Mahathir’s forex scandal – Zeti should come clean

 |Jan 31, 2017
In 1991, Daim Zainuddin (left) resigned as finance minister and Anwar took over.
In 1991, Daim Zainuddin (left) resigned as finance minister and Anwar took over.

Bank Negara started gambling on the forex market in the late 1980s.

As early as 1989 the western media had already revealed that Bank Negara is the biggest forex speculator in the world but by then Bank Negara was already in trouble.

In 1991, Daim resigned as finance minister and Anwar took over.

Anwar’s job as finance minister was to cover Mahathir’s and Daim’s backs when all hell breaks loose.

In September 1992, Soros attacked the forex market with US$8 billion in borrowed money and Bank Negara, which was already sinking, lost a total of US$10 billion while Soros made US$1.2 billion.

For the first time in 26 years, Malaysia Today revealed the real reason why Daim Zainuddin handed the post of finance minister to Anwar Ibrahim.

So the timeline is as follows:

In 1989, it was revealed that Bank Negara was the biggest forex gambler in the world.

In 1991, the story became too hot to cover up any longer – so Daim resigned and handed the post of finance minister to Anwar.

In 1992, George Soros attacked the forex market with USD$8 billion and Bank Negara got wiped out.

In 1993, Lim Kit Siang raised the matter in Parliament and Anwar denied it.

In 1994, Kit Siang again raised this matter in Parliament and Anwar finally admitted it but said it was only ‘paper losses’ and a small amount and not as much as was reported.

Now, that is the backdrop to the whole issue.

Some, however, are asking why only now are we talking about it after 26 years?

Well, the answer is simple for those of you who are too dumb to understand.

Before this we did not know the real story plus what the real amount of losses was.

A few days ago we were told the truth.

That is why we are talking about it now after 26 years.

Kapish? Now stop asking silly questions unless you want a silly reply.

Mahathir blames Soros for Bank Negara’s losses but was it really Soros or is there another yet untold story?

In April 1991, a report by the Reuters news agency from London described Bank Negara as “a dominant force on the foreign exchange scene for some years” and it was accused by some forex operators as “a market bully”.

The report went on to say:
“Over the past two years it (Bank Negara) has stepped up its trading volume, and this year it has started dealing in what dealers described as ‘really massive amounts’.
Typically, Bank Negara operates in US$50 million lots, compared with the market norm of US$5 million or US$10 million and deals with maybe six major banks in Europe and six in New York, dealers said.
One trader said the only dealers rivalling Bank Negara would be the Japanese funds.
But while these funds enter the market no more than once or twice a year, Bank Negara is coming in and doing yards (billions) of dollars a day.
Its recent technique has been to hit major banks for US50 million each, then hit them 10 minutes later, dealers said.
Then it changes centre, and does it all over again.”

In short, Bank Negara was gambling and was gambling big time.4

Time for former Bank Negara Governor Zeti to come clean on Mahathir's forex scandal.
Time for former Bank Negara Governor Zeti to come clean on Mahathir’s forex scandal.

What was Zeti’s role?

In fact, Bank Negara had set up operations in London and New York for this very purpose.

In the late 1980s, Zeti Akhtar Aziz was posted to their London office.

So Zeti knows what has been going on since the late 1980s and she also knows who was involved.

However, Zeti has never talked these last 28 years or so and has never revealed the truth.

Zeti was in London at that time and knows what happened so why is she not telling us the truth?

Is that why she was rewarded with the post of governor?

Was part of her job function to never reveal what happened in the 1980s, how much Bank Negara really lost, and who were the people behind it?

In 1993, Anwar told Parliament that the story that Bank Negara gambled and lost on the forex market was not true.

That was part of his job function and the reason why Daim handed him the post of finance minister: to cover Mahathir’s and Daim’s backs and lie to Parliament.

In 1994, Anwar again lied to Parliament and said that Bank Negara made only ‘paper losses’ and that the amount was small and not as large as reported.

Anwar then told Parliament that Jaffar Hussein, Bank Negara governor at that time, had accepted responsibility and had resigned.

Today, Deputy Home Minister and Pulai MP Nur Jazlan Mohamed said that Jaffar, his father-in-law, was the fall guy who took the blame and resigned to cover the backs of the real culprits.

“He resigned on April Fool’s Day in 1994, to cover the faults of others. My father-in-law’s resignation to take responsibility for someone else’s mistake is rare in politics and government in Malaysia even today. And my late father-in-law’s face was in the Utusan report, implying as if he was the person at fault and not just taking responsibility as the boss of Bank Negara at the time,” said Nur Jazlan.

The son-in-law of Bank Negara governor at that time, Nur Jazlan Mohamed, has spoken.

It is now time for Zeti Akhtar Aziz, the person who was in London while all this was going on, to also come clean and reveal the truth and not take the truth to her grave like Jaffar Hussein did.

The problem with all these latest revelations is that it raised more questions than answers.

For example, we now know that the amount that Bank Negara lost was US$10 billion, equivalent to RM98 billion today.

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

George Soros was to be blamed entirely?

But what we do not understand is that George Soros attacked the market only on Sept 16, 1992, which is now known as ‘Black Wednesday’.

He came in with US$8 billion of borrowed money but stayed in for only a few days and after that got out again after making US$1.2 billion.

Mahathir Mohamad said that Malaysia lost a lot of money (he never mentioned how much but we now know it is US$10 billion) because of Soros.

Mahathir blamed Soros entirely.

But then Soros hit the market only on Sept 16, 1992 and for only a few days.

Bank Negara, however, had been playing the market from the 1980s and it stepped up its activities in 1989 until 1993.

So Bank Negara was gambling heavily for four years while Soros for just a few days.

So how Bank Negara’s US$10 billion loss can be blamed entirely on Soros?

The next question is: is the entire US$10 billion loss due to forex losses or is there some other reasons for this loss and is the forex losses merely a cover-up to hide the real reason for Bank Negara’s losses?

It is just like the story we hear about a goldsmith shop being hit by robbers and about RM1 million is taken away and the goldsmith shop hides another RM1 million worth of jewellery and reports to the insurance company that it got robbed for RM2 million.

So, how much of that US$10 billion actually left through the back door at night and how much was really lost playing the forex market?

There may actually be more to this story after all.

Anyway, we shall talk more about this in the next episode. – Malaysia Today

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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.