RM8.5b losses in ‘92, RCI told

‘Financial statement approved by A-G then’

PUTRAJAYA: A Bank Negara Malaysia internal audit showed a loss of RM8.5bil in 1992 owing to foreign exchange (forex) dealings, the Royal Commisson of Inquiry (RCI) heard.

Wong Yew Sen (pic), 70, a former audit manager with the central bank, said the audit finding was based on documents that were available at that time.

According to the audit, Wong said, there was a RM9.3bil decrease in the bank's “Other Reserve Account” dated Dec 31, 1992, and this was because of the RM8.5bil forex activity that was charged to that account.

“I cannot say whether the move to charge the forex losses to the Other Reserve Account was the right move, but the financial statement was presented and approved by the Auditor-General,” he told the RCI.

Wong was an employee of Bank Negara from 1971 until his retirement in 2003, and continued working there until 2006 on a contract basis.

Between April 1993 and January 1996, he was the manager of the internal audit department at the central bank, reporting directly to the deputy governor.

Wong was reading his witness statement yes- terday, the second day of the inquiry into the losses experienced by Bank Negara owing to forex trading in the 1990s, at the Court of Appeal.

Wong, however, admitted that he was not directly involved in making the audit report titled “Audit Report on Foreign Exchange Operation Division of Banking Department and Processing Section of Accounts Department As At 31 December 1992 Dated 21 January 1994”.

“I only checked the draft report that was prepared by the examiner's team before the full report was out,” he said.

Wong said the audit team carried out physical inspection of each document on forex as well as other related documents, an exercise that was conducted between January 1992 and February 1993.

Wong said there was a written policy at Bank Negara on forex dealings but it was not as “comprehensive” as stated in the Observations page in the audit report.

“I do not know whether there was an adjustment to the annual financial statement for the purpose of covering up the bank's losses in forex.

“Besides, the objective of the audit was not to find out the actual amount of losses,” he said.

According to the audit, forex dealers were given a cap of US$125mil (as a group) and were

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able to decide for themselves whether or not to make a trade.

“For chief dealers and above, there are no specific caps on forex trading,” he said.

The inquiry continues on Aug 29.