KUALA LUMPUR: Bank Negara Malaysia (BNM) is seeking to pull out its sole representatives from the investment panels of two government agencies, the Social Security Organisation (Socso) and the Employees Provident Fund (EPF), says Deputy Finance Minister Datuk Chua Tee Yong. The central bank’s move comes after the government’s tabling of a controversial proposed amendment to the Retirement Fund Act 2007 in Parliament recently, which would see the removal of BNM’s sole representative from Kumpulan Wang Persaraan (Diperbadankan) (KWAP), also known as the Retirement Fund Inc.

Chua clarified yesterday that it was BNM which had asked to be pulled out of KWAP to avoid a conflict of interest, due to the fact that it is a regulator and therefore should not be involved in KWAP’s investments.

“BNM has [also] asked to pull out its representatives from Socso and the EPF,” Chua said in his winding up speech on the Retirement Fund (Amendment) Bill 2015 in Parliament.

It was previously reported that KWAP is managing a fund size of about RM112 billion.

Opposition Members of Parliament Rafizi Ramli, Tony Pua and Wong Chen have all expressed concern in their speeches in Parliament that KWAP had loaned RM4 billion to Finance Ministry-owned SRC International Sdn Bhd, which was used to purchase a stake in a mining company in Mongolia.

Earlier, during the same debate, Rafizi had disclosed that he was in possession of leaked Cabinet documents which confirmed that KWAP was one of the companies that would be jointly involved in the development of the Tun Razak Exchange (TRX) by the debt-ridden 1Malaysia Development Bhd (1MDB).

Meanwhile, Pua said in the parliament lobby later, that the argument given by the Ministry of Finance (MoF) that it wanted to avoid conflict interest was baseless. 

“This is nonsense. Going by the same argument, MoF, which is also a regulator, has Treasury’s secretary-general Tan Sri Irwan Serigar Abdullah holding the post of chairman of KWAP [so he shouldn’t be there],” he said.

Pua said there may not be any immediate impact resulting from BNM pulling out its representatives from the retirement funds, but warned that there would be “no checks and balances” if something goes wrong.

MoF’s revelation yesterday sparked speculation among some opposition MPs that BNM likely wants to “wash its hands” of involvement in dealings that are shrouded in controversy.

This article first appeared in The Edge Financial Daily, on May 19, 2015.