Mahathir’s forex scandal – Not too late for a RCI

 |Feb 2, 2017
Anwar Ibrahim has told Malaysians several versions of the multi-billion forex scandal that happened in Malaysia during Mahathir's premiership.
Anwar Ibrahim has told Malaysians several versions of the multi-billion forex scandal that happened in Malaysia during Mahathir’s premiership.

This was what Malaysiakini reported on 19th July 2006:
“Former deputy prime minister Anwar Ibrahim has revealed the key players who went behind the back of the then Bank Negara governor – the late Jaffar Hussein – to make foreign exchange (forex) speculations resulting in losses of up to RM30 billion between 1992 and 1994.
Describing the entire episode as his ‘worst experience’ in government, Anwar claimed that former Premier Mahathir Mohamad was in cahoots with former finance minister Daim Zainuddin and Second Finance Minister Nor Mohamed Yakcop to cause the losses, which had not been recovered by Bank Negara until today.
“It was Nor Mohamad and Mahathir and Daim. That was the time I just came in (as finance minister). But I trusted Jaffar who did not know about it until I asked. He genuinely thought that it was a small amount,” he said in a two-hour interview last week at Malaysiakini’s office in Bangsar Utama.
“By the time I got the picture, the problem was huge. We were talking about losses in the range close to US$10 billion.”

That was what Anwar told Malaysiakini in 2006.

Jaafar Hussein, the fall guy

In 1994, however, Anwar blamed Jaffar Hussein for the mess and said that the Bank Negara Governor had been punished – he was asked to resign from Bank Negara.

Anwar also said Bank Negara suffered a ‘small paper loss’ and that the loss was not as large as what the media had been reporting since 1989.

So, in 1994 Anwar said one thing (after denying the ‘rumour’ in 1993 that Bank Negara had lost a huge amount of money playing the forex market) and 12 years later, in 2006, he did a u-turn and said that Jaffar was not to blame after all and that Mahathir Mohamad, Daim Zainuddin and Nor Mohamad Yakcop were the real criminals.

But then Jaffar, who died August 12, 1998, had already been punished (on April 1, 1994) while Mahathir, Daim and Nor Mohamad escaped punishment.

The question is did Anwar really not know the truth in 1993 and was misinformed – which is why he misinformed Parliament – or did he actually already know the truth when he was appointed the finance minister in 1991 and one of the terms of his appointment was he would cover Mahathir’s and Daim’s backs and lie to hide the truth regarding the Bank Negara forex losses if this matter ever becomes public knowledge?

Yes, the long and short of it is someone lied and someone was punished.

The only question is: who was the one who lied and was the wrong person punished?

Since way back in 1989 the western media had already been reporting this matter in great detail.

So how can Anwar say, four-five years later in 1993-1994, that he was still ‘in the dark’ about the matter?

This can only mean Anwar pretended to be in the dark but in reality was covering Mahathir’s and Daim’s backs – which 12-13 years later Anwar admitted (that Mahathir and Daim were the culprits behind the Bank Negara forex losses).

On August 24, 1989, Reuters reported:
“A Southeast Asian central bank has emerged as an active market player in the currency market and its presence is becoming more noticeable in thin summer trading conditions, dealers said. Big market moves are often attributed to Bank Negara Malaysia.”

On December 1, 1989, Reuters reported:
“Monetary authorities in major countries are about to find out what currency dealers in Tokyo already know Malaysia’s Bank Negara can’t be pushed around. Jaffar Hussein, the Malaysian central bank governor, said in Kuala Lumpur on Wednesday that Bank Negara will not bow to pressure to check its foreign exchange activity and will do what it sees fit to preserve the value of its reserves.”

On December 5, 1989, Asian Wall Street Journal reported:
“Bank Negara, Malaysia’s central bank, curtailed its speculative activity in the foreign-exchange market following a US Federal Reserve Board request that it do so, according to currency traders and individuals familiar with the US position. Traders said that on some days, the Malaysian central bank would trade as much as between US$1 billion and US$5 billion. Although that is a small amount compared with the currency market’s global daily volume of about US$400 billion, it is an enormous amount for a single central bank and a significant portion of Malaysia’s about US$6.5 billion in foreign reserves. A central bank normally trades in the foreign-exchange market to influence the exchange rate of its country’s currency, to buy other currencies in order to pay overseas obligations, or to occasionally adjust and balance its foreign-exchange reserves. In the case of Bank Negara, however, traders in Tokyo, Singapore and Hong Kong asserted that the bank’s activities were aimed at turning a profit.”

On December 14, 1989, Reuters reported:
“They sometimes do a billion in one shot, mostly through US banks in Singapore,” said one dealer at a Tokyo city bank, who estimates his bank does 400-500 million dollars worth of business with Bank Negara on any given day. 

Anwar’s versions on forex scandal

Now, how do you reconcile those reports in 1989 with Anwar’s statements to Parliament four-five years later in 1993 and 1994?

And why did he do a u-turn in 2006 and say the opposite of what he said in 1993 and 1994?

Did Anwar just find out the truth in 2006 or had he known the truth all along since 1991-1992 and he lied in 1993-1994 to cover Mahathir’s and Daim’s backs as part of the terms of his appointment to the post of finance minister in 1991?

So, we have one truth in 1993-1994 (which Anwar told Parliament) and another truth in 2006 (which Anwar told Malaysiakini).

Then, on June 2, 2012, Anwar told a third truth in his talk at the Penang Institute’s public forum at Dewan Sri Pinang in Penang.

In June 2012, Anwar said he did not know what was going on and was kept in the dark.

So, in that case, who prepared Anwar’s replies to Parliament in 1993 and 1994? Anwar spoke in Parliament in 1993 and again in 1994 and at that time he was very sure about the matter.

He even told Parliament he was monitoring the whole situation on a daily basis and was totally aware of what was going on.

Now he says he was in the dark at the time and blames Mahathir, Daim and Nor Mohamad for it, backtracking on this earlier allegation that Jaffar Hussein was solely to blame and had been punished.

It's time for to hold a RCI on Mahathir's forex scandal as demanded by DAP veteran Lim Kit Siang for years.
It’s time for to hold a RCI on Mahathir’s forex scandal as demanded by DAP veteran Lim Kit Siang for years.

High time for RCI on forex scandal

Probably what Barry Wain wrote in his book is much closer to the truth.

What Wain said was that Mahathir was in the know all along, was very impressed with Bank Negara’s gambling operation, and gave his go-ahead for Bank Negara to play the forex market.

It appears like a Royal Commission of Inquiry will be needed to get to the bottom of this whole thing. Jaffar Hussein is already dead.

So, while the other players are still alive, they need to be brought before the RCI where they can testify and tell us the truth.

Someone is lying and someone is guilty (or maybe more than one person).

So let us find out who.

They want transparency and answers regarding 1MDB.

They want heads to roll regarding 1MDB.

1MDB is not dead.

It is a going concern.

If not sabotaged yet again, like they did in 2013 and 2014, 1MDB can go on to make a profit.

The forex losses, however, is money down the drain.

That money, US$10 billion, is gone for good.

So we demand to know what happened.

As Lim Kit Siang has been saying since 1993, and Anwar said in 2006 and 2012, the RCI must be set up so that the truth can be told and the criminals can face punishment. – 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.