‘Anwar briefed on BNM’s Forex losses’

Former Bank Negara official: It was recorded in other reserves

PUTRAJAYA: Former deputy prime minister Datuk Seri Anwar Ibrahim once said he would have needed to resign from his finance minister position if the real losses of the foreign exchange (Forex) dealings by Bank Negara Malaysia were revealed to the public, the Royal Commission of Inquiry heard.

Datuk Abdul Murad Khalid, who’s a former Bank Negara assistant governor, said Anwar made that comment after he was briefed by Abdul Murad in early 1994 about the matter.

“I was instructed by Tan Sri Jaffar Hussein (then Bank Negara governor) to explain to Anwar who was then the Finance Minister.

“Anwar had asked me to join him on his flight to Hawaii, United States. I was to explain and brief him on the Forex losses. He said he understood the problem and would speak to Jaffar about it,” Abdul Murad said at the inquiry held at the Court of Appeal here yesterday.

Abdul Murad was an adviser for Bank Negara from April 1, 1994 until Feb 1, 1999.

In 1992, Abdul Murad was a manager at the Bank Department, who was involved in Forex dealings.

The meeting with Anwar came after he had a discussion with Jaffar in London, some time in May or June of 1992.

“I told the governor about my trip to the Chemical Bank in New York. They told me about Bank Negara’s losses while dealing in Forex, which amounted to about US$170mil.

“Jaffar didn’t believe me. He scolded me and told me to talk to (former Bank Negara adviser) Tan Sri Nor Mohamed Yakcop,” he added.

The third witness claimed that as the manager, he had access to documents and information relating to the Forex trading carried out by the bank in the 1980s and between 1990 and 1993. He said the bank’s Forex dealings involved major foreign currencies such as the US dollar, pound sterling, deutsche mark, Japanese yen and French franc.

The transaction was done in a “forward” manner, where the transaction is done today but paid later when it reaches its maturity.

“A legal Forex trading is when an asset in a foreign currency is converted to another foreign currency. But the Forex dealings done in the 1980s and between 1990 and 1993 are speculation-based, where it did not depend on assets, it was more of a gamble,” Abdul Murad claimed.

He said to his knowledge, the Forex losses by Bank Negara were “one of the biggest scandals in the history of world banking”.

“This would have shamed Bank Negara and the Government. The ruling government would also be affected by this scandal. Therefore, a ‘cover-up’ had to be done to protect the image of the bank and the Government,” he claimed.

Abdul Murad also claimed that the Forex losses were not reflected in the profit and loss account, but were recorded in the “other reserves” account.

“So, the actual losses were not shown, and hidden away with the intention that anybody who sees the bank’s account would not notice it,” he said.

Two other former Bank Negara employees – Abdul Aziz Abdul Manaf and Datuk Ahmad Hizzad Baharuddin – also testified on the first day of the hearing.

RCI chairman Tan Sri Mohd Sidek Hassan concluded yesterday that some RM31bil was lost to the Forex dealings between 1992 and 1994.

Earlier, the RCI dismissed a request by Bank Negara to hold the inquiry behind closed doors.

Datuk Tan Hock Chuan, the lawyer representing Bank Negara, said several reports in the investigations had been classified under the Official Secrets Act (OSA).

This, he said, may implicate the witnesses who are set to testify.

Mohd Sidek turned down the request on grounds that the proceedings were an inquiry and not a trial.

“Nobody is on trial. We’ve been commissioned by the Yang di-Pertuan Agong to do this,” he said.

The hearing continues on Thursday.