Government had 'to sell MAS, MISC shares to cover Bank Negara losses in the 1990s'

Updated 6 years ago · Published on 26 Dec 2017 1:55PM · 5 Comments

Dr Mahathir Mohamad accuses the Najib government of failure to ensure higher international reserves and plundering public coffers. – The Malaysian Insight pic by Najjua Zulkefli, December 26, 2017.

THE government was forced to take drastic action to cover Bank Negara Malaysia’s foreign-exchange losses during the Mahathir administration in the 1990s, said Second Finance Minister Johari Abdul Ghani.

These included selling off BNM shares in Malaysia Airlines at RM8 per share and Malaysian International Shipping Corporation shares at RM10 per share to Retirement Fund Inc, Johari said today.

The government was also forced to transfer its shares in Telekom and Tenaga Nasional Berhad to BNM at the nominal value of RM1 per share.

These shares were then revalued by BNM at RM22.10 and RM19.30 per share for Telekom and TNB respectively.

“If these speculative foreign exchange losses were not real, the government would not have taken these drastic actions to cover the BNM losses at that material time,” Johari said in an open letter to former prime minister Dr Mahathir Mohamad.

The minister cited these examples in a rebuttal of Dr Mahathir’s latest blog post on December 24 on BNM’s foreign-exchange losses.

Dr Mahathir said the central bank’s international reserves plummeted under the Najib administration at a rate greater than the RM31.5 billion lost under him in the 1990s.

In today’s letter, Johari said BNM’s losses under the Mahathir administration were because of the bank’s involvement in speculative activities.

Speculative foreign exchange is a form of gambling that resulted in losses, he said.

This type of speculation is different than the normal management of the foreign exchange market by the central bank.

Previously, Johari said the drop in reserves between 2013 and 2015 was due to an outflow of foreign funds caused by concerns over weak global growth, a change in US monetary policy and plunging world oil prices.

Johari said the outflows were not unique to Malaysia but also happened in other emerging markets.

In today’s letter, Johari said an internal audit report found that the amount of forex speculative transactions during Dr Mahathir’s era was “excessive”.

“These speculative activities caused BNM to suffer foreign-exchange transaction losses amounting to RM31.5 billion during the period under review.” – December 26, 2017.

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Comments

  • Do you remember any money gone into mahathir's account?

    Posted 6 years ago by Ali Along · Reply

    • Do you sincerely believe his children (and cronies) became billionaires through their own effort WITHOUT help? BN (whoever their leaders, past and present) always s*rewed the rakyat ...... only the methods are different. And parents can always get money from their adult children!

      Posted 6 years ago by Malaysian First · Reply

  • Really Johari think many people care about him arguing fairness of forex losses? EVERYONE KNOWS THIS IS ABOUT NAJIB STEALING AND MAHATHIR WANTS HIM OUT. They want to hear what he has to say about THAT. Not this.

    Posted 6 years ago by Bigjoe Lam · Reply

  • Johari, we are not concerned to what happened 30 years ago for the rakyat did not undergo such a hardship as today. Furthermore, we all know mahathir is not an angel but your stupid brain fails to accept that two wrongs do not make a right. We are more concerned of your mo1's 1mdb and other scandals including the pocketing rm of 2.6 billion which has affected the daily life of the rakyat. Why was the pac's report on 1mdb put under OSA? Where is the RCI to investigate your mo1's wrongdoing? Keep your own backyard clean before blaming others.

    Posted 6 years ago by Nathanji Devan · Reply

    • We must be concerned on ALL shenanigans ..... with NO exceptions. Just because it happened
      long time ago, doesn't mean its forgivable ........ it may have contributed through a sequential chain of effects to our hardships now. Forgiving will allowed others to repeat them. Would we forgive RM2.6 billion 30 years from now?

      Posted 6 years ago by Malaysian First · Reply