ALL eyes will be on the list of witnesses to be called by the Royal Commission of Inquiry (RCI) investigating Bank Negara Malaysia’s (BNM) foreign exchange (forex) losses in the 1990s when it convenes at the Palace of Justice in Putrajaya tomorrow.

The losses were alleged to have amounted to some US$10 billion (RM43 billion), but a special task force formed in February to probe into the scandal, which occurred during the administration of former prime minister Dr Mahathir Mohamad, found that the amount was higher.

It also found that former ministers and parliamentarians had been misled on certain information.

The RCI will be chaired by Mohd Sidek Hassan, who is Petronas president. The former chief secretary to the government had also led the special task force which recommended that a further investigation be conducted by an RCI.

The RCI’s work comes at a time when Dr Mahathir, who led Malaysia for 22 years, is now head of the opposition alliance Pakatan Harapan through his newly formed party, Bersatu, of which he is chairman.

He left Umno to protest against Prime Minister Najib Razak’s alleged corruption and kleptocracy through state investor 1Malaysia Development Berhad.

Dr Mahathir has said he will readily face the RCI to testify if called. He has also said the inquiry was a diversion by Putrajaya from current issues facing the Najib administration.

The RCI, which was set up in accordance to the Commission of Enquiry Act 1950 (Act 119), will determine the validity of allegations of losses due to foreign exchange speculation, whether BNM’s activities in forex trading had contravened the Central Bank Ordinance 1958 or any other law and whether there was an attempt to cover up the losses.

The RCI is expected to recommend action against parties it finds to be directly and indirectly involved in the scandal and measures to ensure such an incident does not recur.

It has three months to complete its investigation and submit a report to the Agong from the date of its being set up on July 15.

It was widely speculated that BNM had got caught in the battle between investor George Soros and hedge funds managers over speculation against the pound.

The Bank of England had bought back billions of sterling but Soros and other hedge funds managers shorted the currency. BNM was said to have taken the side of Bank of England, resulting in heavy losses. However, BNM has never confirmed nor denied the events, despite circumstantial evidence pointing to a loss of RM9.3 billion in its 1992 accounts.

The then BNM governor Jaafar Hussein and Nor Mohamed Yakcop, who was in charge of the foreign exchange operations at the central bank, accepted responsibility and resigned. 

Nor Mohamed subsequently became a financial adviser and minister in the government. Ironically, he has been credited with saving Malaysia from currency speculators during the Asian financial crisis in 1998.

Anwar Ibrahim, who was finance minister from 1991 and 1998 during the scandal, had told the task force that BNM had lost between RM15 billion and RM30 billion. 

Anwar, now with the opposition and in jail for a sodomy conviction, also claimed that Nor Mohamed did not provide a complete report on the central bank’s losses. Others who were questioned by the task force were Gelang Patah MP Lim Kit Siang and former BNM governor Zeti Akhtar Aziz.

Sidek is assisted by High Court judge Kamaludin Md Said, Bursa Malaysia chief executive officer Tajuddin Atan, Special Task Force to Facilitate Business (Pemudah) co-chairman Saw Choo Boon, Malaysian Institute of Accountants member K. Puspanathan, and Finance Ministry strategic investment division director Dr Yusof Ismail. – August 7, 2017.