Anwar: Daim and Mahathir approved BNM Forex Trading

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KUALA LUMPUR (Sept 24): Foreign exchange trading activities undertaken by Bank Negara Malaysia (BNM) in the early 1990s, which resulted to the central bank losing at least RM5.7 billion of its reserves, was approved by then Minister of Finance Tun Daim Zainuddin, with the support by former Prime Minister Tun Dr Mahathir Mohamed.

This was explained by opposition leader Datuk Seri Anwar Ibrahim to clear his name after Rembau MP Khairy Jamaluddin recalled from a 1993 Parliament Hansard that veteran politician Lim Kit Siang had called for Anwar's resignation as the Minister of Finance then when the fiasco was uncovered. Lim was said to have called for Anwar's resignation as a ministerial responsibility to the fiasco.

"During the said Parliament session, I have explained to the house that the then governor of Bank Negara Tan Sri Jaafar Hussein said that he had not received the full information regarding the forex trading activities, as it was conducted by the forex trading department under the (now) Minister in Prime Minister's Department Tan Sri Nor Mohamed Yakcop.

"As the Minister of Finance then, I had ordered for the forex trading activities to be stopped immediately. The late Tan Sri Jaafar told me that the forex trading activities was conducted by Tan Sri Nor Mohamed Yakcop with the approvals given by both the Minister of Finance before me and the Prime Minister then. Go and ask them!" he said in Parliament on Monday.

Anwar also questioned why Nor Mohamed was later appointed as a minister several years after the fiasco, despite his direct role for the loss of the RM5.7 billion, which was considered as a very huge amount then, given that BNM's total assets was estimated to be about US$20.7 billion in 1992.

The issue was brought up by Bagan MP Lim Guan Eng, as the fourth order of the house for the day, asking the Minister of Finance to state the actual loss suffered by BNM in the foreign exchange market from 1990 to 1992, who were the persons identified and why there was no stern action taken against those responsible.

Lim, the Secretary General of the Democratic Action Party and the current Chief Minister of Penang, said the reason he asked the question in Parliament was to determine whether the actual loss suffered by BNM as a result of the forex trading activities was far higher than disclosed by the central bank in its annual report tabled to the Parliament in 1993.

In his oral reply to the question, deputy Minister of Finance Senator Dr Donald Lim Siang Chai said BNM has not conducted any activities that could risk the repeat of such huge loss of national treasury anymore.

He said BNM has also introduced a benchmark of investments and the control of risks in managing the country's international reserve.

"Treasury risk management unit has also been established to oversee Bank Negara's investment risks. Reserves investing activities is also been monitored and audited by the National Audit Department and Internal Audit Department of the central bank itself," he said.