“I, as the prime minister, never interfered with BNM’s affairs and its administration at all, and I also believe I have no legal authority to interfere with BNM’s policies, affairs and administration”
PUTRAJAYA: Former prime minister Tun Dr Mahathir Mohamad said Bank Negara Malaysia (BNM) had actively engaged in foreign currency transactions (forex) in the 1980s, without his knowledge.
He said the governor at the time, Tan Sri Jaafar Hussein, had decided to actively involve BNM in foreign currency trading to balance the volatility of the Ringgit to preserve the country’s reserves and the economy.
“Although I only learned about BNM’s active involvement in foreign currency transactions later, I received the reason on why it was done by BNM under the administration of Jaffar,” he told the Royal Commission of Inquiry investigating the losses suffered by BNM through foreign currency trading in the 1990s.
Dr Mahathir, 92, who was the 24th witness said that in the late 1980s, he knew of the forced increase in the value of the Japanese yen by several large nations, namely the ‘The Group of Seven’.
He said at the time, Malaysia faced negative impact as national borrowings in Yen had almost tripled in value as a result of the ‘Plaza Accord’ intervention.
Dr Mahathir, who read his statement, said the value of imported goods in yen had also risen almost threefold, adding he had no personal knowledge regarding the details, profits or losses from foreign currency transactions, or the manner in which trading was carried out by BNM while he was prime minister.
He said during his tenure as prime minister, he had no knowledge or reason to suspect that BNM was conducting any business in conflict with the powers conferred upon the institution under the law.
“If I had any reason to think otherwise, I would have definitely taken the necessary steps as the prime minister, to identify the matter,” he said.
The former prime minister also told the Royal Commission of Inquiry (RCI) that in the late 1980s, he had been invited by Jaffar to a trading room at BNM in Kuala Lumpur.
He said it was the only time during his tenure as prime minister he had entered the trading room as Jaffar wanted to show him where foreign currency transactions aimed at strengthening the country’s economy, was being conducted.
“In my memory, I was there for a mere half an hour during the visit. The reason I went there was to honour the wishes and invitation of Tan Sri Jaffar.”
Dr Mahathir said when he was prime minister, BNM operated independently as a corporate body under the ‘Central Bank of Malaysia Ordinance 1959’.
“I, as the prime minister, never interfered with BNM’s affairs and its administration at all, and I also believe I have no legal authority to interfere with BNM’s policies, affairs and administration,” he added.
Dr Mahathir said BNM had to submit its annual financial reports to be audited by the Auditor-General and subsequently, handed over to the Finance Minister to be tabled in Parliament.
“As far as I recall, BNM’s annual audit report for 1992 was discussed in the Cabinet meeting in early 1993.
“What had been tabled and discussed in the Cabinet meeting was the same as what was presented in Parliament afterwards,” said Dr Mahathir.
The Royal Commission of Inquiry is chaired by Petronas chairman Tan Sri Mohd Sidek Hassan.
Other members of the panel are High Court judge Datuk Wira Kamaludin Md Said, Bursa Malaysia chief executive officer Datuk Seri Tajuddin Atan, Special Task Force on Facilitating Businesses co-chairman Tan Sri Saw Choo Boon and Malaysian Institute of Accountants member K. Puspanathan.