Key witness in Malaysian inquiry says didn't execute forex trades, can't recall values done

Nor Mohamed Yakcop (centre), the main witness in the billions of dollars lost by the Malaysian central bank in the 1990s, was testifying on Wednesday at the ongoing Royal Commission of Inquiry.
Nor Mohamed Yakcop (centre), the main witness in the billions of dollars lost by the Malaysian central bank in the 1990s, was testifying on Wednesday at the ongoing Royal Commission of Inquiry.PHOTO: FOTOBERNAMA

KUALA LUMPUR - A key witness in a multi-billion dollar scandal involving Malaysia's central bank in the 1990s denied on Wednesday (Sept 6) 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 a former banking manager at Bank Negara Malaysia (BNM) who had authority over the forex trades then, and later became its advisor.

His testimony was much-anticipated as he is seen as a former BNM insider who might name names and unveil more details on the trading losses, said by the commission to total RM31.5 billion in 1990s value. This was higher than the initial sum of RM9 billion reported by the government led by Tun Mahathir Mohamad in the 1990s.

Mr Nor Mohamed, 70, was pinpointed by at least one witness during the inquiry as the man who orchestrated the loss-making forex trades.

Mr Nor said he had made a mistake while overseeing the bank's forex traders, and did not deny partial accountability.

"I think I made a mistake," Mr Nor Mohamed said when questioned by the RCI's conducting officer.

"I was also very careful not to execute any trade by myself, although I had the authority to do so," he said.

He also told the RCI: "I don't remember about the profits and losses in the forex transactions from the year 1986 until 1993."

He said that during his work at the central bank in the early 1990s, he did not report to either finance minister or the prime minister. Tun Daim Zainuddin was the finance minister between 1984 and 1991, and was replaced by Anwar Ibrahim. Dr Mahathir was the prime minister.

Some witnesses have said that the forex losses occurred between 1988 and 1992, with the unwinding of positions taking up to 1994.

Said Mr Nor Mohamed on Wednesday: "Admittedly, we misread the turn of the market... There is no denying my accountability for the forex losses", adding he had resigned from BNM due to the forex scandal.

Last week, a former BNM forex dealer Fizaman Noor Mohammed Nasir told the commission that large trades could only be decided by the chief dealer or by Mr Nor Mohamed.

However, Mr Nor Mohamed, in his testimony, 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".

Mr Nor Mohamed was in 1998 called back to serve the government during the Asian financial crisis when the Malaysian ringgit and other regional currencies came under speculative attacks. He later 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.

Testifying before Mr Nor Mohamed, former BNM governor Zeti Aziz said that under her leadership, she had requested for 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 totaling RM2.473 billion in 1990," Tan Sri Zeti told the commission.

At the height of forex trading losses in 1992, Ms Zeti said then bank governor Jaffar Hussein and former BNM adviser Abdul Murad Khalid had a meeting in London. She was present in the said meeting which was also attended by former BNM economics department head Awang Adek Hussin.

Mr Murad had briefed Mr Jaffar that BNM had "massive exposure" from forex transactions, but Ms Zeti said he did not have details of the transactions.

Jailed opposition leader Anwar will testify on Thursday (Sept 7) before the RCI.

Critics have said that the inquiry was formed by the administration of PM Najib to smear the name of his chief critic, ex-premier Dr Mahathir who led the country at the time of the huge losses.