Anwar concedes lapses in BNM forex scandal

Opposition Leader Anwar Ibrahim has admitted that he shouldered a portion of the blame for Bank Negara’s disastrous foray into the forex (foreign exchange) market in 1992, when he was finance minister.

However, he stressed that the main culprits were prime minister Dr Mahathir Mohamad, former finance minister Daim Zainuddin and Nor Mohamed Yakcop, who was then heading the forex department in Bank Negara.

The episode caused Bank Negara to lose up to RM30 billion in the forex market, but Anwar said the central bank had done so without his knowledge.

Speaking at a forum organised by the Penang Institute yesterday, Anwar said he was unaware of the matter until a friend in Zurich informed him that Bank Negara was a major forex player, speculating in foreign currencies.

Following this, he had inquired about the matter from then Bank Negara governor - the late Jaafar Hussein (below) - who replied that the amount traded was "small, but exceeding the amount stipulated".

"When I asked who dealt with the matter, he said it was Nor Mohamed and I left it at that," said Anwar.

Nor Mohamad was once an adviser to Mahathir. During the Abdullah Ahmad Badawi administration, Nor Mohamed appointed finance minister II. He is currently a minister in the Prime Minister’s Department, in charge of the economic planning unit.

Staggering amount

Anwar said he had full confidence in Jaafar at that time as his personal integrity - apart from this scandal - was impeccable, that he had no reason to question the latter's decision or reports.

However, Anwar said he was later told by a journalist in Hong Kong that the amount Malaysia traded was "staggering" but merely gave the latter a standard reply saying the bank was only "protecting the ringgit and that country would not be dictated by the powers-that-be".

Anwar said this made him approach Jaafar again to inform him that he was “quite convinced” that Bank Negara was indulging in unusual speculative forex.

“This was when for the first time, he suggested I talked to Mahathir and that he cannot provide me with any details as that was the forte of Nor Mohamed," Anwar told a 200-strong crowd at the Dewan Sri Pinang.

He said he had also received reports from key members of Bank Negara, including Zeti Akhtar Aziz (left) who later rose to become governor, that the amount was "staggering and cannot be just defended by purely saying it is to protect the ringgit".

"By the time I met Mahathir, he admitted that now there were some losses, it has become a major issue. They had made billions of dollars before.

"He was quite familiar with the subject apparently. Whether he was personally involved, parking some of his funds or Daim's funds, I reserve some basis to question and doubt.

“Many people say it was Daim and Nor Mohamed was only used as a conduit. When money was made, they claimed as theirs. Any losses is Bank Negara's. That is how you make bumiputera successful businessmen,” he quipped, drawing loud laughter from the crowd.

No reports

At that juncture, Anwar claimed that the government did not have a single report or document, nor did it provide an official position in its quarterly or annual report about the fiasco.

He said as far back as 1989, and even when he was in cabinet, nobody what knew was happening as there was no report, discussion or even a single paper on the forex fiasco other than the usual central bank annual report.

Anwar added he was only alerted when he read an Asian Wall Street Journal in December 1989, quoting former USA federal reserve chief Alan Greenspan urging Malaysia to cool off its currency speculation activities.

The remark was rebutted by Mahathir, who scoffed at the Americans, saying, "What business has the US to do with how we conduct our financial affairs".

"Sounds very right, politically correct and very Umno," quipped Anwar, triggering another round of laughter.

“I would still defend and support that position. That Bank Negara must be active in its mandate to protect our ringgit. There is where we draw the line,” he added.

Nor Mohamed (right) and Jaafar had to resign from office in 1994, leaving the country poorer by RM30 million, which then-opposition leader and DAP secretary-general Lim Kit Siang described as a “colossal loss”.