The Malaysian Insight is covering the RCI live:
2.30pm: Conducting officer Suhaimi Ibrahim asked Dr Mahathir why he didn’t attempt to find out more about BNM’s forex trading, since he already knew that the activity was being pursued as a way to support the ringgit and preserve the bank’s reserves, following Malaysia’s exposure to yen borrowings.
Suhaimi said the exposure and buying for foreign currency by BNM had been reported in the news and raised in the cabinet in November 1990.
Dr Mahathir said he did not take all foreign news reports seriously because “the foreign press are used to attacking me”.
2.20pm: The hearing resumed with Dr Mahathir continuing his testimony. RCI conducting officer Suhaimi Ibrahim led the questioning.
Suhaimi asked Dr Mahathir if the government could have interfered in BNM’s activities through officers from the MoF who sat on the central bank’s board.
“If there are officers, they will report to the individual ministry. It is up to the various ministries whether they want to inform me or not. The report by the MoF was made in parliamentary papers,” said Dr Mahathir.
1pm: The hearing breaks for lunch.
12.50pm: Dr Mahathir’s testimony at the RCI took on a political tone as he blasted Prime Minister Najib Razak, accusing him of allowing the RCI to distract from issues and to smear his name.
“Twenty-five years on, the forex losses are not something we should be distracted by.
“From time to time, without answering specific questions – questions raised by myself – Najib Razak has raised all sorts of irrelevant issues in order to smear my credibility, just so that the Malaysian public are distracted from the turmoil caused by Najib Razak,” said Dr Mahathir.
12.40pm: Dr Mahathir now talks about former BNM adviser Nor Mohamed Yakcop who had also been in charge of foreign exchange operations at the central bank.
“I appointed Nor Mohamed in 1998 as a member of a small committee that met every morning to head off the economic crisis then. He assisted in improving the economy and restoring the value of the ringgit during the economic crisis.
“I believe this saved Malaysia from the loss of hundreds of billions of ringgit.”
Dr Mahathir also said he felt former governor Jaffar Hussein was a man of honour, a “straight, firm man” in whom he had full confidence.
“I would like to state that the losses between 1992 and 1994 do not besmirch all the contributions by Jaffar who has served the country without rest.”
Jaffar resigned in 1994, taking full responsibility for the forex losses, which Dr Mahathir said was commendable of him.
12.38pm: Dr Mahathir said he concurred with the testimony of Anwar Ibrahim, who testified at the RCI more than a week ago.
The former prime minister also said he no longer had access to the minutes of cabinet meetings held on March 30, 1994 and April 6, 1994.
“But said what Anwar said to the RCI is consistent,” he said, adding that he did not believe Anwar, who was finance minister after Daim, would have concealed any information from BNM.
Dr Mahathir said he was informed of BNM’s forex losses through the parliamentary report and whatever was reported in the cabinet meetings.
12:30pm: Dr Mahathir denied being informed by former Treasury deputy secretary-general Clifford Herbert that losses were RM30 billion.
“I would not have responded by saying ‘sometimes we make profit and sometimes we make losses’ if I had been informed that the bank’s losses were that high,” he said, referring to Herbert’s testimony to the RCI that he (Dr Mahathir) had been indifferent when told about the losses.
12.20pm: Dr Mahathir said BNM was governed by Central Bank of Malaysia Ordinance 1958 at the time and had its own “administrative structure” led by BNM governor, then Jaffar Hussein.
“The BNM governor spoke with me but only generally over policy matters. There was no conversation that dove into details regarding BNM’s activities.
“BNM had to present its annual financial report that needed to be audited before it is presented to the Finance Ministry and later to Parliament.”
He added that he did visit the bank’s trading room in Kuala Lumpur once, in the late 1980s, upon Jaffar’s invitation, and only stayed about 30 minutes.
He said during his time as prime minister, he did not know or suspect of anything BNM had done that was against the law.
“I would have taken steps to address the matter had I known,” he said.
12.15pm: Former prime minister Dr Mahathir Mohamad takes the stand as the RCI’s 24th witness.
He begins by saying: “After long having been retired from politics, and due to various political turmoil that has struck the country, I have returned in an effort to contribute towards saving Malaysia.”
He identifies himself as chairman of Pakatan Harapan and names the four opposition component parties, Bersatu, PKR, DAP and Amanah.
11.50am: RCI panel member Tajuddin Ali said ordinances governing the central bank require that the BNM board shall keep the minister informed of general monetary and banking policy, among others.
Daim said lawyer Haniff Khatri Abdullah had informed him that BNM was not breaking any law by not informing MoF of its activities.
“The RCI cannot condemn BNM for not informing MoF regarding the forex dealings,” he said.
11.30am: RCI conducting officer Suhaimi Ibrahim said Daim as finance minister should have known what was happening and taken action in BNM, according to the Central Bank of Malaysia Act 1958.
He said forex trading solely for profit was illegal and Daim should not have allowed the bank to go “astray”.
Daim: I got EPF, I got Customs, I got the economy, I have to deal with all the other ministries. We only come to know when it is in the report. Before that, we wouldn’t know. You are only wiser after the event. We had to look after 1,200 companies.
Suhaimi then asks Daim about Nor Mohamed Yakcop who was then the person in charge of supervising forex trading.
Daim: I never interacted with Nor Mohamed Yakcop. I only met him in 1997.
Another panel member, High Court judge Kamaludin Said asked Daim how he could claim that he did not know about the change in bank policy (from before 1988 on the preservation of reserves) to conduct aggressive forex trading, when it was he (Daim) who had helped to get Jaffar Hussein appointed as bank governor.
Kamaludin: Before Jaffar, it seems that the governors were appointed from within the bank, (with him) there seemed to be a change. Care to comment?
Daim: The previous governor recommended Jaffar. We wanted the best.
11.15am: Panel member Tajuddin Atan said BNM at the time was dealing with Malaysia’s exposure to the yen and that as finance minister, Daim should have known what was going on because global issues were involved.
Tajuddin: If you said the BNM governor was not required to inform you, are you then saying that he is to inform the prime minister?
Daim: I don’t know.
Sidek: The Treasury secretary-general is a member of the BNM board. If BNM classified reports as OSA, does this mean the finance minister can’t access them?
Isn’t it mandatory for the Treasury secretary-general to inform the MoF as a matter of need to know? Pardon, Tun, but it is mandatory for the secretary-general to inform the minister.
Daim: But they did not inform me.
Sidek: And (former senior auditor Kanason Pothinker) knew. He was so small (lower ranking than you), yet he knew. And you as minister who was so good, didn’t know. I find that so odd. Don’t you agree?
Daim: How can I agree or disagree when I wasn’t informed. If I know these things, no way would I have allowed this to happen. I would have sacked them. But I do not know how to act. There needs to be logic in your thinking.
Sidek: The illogical part, Tun, is that everyone seems to know and you do not know. With respect, Tun, the OSA is to protect information of the people who are supposed to know. In this case, you are supposed to know.
Daim: Yes, but in this case, I do not know.
10.50am: RCI panel chairman Mohd Sidek Hassan said it was “obligatory” for Daim as the finance minister then to know what was going on in BNM.
Daim: If they chose not to inform me, what could I do? Central banks around the world, the US, Australia, are independent. We don’t question, they decide, we don’t interfere. Their role is to inform me. If they don’t inform me, how would I know.
Sidek: Isn’t it your supervisory responsibility to be in charge in BNM?
Daim: In hindsight, we are all very brilliant, okay.
Another panel member, Special Task Force to Facilitate Business co-chairman Saw Choo Boon, then asks Daim if the MoF’s representative on the BNM board kept him informed.
Daim: You’d be surprised. We are on so many boards. The government during my time had 1,200 companies, okay. I only know (things) when it comes to audited accounts.
Sidek: We don’t expect to know all, but if it impacts the nation, I expect to know.
Daim: There was no market talk.
Sidek: Even the auditor-general found out.
Daim: They should have informed me.
10.40am: Daim is asked about how much he knew of BNM’s dealings as finance minister. He said the central bank is “fiercely independent” and that he was not informed of its dealings.
“You appoint responsible people to take care of the reserve. It’s not something you play around (with).”
RCI conducting officer Suhaimi Ibrahim then asked Daim a string of questions:
“Do you remember a speech by then governor Jaffar Hussein in December 1988 that BNM planned to be ‘aggressive’ in forex trading to optimise profit?
“Is it not a change of policy from being prudent to being actively involved in forex trading?
“(Don’t) they have to get Tun’s decision on whether certain transactions should be taken or not?
“Are there not mechanisms where you have a board to control the operations of the bank, and within the board there is an officer from the MoF? (Isn’t) the representative of the government through the MoF’s officer to the board? You had your man there and all this was done all above board, according to the regulations?
“The law says that you must be informed (of the forex dealings). The board shall inform the MoF regarding policy changes. (So) Jaffar should have informed you,” said Suhaimi.
Daim: “Bank Negara is fiercely independent.”
Suhaimi: They never tell you what they were doing?
Daim: Once a month they sent a letter, that is all.
Suhami: Wasn’t there a mechanism of control? An obligation to keep you informed?
Daim: No, no, no. What happened is that the appointment of Jaffar needed to go through the cabinet before it is approved by the king. I did not appoint him.
Suhaimi: Yes, they have independence, but they are taking care of the country’s reserves.
Daim: If at the time, if I knew what was going on, I would have stopped it.
10.36am: Muhyiddin Yassin arrives at the courthouse, followed a few minutes later by Dr Mahathir Mohamed and wife, Dr Siti Hasmah Mohd Ali. They go straight into the room where proceedings are held.
10.19am: Proceedings continue with Daim as the 23rd witness. The 79-year-old was finance minister from 1984 to 1991.
Daim said BNM became active in forex trading from 1988 onwards.
He added that the bank governor then, the late Jaffar Hussein, never discussed with him in detail about forex dealings by BNM’s trading arm.
Daim also said he never spoke with the prime minister about BNM’s forex dealings.
10.03am: Testimony by Othman Jusoh, the former secretary of the finance department in the MoF ends. The next witness, former finance minister Daim Zainuddin, prepares to take the stand.
The RCI takes a break due to a faulty sound system.
9:49am: Former finance minister Daim Zainuddin arrives in the courthouse.
9.43am: Witness Othman, the former secretary of the finance department in the MoF, tells the RCI what the meeting between BNM and MoF in late November 1994 decided.
“The sale of government-owned shares are to be done ‘quietly’ via Rashid Hussein Sdn Bhd, ” he said.
The RCI conducting officers ask what “quietly” (senyap-senyap) means.
Panel member Tajuddin Atan asks if the “next level of authority” was informed of such a decision. He also asked if what BNM was doing was to ask MoF for resources (to keep the bank’s reserves afloat).
Othman nodded in response.
9.38am: Othman said he had recommended that BNM draft a letter of undertaking to the MoF on the RM8 billion shortfall. Asked by the RCI conducting officer what this type of letter meant, Othman replied:
“BNM is a government agency. When an agency is in such trouble, the government should be prepared to help out. The question what the government is willing to do to help BNM.”
He added that the purpose of the meeting between BNM and MoF was to “assist” the central bank.
“The purpose of this meeting was for the government to assist BNM in relation to the losses faced by the bank by transferring shares held by the government in certain companies to the central bank,” he said.
This meeting, Othman said, was held in late November 1994 and was attended by the bank deputy governor, Treasury secretary-general Clifford Herbert and former assistant governor Abdul Murad Khalid.
Othman said he could not recall who was the bank’s deputy governor at the time.
9.26am: Panel member Bursa Malaysia CEO Tajuddin Atan asked the witness if a discussion on BNM’s forex losses was discussed with the Ministry of Finance (MoF) for the first time in December 1993.
Othman said: “Yes”.
He added that BNM had suffered a shortfall of RM8 billion at the time and he (Othman) had reported in a meeting that the central bank may be insolvent unless its reserves were bolstered.
9am: The hearing starts with Othman Jusoh, the 22nd witness to take the stand. He was former deputy secretary and then secretary of the finance department in the Ministry of Finance.
He said he worked with the former ministry deputy secretary-general (II) Clifford Herbert in late 1993 to transfer shares to keep BNM’s reserves afloat.