PUTRAJAYA: Dr Mahathir Mohamad was calm and composed when informed that Bank Negara Malaysia (BNM) had suffered forex losses of about RM30 billion, the Royal Commission of Inquiry (RCI) heard today.
Appearing before the five-man tribunal, chaired by Mohd Sidek Hassan, former finance ministry secretary-general Clifford Francis Herbert related how when briefed about the forex losses, the former PM simply said, “Sometimes, we make profits and sometimes we make losses.”
The witness said the incident took place at the prime minister’s office in late 1993 when he along with then finance minister Anwar Ibrahim briefed Mahathir about the billions in forex losses.
Clifford, who was secretary-general from 1994 to 1997, said he only came to know of the losses at the end of 1993 when Anwar instructed him to check with BNM about it.
“I was provided certain documents by BNM and I did my own calculations and reported to Anwar that the losses amounted to RM30 billion,” he said, adding that he could not remember exactly which year the losses were for.
Clifford said a discussion followed with then BNM governor Jaffar Hussein to prepare a note for Anwar to defend the central bank in Parliament.
He said Jaffar had also told him that most of the central banks at that point had registered losses on forex transactions because the forex market was volatile.
Clifford said during a trip to Hawaii, several BNM senior officials advised Anwar that he should ask Nor Mohamed Yakcop, who was Assistant Governor of BNM at the time, to resign from the central bank as he was responsible for the huge losses.
“On reaching Hawaii, I called the BNM board of directors’ secretary and informed him that Anwar had agreed that Nor Mohamed should resign,” he said.
Clifford said then BNM deputy governor Lin See Yan also informed him that the central bank was insolvent, largely due to the forex losses.
He said Anwar later agreed to the transfer of Tenaga Nasional Bhd and Telekom shares to BNM to strengthen the bank’s balance sheet.
Clifford’s predecessor, Mohd Sheriff Mohd Kassim, earlier told the tribunal that Jaffar had written to him and asked for a letter of support from the government in case BNM had a deficit in its reserves.
“I wrote and replied that the government would support BNM,” he added.
Sheriff said that from his observation, BNM made adjustments in its accounts to protect itself and avert any serious implications on the Malaysian economy and the ringgit.
“The adjustments on its profit and loss account and reserve management was not a cover-up,” he said.