Wednesday, March 29

Ex-finance minister says not aware of forex dealings by BNM


PUTRAJAYA: Former Finance Minister Tun Che Abdul Daim Zainuddin told the Royal Commission of Inquiry (RCI) tasked with investigating foreign exchange (forex) losses suffered by Bank Negara Malaysia (BNM) that he was not aware of losses amounting to RM772.3 million in 1988 and RM2.259 billion in 1989 and a profit of RM2.473 billion in 1990 by BNM through forex activities.

Daim, 79, who held the Finance Minister’s post from July 1984 to March 1990, stressed that this was the first time he knew about it as he was not briefed by Treasury secretary-general who is also a member of BNM Board of Directors, Tan Sri Clifford Herbert on the operations and transactions of BNM during his tenure.

“Nobody in BNM informed me on forex transactions conducted by BNM from 1984 to 1990,” he said and clarified that he did not ask Treasury secretary-general on the BNM board meetings as the board was responsible for the BNM operations and policies.

Daim who was the 23rd witness, said this in a witness statement read by him at the Palace of Justice yesterday.

Apart from that, when answering a question from Conducting Officer Datuk Suhaimi Ibrahim, Daim stressed that if he was aware of the transactions, he would not allow the central bank to incur losses from forex dealings.

RCI chairman Tan Sri Mohd Sidek Hassan asked Daim that as Finance Minister how could he not take responsibility for the activities conducted by BNM when the Central Bank of Malaysia Ordinance 1958 said it was mandatory that the finance minister should be informed of the operations of the central bank.

“It is surprising that the third person in Auditor General (Department) also knew of the matter and took action to seek further information.

“But in your case, you did not know and did not take an interest to know?” asked Mohd Sidek.

Daim said even though BNM was part of the government, the organisation was free in terms of operations as the BNM board was responsible for the operations of the central bank.

“As the Finance Minister, I do not have any obligations to monitor the operations/proceedings of BNM as it was free from control,” he said and clarified that he did not know about the forex dealings carried out by BNM.

He said he was not aware BNM was actively involved in forex trading in 1988 and he was not told of the losses suffered by BNM in forex trading in 1988 and 1989.

“I cannot answer the question whether the trading conducted by BNM in the years concerned was to stabilise the Malaysian Ringgit or to trade for profit,” he said and clarified that he also did not know if there were changes to BNM policies on forex trading starting in 1988.

Daim said as finance minister, he also did not know who was responsible for implementing forex trading at BNM and had no knowledge of a letter from the Auditor General dated Jan 23 and 31, 1990 with the heading ‘Forex Trading By Bank Negara’ addressed to the Attorney-General.

“I have no knowledge of a letter from BNM dated Feb 9, 1990 signed by Tan Sri Mohamed Yakcop to the Attorney-General’s Chambers titled Foreign Exchange Transactions by Bank Negara Malaysia as well as a letter dated Feb 21 1990 to the Auditor General and BNM Governor with the heading ‘Forex Trading by Bank Negara,” he said.

Apart from that, he said the then Bank Negara Governor, Tan Sri Jaafar Hussein briefed him every year before the tabling of budget in Parliament on the country’s domestic and foreign economic outlook as well as BNM’s proposals for the consideration of the finance minister.

“I did not brief the Prime Minister and the Cabinet on the operations of BNM, the Cabinet only receives an audited BNM annual financial statement,” he said. — Bernama