THE Royal Commission of Inquiry into Bank Negara Malaysia’s foreign exchange losses has been accused of not declassifying audit reports and documents that would shed further light on the central bank’s currency trades between 1991 and 1994, lawyer Haniff Kathri Abdulla said.

Haniff, who is Dr Mahathir Mohamad’s counsel, said lawyers holding a watching brief at the recently concluded RCI were barred access to the documents during the proceedings.

“The chairman did not make any ruling and yet opined that the RCI was not bound by the Official Secrets Act, which is a major error in law,” he said in his written submission today.

“It would, therefore, not be in the interests of this RCI to proceed with any further recommendation, which has not complied with the provisions negating criminal exposure to any of the commissioners, officers or witnesses.”

The written submission was handed to the RCI secretary Yusof Ismail at 5pm today. 

The inquiry saw 25 witnesses testify. Their statements came with 42 documents, including classified audit reports that are not available to the public. 

Haniff said witnesses, including Dr Mahathir and former finance minister Anwar Ibrahim, were not shown documents that the RCI commissioners had access to.

“It is, therefore, our submission, as bitter as it may be, that this RCI stops its deliberations and determination of all the materials adduced during the proceedings towards the five terms of references,” he said.

The RCI was formed in July following claims by former BNM assistant governor Abdul Murad Khalid that the losses suffered were US$10 billion, higher then the RM9.3 billion reported by BNM in its annual report in 1994. 

Haniff also objected to the report “Accounting Treatment of Losses Arising from Active Reserve Management 1988 – 1994” prepared by former BNM accounts manager Abdul Aziz Abdul Manaf in 2007, which claimed that the losses were RM31.5 billion.

Haniff said it was not a “valid allegation”.

The figure of RM31.5 billion only arose after the preparation of (Aziz’s accounting treatment), which was prepared for the purpose of collecting material in order to come up with necessary suggestions to be incorporated as proper check and balance under the proposed new Bank Negara Act, which was passed in 2009. 

“Hence, the underlying purpose and objective in the preparation of the 2007 report in itself, was not to ascertain the losses of the forex in 1992 to 1994.

“This is confirmed by Aziz, who is the co-author of the 2007 report with Witness No. 10 (Khaw Lay Kuan, former manager in the central bank’s Finance Department).”

Haniff also pointed out that Aziz testified that in his preparation of the 2007 report, he did not have access to check and verify the dealing chits nor the confirmation telex pertaining to the forex transactions. 

“(Aziz) could then not answer a question posed by a member of this RCI panel that the reserves in the reserve account showed positive increment of the reserves throughout the period of 1988 to 1994, which would not support the fact that the forex losses could have been recorded under the reserve account since, losses should naturally reduce and not increase the reserves. 

“That question was conceded by Witness No.1 (Aziz) that he could not answer. Hence, were there actual losses of RM31.5 billion as reported in the 2007 Report? This question would cast a heavy doubt on the allegation that the losses in the forex trading between 1992 to 1994 were indeed RM31.5 billion,” Haniff said. 

The RCI began hearing witnesses from August 21 and ended on Tuesday. 

As part of its terms of reference, the RCI will recommend “suitable actions” to be the taken against those found to be directly or indirectly involved in causing the losses and hiding the facts and information on the losses, which occurred 25 years ago. 

The panel will present its findings to the King on October 13. – September 21, 2017.