FORMER prime minister Dr Mahathir Mohamad has denied any wrongdoing in the recently resurrected Bank Negara Malaysia (BNM) scandal. Instead, he blamed the multi-billion dollar losses on the actions of the former BNM governor, the late Jaafar Hussein, and the assistant governor at the time, Nor Mohamed Yakcop.

In an interview with The Malaysian Insight,  Dr Mahathir also maintained that he knew little more than what was reported to Parliament of the financial losses that occured between 1987 and 1992.

Mahathir served as prime minister from 1981 to 2003.

Former BNM assistant governor Murad Khalid revived the forex scandal in January when he said the central bank had racked up almost US$10 billion (RM43 billion) in foreign exchange trading losses by 1992, a figure that dwarfs the official RM9 billion of losses disclosed by BNM then.

Upon the recommendation of a special task force established after Murad’s revelation, the Prime Minister’s Office (PMO) announced on June 21 that a Royal Commission of Inquiry (RCI) will be formed to investigate the forex losses.

After learning of the losses, Dr Mahathir said his government closed BNM’s currency trading arm, which was reported to have traded five to ten times more than the normal rate of central banks.

Dr Mahathir also said BNM did not anticipate the Maastricht Treaty, signed on February 7, 1992, which set the foundation for the Euro and precipitated the collapse of the British pound that year.

Jaffar, who served as the central bank’s governor from 1985, resigned on April 1, 1994 and died four years later.

Nor Mohamed went on to serve as second finance minister in Abdullah Ahmad Badawi’s administration.  He was questioned by the special task force in May.

Opposition leaders have said the RCI is an attempt to divert attention from US Department of Justice’s third civil suit, announced just a week earlier, which sought to seize US$540 million in assets believed to be bought with money stolen from 1Malaysia Development Bhd.

Below are excerpts of Dr Mahathir’s interview with The Malaysian Insight.

Q: Regarding the forex losses, what actually happened?

Dr M: Bank Negara is in charge of our reserves and our reserves have to be managed. Bank Negara decided that part of the management is to trade in currency to sustain the value of the reserves that we held.

Of course, trading in currency is a very profitable business. Many hedge funds trade in currency. But it also carries a risk. You may make a profit or you may lose. And what happened was that they did not foresee the decision of the Maastricht Treaty.

And they lost in their betting. How they lost, I don’t know. I was told that they were doing currency trading but I was not informed of the details and all that.

Q: How did the losses happen and when did you learn of them?

Dr M: This used to be a very fast moving business and they pride themselves in being very skilled in trading currency. They opened an office in London and I was invited to open that trading room.

But other than that, I don’t know. And eventually, they lost money. And when they lost money, the government decided to close it down, to stop all the trading.

And then they had to submit the report (to Parliament) on how much they have lost. That is all the government knows.

Q: Can you remind us how much the losses were?

Dr M: I don’t remember how exactly much, but I think it was about RM10 billion, I am told.

Q: Who is responsible for the losses?

Dr M: Tan Sri Jaafar. He was responsible. He started the currency trading room and all that in Bank Negara and also in London and put Nor Mohamad in charge of trading.

Q: What about the recent statement of Deputy Home Minister Nur Jazlan Mohamad, who said Jaafar was made the scapegoat by the then-government for the losses?

Dr M: This is his view because he is his father-in-law. He’s not going to admit. But the fact is that Tan Sri Jaafar Hussein admitted he made a mistake and he, as well as Nor Mohamed, left the bank after that.

Q: Did Najib, who was a member of your cabinet, object to the currency trading?

Dr M: Tak ada. Tak ada bantah apa pun. (No. There were no objections at all) – August 3, 2017.