BANK Negara Malaysia and the Ministry of Finance agreed that shares held by the government in certain companies be transferred to the central bank as a way to keep its reserves afloat after suffering losses on the forex market, the inquiry panel into BNM’s forex trading losses was told today.

Othman Jusoh, the former secretary of the finance department in the MoF, said the decision was made at a meeting in late November 1994.

“The sale of government-owned shares (was) to be done ‘quietly’ via Rashid Hussein Sdn Bhd,” he said.

“The purpose of this meeting was for the government to assist BNM in relation to the losses faced by the bank by transferring shares held by the government in certain companies to the central bank,” the RCI’s 22nd witness said today.

Othman said BNM had suffered a shortfall of RM8 billion at the time and he (Othman) had cautioned that the central bank may be insolvent unless its reserves were bolstered.

He had also recommended that BNM request help from the MOF, because “BNM is a government agency. When an agency is in such trouble, the government should be prepared to help out. The question (is) what the government is willing to do to help BNM”.

A meeting was then held in late November 1994 and was attended by the bank deputy governor, the Treasury secretary-general Clifford Herbert and former assistant governor Abdul Murad Khalid.

Othman said he could not recall who was the bank’s deputy governor at the time.

The RCI is in its seventh day of hearing on forex losses that allegedly amounted to US$10 billion (then RM25 billion) by former BNM assistant governor Abdul Murad in an interview with the New Straits Times in June.

BNM, however, in its 1994 annual report said the losses amounted to RM9.3 billion.

The focus of the RCI today will be on former prime minister Dr Mahathir Mohamed who is expected to take the stand this afternoon. Now the leader of the opposition, he and opposition members have said the RCI is politically motivated. – September 18, 2017.