KUALA LUMPUR • A key witness in a multibillion dollar scandal involving Malaysia's central bank in the 1990s denied yesterday that he had personally executed any of the foreign exchange trades that resulted in massive losses.
Tan Sri Nor Mohamed Yakcop also told the ongoing Royal Commission of Inquiry (RCI) probing the central bank's losses that he could not recall the highest forex transaction done in a day, or a month, during the period.
He was at that time a banking manager at Bank Negara Malaysia (BNM) who had authority over the forex trades, and later became its adviser.
A witness told the commission last week that Mr Nor Mohamed or the bank's chief dealer had authority on all trading.
Mr Nor Mohamed's testimony was much anticipated as he is seen as a former insider who might name names and unveil more details on the trading losses, said by the commission last week to total RM31.5 billion in 1990s value.
Mr Nor Mohamed, 70, said during his work at the central bank in the early 1990s that he did not report to either finance minister or the prime minister.
About the inquiry
A Royal Commission of Inquiry (RCI) is a formal public inquiry in countries with monarchies. The RCI for foreign exchange losses notched up by Bank Negara Malaysia (BNM) was set up by the government on July 1 to probe into the losses which occurred in the early 1990s when the central bank embarked on aggressive forex trading.
The formation of an RCI more than 20 years after the incident had caused critics to raise concerns that the probe is targeted at former premier and current opposition leader Tun Dr Mahathir Mohamad, who was prime minister during the scandal. The RCI determined on its first day of sitting that the country lost RM31.5 billion from forex trades in that period, over three times more than the initially reported figure by BNM.
The commission is looking into the possibility of a cover-up in the aftermath of the losses. The forex scandal caused then-BNM governor Jaffar Hussein to resign from his post.
Tun Daim Zainuddin was the finance minister between 1984 and 1991, and was replaced by Anwar Ibrahim. Dr Mahathir was the prime minister.
Mr Nor Mohamed said: "Truthfully, all forex trades were conducted by the chief dealer and dealers. What they do upon my instruction is steps taken in diversifying reserves from US dollar to other foreign currencies."
Still, Mr Nor Mohamed did not deny partial responsibility.
"There is also no denying my accountability for the forex losses. I accept my fair share of the responsibility and resigned from BNM," he said in a 42-page statement to the RCI.
Mr Nor Mohamed was in 1998 called back by Dr Mahathir during the Asian financial crisis when the Malaysian ringgit and other regional currencies came under speculative attacks. The former central banker became the government's special economic adviser.
He was made a full Cabinet member during the premierships of Tun Abdullah Badawi and Datuk Seri Najib Razak.
TRADES AND DIVERSIFYING
Truthfully, all forex trades were conducted by the chief dealer and dealers. What they do upon my instruction is steps taken in diversifying reserves from US dollar to other foreign currencies.
TAN SRI NOR MOHAMED YAKCOP, in his testimony.
Testifying ahead of Mr Nor Mohamed, former BNM governor Zeti Aziz said that, under her leadership, she had requested a report on forex losses in 2007 as part of the central bank's preparation to amend its banking law.
Based on the report, "the total losses experienced by Bank Negara Malaysia in its forex trading for years 1988 to 1994 were RM32.074 billion after taking into account profits totalling RM2.473 billion in 1990", Tan Sri Zeti told the commission.