RCI pins blame on Nor Mohamed Yakcop over forex losses

PETALING JAYA: The Royal Commission of Inquiry (RCI) on Bank Negara Malaysia’s (BNM) forex trading losses in the 1990s pinned the blame on Nor Mohamed Yakcop, which it said appeared to have absolute control and responsibility for the forex dealing operations.

In its report to the Yang diPertuan Agong, which was made public today, the RCI said evidence suggests a possible criminal breach of trust (CBT) of funds belonging to BNM under Sections 406 and 409 of the Penal Code was committed by “persons directly involved in the forex dealing operations, principally Nor Mohamed Yakcop”.

However, the report suggested that he could not have carried on for such a long time without the direct or tacit approval of his superiors and or persons in authority.

“The commission assessed joint liability of these persons which could fall either under Section 34 or Section 107 of the Penal Code, and explained as having common intention or abetting.

“The persons falling under this category would be the deputy governor, the governor, the BNM board of directors, the finance minister and prime minister,” the commission said.

The report made the assertion despite Nor Mohamed having testified to the RCI on Sept 6 that he had not discussed the forex trading conducted by BNM in the early 1990s neither with then prime minister Dr Mahathir Mohamad nor then finance minister Anwar Ibrahim.

The RCI said that aside from the losses resulting from the act of trading, the reporting aspect of BNM’s forex trading losses was also an offence, and it implicated the finance minister as the main person responsible.

“Based on the reporting phase,the possible offence of cheating may have been committed under Sections 417 and/or 418 of the Penal Code.

“The finance minister was the main person responsible for withholding the fact and information of the forex losses to the cabinet.

“The prime minister too is liable as he also had knowledge of the extent of the forex losses, but did not correct or offer more information when the cabinet were not given the right information,” the report said.

Speculative trading contravened BNM rules

The RCI  -also made its conclusion that the BNM’s forex dealings from late the 1980s to 1993 were excessive and speculative for profit, and therefore contravened Section 31(a) of the Central Bank Ordinance 1958.

“This is based on testimony from BNM dealers that their individual highest transaction value for management deals done in a single day was US$800 million and sometimes even exceeded US$1 billion.

“They also admitted that so long as forex dealings were done for profit and in large amounts, they were speculative,” the RCI said, adding that BNM had not given any justification for calling it “reserves management”.

The RCI, which was held over nine days from Aug 21 to Sept 19, saw a total of 25 witnesses testifying.

It was led by its chairman Sidek Hassan, who is former chief secretary to the government and current chairman of Petronas.

Other members of the RCI panel were High Court judge Kamaludin Md Said, Bursa Malaysia Bhd chief executive officer Tajuddin Atan, Special Task Force to Facilitate Business co-chairman Saw Choo Boon and Malaysian Institute of Accountants member K Pushpanathan. -FMT

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