Losses deprived country of development opportunities
KUALA LUMPUR: The foreign exchange (forex) losses by Bank Negara Malaysia (BNM) in the 1990s had a significant negative impact on the economy of the country, whereby it had deprived the country of development opportunities, the Royal Commission of Inquiry (RCI) said.
The commission is definitive that BNM has incurred losses due to forex dealings in 1992, 1993 and 1994 and the amount of losses for the three years totalled RM31.5 billion.
“There is evidence from documents and testimonies of witnesses to prove that BNM had undertaken voluminous speculative trading activities for profit,” said the RCI, which made its findings public yesterday.
As part of its enquiry, the commission conducted an open enquiry of 25 witnesses consisting of past and present employees of BNM as well as former members of the civil service and administration.
The commission was also of the opinion that there were deliberate concealments as BNM’s annual reports did not state the actual losses incurred from the forex dealings between 1992 and 1994.
The losses, it said, did not only deprive the country of development opportunities but also impaired BNM’s ability to fulfil its mandated role as the country’s central bank.
However, the commission opined that substantial measures were taken by BNM in improving the governance on reserves management.
“No further enhancements are being recommended, as the various measures of improvements in the overall governance and internal controls of the bank have been adequately addressed in the Central Bank of Malaysia Act 2009 (Act 701),” said the commission.
The RCI also considered the separation of the roles of the Governor as the Chief Executive of BNM and chairman of the board of directors.
“Based on the research conducted on other central banks’ practices, particularly those of developed countries, the commission is of the view that the current practice should be retained,” it added.