PUTRAJAYA (Aug 29): Bank Negara Malaysia (BNM)'s Accounts Department did not make any adjustments to the central bank's accounts book to cover up any foreign exchange (forex) losses that may have occurred between 1989 and 1994, a former manager of the department testified today.

Ishak Ismail said the Accounts Department is not involved in the classification of BNM's forex transactions, which is solely within the mandate of the bank's Banking Department.

"There was no cover up. Everything was done according to [proper] accounting procedures at that time," Ishak told the Royal Commission of Inquiry (RCI) into the forex scandal.

He added that forex transactions were usually classified under 'trading' or 'reserves management', the latter of which is used for purposes of stabilising the currency and managing its external reserves.

Ishak said that as far as he was aware, there was no reversal between the trading accounts and the reserves management accounts and vice versa, and that this was solely within the purview of the Banking Department, not the Accounts Department.

"If the Banking Department classifies the [forex] trading under the trading segment, then I have no say in the matter," he said.

Ishak said transactions classified under the trading segment by the Banking Department will be recorded under the profit and loss statements of the bank, while the transactions classified under the reserves management segment will be recorded under the exchange rate fluctuation reserve account.

Ishak, 67, was the manager of BNM's Accounts Department between 1989 and March 1993.

At the previous hearing, the then manager of BNM's Internal Audit Department, Wong Yew Sen, testified that an audit report showed that RM8.5 billion was deducted from the 'other reserves' segment under forex transactions, in 1992.

The RCI was set up as the result of investigations by a special task force formed in February into the forex losses suffered by the BNM between 1987 and 1994, after former BNM assistant governor Datuk Abdul Murad Khalid alleged that the central bank incurred up to US$10 billion (about RM25 billion at that time) in losses and not RM9 billion as earlier reported by the bank.