PUTRAJAYA - A former senior official at Malaysia’s central bank yesterday made an explosive allegation against former finance minister Anwar Ibrahim, in his testimony during the first day of an inquiry into billions of dollars lost in foreign exchange trades in the 1990s.
Abdul Murad Khalid, a former assistant governor at Bank Negara Malaysia (BNM), claimed that Anwar said he would have to resign as finance minister if the full extent of BNM’s forex losses were revealed to the public.
Datuk Murad told the Royal Commission of Inquiry (RCI) that he was instructed by then-BNM governor Jaffar Hussein in 1994 to explain the forex losses to Anwar, who is now an opposition leader.
“Anwar had asked me to join him on his flight to Hawaii to provide an explanation on the forex losses, as instructed by Jaffar. After explaining (the matter) to Anwar, he said that he understood the losses and that he would discuss it with Tan Sri Jaffar Hussein,” he told the inquiry.
Mr Murad added: “... after I gave him the explanation, Anwar commented that should the true figures of the forex losses were to be revealed to the public, he would have to resign as finance minister.”
Anwar was Malaysia’s finance minister from 1991 to 1998.
The RCI was formed to investigate the forex losses scandal that erupted when Tun Mahathir Mohamad was prime minister. Like Anwar, Dr Mahathir is also now an opposition leader arrayed against Prime Minister Najib Razak.
Mr Murad’s allegation is explosive because he has now named Anwar’s alongside Dr Mahathir as someone who knew about the central bank’s losses.
Mr Murad went on to testify yesterday that Tan Sri Jaffar was unaware of the magnitude of the forex losses, which Murad claimed to be at least US$10 billion (then RM25 billion).
The RCI also concluded yesterday that BNM had lost around RM31.5 billion in forex trades over 20 years ago and that the figure had been concealed from the bank’s reports.
Its chairman, Tan Sri Mohd Sidek Hassan, said: “We have made a finding today that Bank Negara lost RM31.516 billion between 1991 and 1994. The figure, however, is hidden from Bank Negara’s reports.
“We will find out who was responsible in asking for it to be concealed,” he said before adjourning the proceedings.
Earlier, former BNM employee Abdul Aziz Abdul Manaf told the five-man panel that the central bank suffered RM31.516 billion losses in forex trading. However, it was unclear how the losses were calculated.
Panel member Datuk Tajuddin Attan asked Mr Aziz to explain why the central bank’s reserves appeared unaffected by the losses in the later years. Mr Aziz said he was unable to provide further details on how the losses occurred as he had only provided an “accounting treatment”.
Earlier, the panel had dismissed an attempt by the central bank to have the probe conducted behind closed doors on the grounds that it involved classified documents.
A BNM lawyer said revealing the documents to the public may implicate the witnesses who are slated to testify in the case.
“Two witnesses from BNM have no immunity for criminal action to breach OSA (Official Secrets Act). We have an alternative suggestion - exclude the investigation to the press and public,” Mr Tan Hock Chuan said in court on Monday morning.
However, Mr Mohd Sidek disagreed .
“This is an inquiry, nobody is on trial.
“I’m told that under the Act... commissioners have powers... therefore from now I’m going to continue without delay the inquiry. If everything is under OSA, what’s the point of having an inquiry,” he said.
Two witnesses - former BNM employee Datuk Ahmad Hizzad Kamaruddin and Mr Abdul Aziz - testified earlier yesterday.
The inquiry stemmed from Mr Abdul Murad’s claims in January that the central bank suffered foreign exchange losses of up to US$10 billion (S$13.6 billion) in the 1990s, far more than the RM9 billion (S$2.9 billion) loss that was publicly reported at the time.
The forex losses scandal was among the biggest from Dr Mahathir Mohamad’s time as prime minister. The scandal led former BNM governor Mr Jaafar to resign.
The inquiry will take place over 10 days up to Sept 21, with its report to be submitted within three months from July 15, the date the RCI was established.
The RCI is chaired by Mr Mohd Sidek and its members include former Federation of Malaysian Manufacturers president Tan Sri Saw Choo Boon, High Court judge Datuk Kamaludin Md Said, Bursa Malaysia chief executive Mr Tajuddin and Malaysian Institute of Accountants member Pushpanathan Kanagarayar.