Inquiry into Bank Negara's failed forex trades renews focus on fiascos under his watch
Earlier this week, former Malaysian premier Mahathir Mohamad declared that it would be churlish on his part not to consider becoming the opposition's candidate as prime minister in the coming election, suggesting that he was open to staging a political comeback.
Those plans suffered a blow on Wednesday when Prime Minister Najib Razak's administration announced the setting up of a Royal Commission of Inquiry (RCI) to probe allegations of a cover-up surrounding billions of dollars in foreign-exchange trading losses at Malaysia's central bank in the 1990s when Tun Dr Mahathir was prime minister.
Many Malaysians saw the move as politically driven. It would drag Dr Mahathir away from his campaign to unseat the Najib-led Barisan Nasional (BN) coalition, bring renewed public focus to the former premier's chequered legacy and remind Malaysians, particularly younger voters, of the numerous fiascos during the 22 years of his tenure, which began in 1981.
The RCI would also make it more difficult for the country's opposition alliance to accept any lead role for the 91-year-old Dr Mahathir because it would present them with the awkward prospect of having to defend a politician that has long been a target of their scorn.
Whether the Najib administration's latest gambit receives any traction is uncertain. But it underscores the deep concern in government of the lingering political clout of the former premier, particularly over the country's dominant Malay population, who have traditionally voted in favour of Mr Najib's ruling United Malays National Organisation (Umno) that is the linchpin of the ruling BN coalition.
In recent weeks, Dr Mahathir, who quit Umno in February 2016 has been lobbying opposition leaders to endorse a plan that will see his fledgling ethnic Malay-based Parti Pribumi Bersatu Malaysia (PPBM) installed as the dominant force in the opposition Pakatan Harapan (PH) alliance and him as the paramount leader.
The strategy is aimed at wooing the Malays, particularly those in the rural areas who are largely wary of the country's multiracial opposition parties because of the widely held perception that they are less committed than Umno in championing the special privileges of the community.
By presenting a coalition that mirrors the BN's Malay-centric line-up, Dr Mahathir is arguing that the opposition stands a better chance at wooing a large section of the rural voters who are fed up with widespread corruption and the government's failure to deal with hardship from the sharp spike in the cost of living.
It is a tactic that could produce results in the next general election, which must be held before end-June next year.
The opposition posted its best performance in the 2013 polls, when its secured nearly 52 per cent of the popular vote. But those numbers only translated to 88 seats in the 222 parliamentary constituencies.
JANUARY 2017: Former Bank Negara Malaysia assistant governor Abdul Murad Khalid said in an interview that the central bank was involved in high-risk foreign exchange trading between 1991 and 1993. He claimed US$10 billion was lost between 1991 and 1993, much higher than the RM9 billion disclosed in the early 1990s.
FEBRUARY: Malaysian government forms a special task force to look into the matter, led by former chief secretary to the government Mohd Sidek Hassan.
APRIL: Former deputy prime minister and finance minister Anwar Ibrahim met the task force and told them that Bank Negara lost between RM15 billion and RM30 billion in the 1990s. Anwar was finance minister from 1991 to 1998.
MAY 26: Task force wrapped up investigations.
JUNE 21: Government decides to set up Royal Commission of Inquiry.
Dr Mahathir is betting that his plan could give the opposition the edge in the next poll, particularly in the roughly 40 parliamentary seats that were decided by very slim majorities the last time around.
That prospect worries Mr Najib and his Umno-led coalition, which have seen their collective public approval ratings undercut by a series of high-profile scandals, including that at state-owned 1Malaysia Development Bhd (1MDB) and state-controlled plantation giant Felda Holdings.
Dr Mahathir's premiership was littered with numerous financial scandals, such as the multibillion-dollar collapse of the steel project Perwaja, huge losses in an audacious bid to corner the international tin market in London and the squandering of the billions of dollars at the now-defunct state-owned Bank Bumiputra due to mismanagement.
But the move to zero in on the forex debacle is deliberate because it would give the RCI reason to probe other scandals connected to losses suffered by the central bank, which is known as Bank Negara.
Bank Negara's controversial strategy to speculate in foreign exchange markets began in the late 1980s with the backing of Dr Mahathir.
That plan ended in disaster and by the end of 1993, Bank Negara's capital base was wiped out with accumulated losses estimated at US$10 billion (RM44.5 billion), according to former central bank officials.
A version of this article appeared in the print edition of The Straits Times on June 23, 2017, with the headline 'Mahathir's bid for political comeback suffers setback'. Print Edition | Subscribe
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