bank Negara had already lost US10 billion. – Malaysia Today

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.