‘Nor the main culprit behind forex scandal’

Athi Shankar | June 3, 2012
Free Malaysia Today

An ex-Bank Negara insider reveals the inside track on the currency speculation undertaken by Nor Mohamed Yakcop and other powerful people about 20 years ago.

GEORGE TOWN: A former Bank Negara insider has named four powerful elites as main players to have caused the central bank’s massive RM30-billion loss in the international foreign exchange speculation scandal some 20 years ago.

In his explosive revelation, retired Bank Negara deputy manager, Dr Rosli Yaakop named former Prime Minister Dr Mahathir Mohamed, ex-finance minister Daim Zainuddin, ex-Bank Negara Governor, the late Jaffar Hussein and current Minister in Prime Minister’s Department in charge of Economic Planning Unit Government Nor Mohamed Yakcop as the “forex scandal elite club masters.”

Rosli told a forum here yesterday Jaffar and Nor were biggest culprits by going overboard in the speculative foreign currency venture.

He said the duo speculated and they gambled recklessly and irresponsibly with no regard to the safety of Bank Negara’s assets.

He revealed that they wanted to beat George Soros, perhaps, to impress their bosses that they were experts in forex dealings.

The former high ranking Bank Negara officer said the forex speculation activities were against the very grain of central bank principles.

He asked on how a central bank can be heavily involved in massive forex speculations when its task was to stamp out excessive speculations?

“Bank Negara’s duty was to protect and strengthen the value of ringgit, not to gamble ringgit in forex market.

“I think it was a deliberate attempt to make money for certain people using Bank Negara as piggy ride,” Rosli hammered home his conclusion during a question-answer session later.

He accused Nor to have directly caused the forex losses given that the Tasek Gelugor MP was the man tasked to speculate, and ultimately gamble, Malaysian Ringgit against foreign currencies.

He said Nor, then Bank Negara advisor in charge of investment department, would use his computer and other staff computers to speculate and gamble in foreign exchange market.

This has led international forex players to believe that Bank Negara had many aggressive market traders.

“But truth is it was Nor Yakcop did it all,” Rosli told the forum titled: “Bank Negara Forex Scandal – When Government Becomes Speculator.”

With ex-banker Julian Candiah as moderator, Rosli and Opposition Leader and former finance minister Anwar Ibrahim were two panelists at the full house forum held at a meeting room in Dewan Sri Pinang.

Organised by state government think tank, Penang Institute, Chief Minister and DAP secretary general Lim Guan Eng delivered an opening speech.

Also present were Penang Institute chief executive officer Zairil Khir Johari and state PKR leaders Law Choo Kiang and Abdul Malek Kassim.

‘Yes Man’ governor

Rosli said the central bank ventured into speculative forex market in a big way during Daim’s tenure as finance minister.

“The order to go and make money in the forex market was from Daim with Dr Mahathir’s blessing,” Rosli disclosed, adding that Jaffar was their “Yes Man” Governor at that time.

He said Bank Negara strategy was to hit a currency for a couple of yards and once the initial transaction has gone through, re-hit it again with another couple of yards normally only minutes later.

This will send shocks to the market and dealers will scramble to buy the currency, sending the currency value up.

Bank Negara would then sell the currency with a healthy profit.

“But then, dealers caught on to the scheme hit back,” said Rosli.

In 1992, he said Bank Negara gambled on the British Pound. It bought the Pound long and George Soros, major player in forex market, short.

When the Pound was devalued, Bank Negara lost USD5.5 billion and George Soros gained USD1.7 billion.

Bank Negara then claimed it was only paper loss of RM9.3 billion.

Rosli said experts estimated Bank Negara’s exposure for having lost that much was USD27 to USD33 billion, which was five times more than its foreign reserves and its entire assets of USD20.7 billion in 1992.

Rosli said that Bank Negara was indeed such a real gambler that Alan Greenspan of the US Federal Reserve warned the central bank to stop its speculative activities.

“But it fell into deaf ears and as a result, the bank incurred more losses in 1993,” he said.

Then Opposition Leader Lim Kit Siang estimated Bank Negara lost a colossal RM30 billion. But Bank Negara claimed RM10.1 billion loss in 1992 and RM5.7 billion in 1993.

“Bank Negara claims of losses were schematically understated.

“Losses were hidden through revaluation of BNM’s gold holding and revaluation of quoted investment,” disclosed Rosli.

Bank Negara was once the largest player in the international currency market and in April 1991, Reuter described it as “a dominant force in the foreign exchange scene for some years.”

Rosli said that reasonable profits made before 1992 – 93 was the impetus incentive for Bank Negara to gamble in forex in a major way.

Although the market norm was to trade in lots of USD1million, USD5 million or USD10 million, he said Bank Negara would trade in USD50 million-lot and USD1 billion-yard a day.

He said Bank Negara would trade up to between five and 10 lots per call and sometimes, a few yards a day.

“That’s real gambling … even closest rival, Japanese Fund Managers, would trade in USD50 million-lot only once or twice a year,” said Rosli.

Anwar’s ordeal

He said when Anwar took over the finance ministry in 1991, with it the burden of forex losses, everything had gone sour.

“He could only stop further bleeding which he did,” narrated Rosli on Anwar’s ordeal.

Anwar later explained he could only do damage control and some public relations exercise to save the government from further embarrassment.

The Pakatan Rakyat de facto leader said the finance minister and the Cabinet then did not have a clue about the scandal as there were no documents or reports tabled about it.

He said he took initiative to investigate the scandal after being tipped off by Zurich-based journalist friend.

Until then all Anwar knew was that the Bank Negara was only protecting the ringgit in forex market.

Subsequently he took some bold cleaning up decisions after he probed into the bottom of the scandal.

Nor was forced to resign from Bank Negara on July 10, 1994, which Rosli decribed as a grossly insufficient punishment for such a big a crime he committed against the nation.

Anwar said the deal was that Nor shall never be involved with Bank Negara again.

But, in 1997, Rosli said Nor was ‘rewarded’ when he returned to Bank Negara to handle the ringgit crisis.

Jaffar, who died in 1998, was also forced to resign in April 1994. But Rosli said he was also ‘rewarded’ with the appointment of PNB deputy chairman.

He said the masters were Mahathir and Daim, while Jaffar and Nor was given the dirty job to gamble.

He said this was the reason why Jaffar and Nor were left scot-free and rewarded later, and no independent investigation held on the scandal.

Kit Siang’s suggestion for a royal commission of inquiry was ignored and Jaffar even did not bother to attend public accounts committee inquiry.

Due to involvement of people high-up, Rosli said an open investigation would prove politically disastrous as details of the scandal can gruesome and cause damaging embarrassment to the-powers-that –be.

He suggested that Pakatan Rakyat, if were to capture Putrajaya, should re-open investigation on the scandal which was approved by the audience.

He said certain people would have been in jail as criminal elements existed in the forex scandal.

He said the criminal elements were negligence, overstepping of power, falsification of accounts, “creative accounting”, misinformation, breach of trust and corruption.

“But, they had protectors,” he said.

  1. #1 by monsterball on Sunday, 3 June 2012 - 1:16 pm

    All crooks are exposed by former high ranking Bank Negara man.
    Very damaging news.
    Will MACC act to bring that ex Bank Negara man for questioning?
    MACC dare not…for he was former Bank Negara CEO!!
    It will stay as a rumor…and pass off.

  2. #2 by ENDANGERED HORNBILL on Sunday, 3 June 2012 - 1:18 pm

    MalaysiaBoleh’s two premier Tuns – Tun M and Tun D – ok, jaguh-jaguh kampung, what say you now that the cats have all decamped.

    Tun M would either have selective amnesia or start blaming Nor Yakcop, or Jaffar (“dead man tells no tales!) or Anwar Ibrahim (remember those black eyes: Tun said,’Anwar fell down and hurt himself”). So Tun M and Tun D may also claim force majeure: it’s an Act of God. BNM was fated to lose those forex… i mean, you know the fatalistic streak a’la “Rantau sepanjang Jalan”.

  3. #3 by ENDANGERED HORNBILL on Sunday, 3 June 2012 - 1:21 pm

    If Najib protects Nor Mohd Yakcop, then the voters must punish him and his sins decisively in GE 13 if Nor still has the guts and a thick-enough skin to contest.

  4. #4 by waterfrontcoolie on Sunday, 3 June 2012 - 1:43 pm

    They are all protecting their vested interests! That was why he had to build up his EGO like Bapa Ekonomi Malaysia! Well we all took the bait together with the sinker for another decade! The PR Gomen may have to set up Multi=RCIs to find the real truth for the next decade by the number of exposures already mentioned. No wonder they said they will NEVER give up!

  5. #5 by undertaker888 on Sunday, 3 June 2012 - 2:29 pm

    Do these idiots think that George Soros was educated in bolehland thru the NEP or quota system like them? These half past sixes trying to outfox a fox.

    They can’t even tie their owns shoes but still have the nerves to outsmart an expert. Next time just sit in their offices and collect their gaji buta rather than gambling our money away. Idiots!!!

  6. #6 by sotong on Sunday, 3 June 2012 - 2:39 pm

    The money should have been used to create so many programs beneficial to the ordinary people and country…….instead people suffered unnecessarily from their gross irresponsibility and incompetency.

    Then, they blamed it on others and divide the ordinary people to cover themselves.

  7. #7 by donplaypuks on Sunday, 3 June 2012 - 2:52 pm

    Why then has the main culprit been promoted to Minister level as head of Economic Plundering Unit? Only in M’sia are crooks caught with their hands in the cookie jar allowed to enjoy the fruits of their thievery!

    The punishment for gambling away and losing $30 billion of our national reserve is promotion to PM’s Dept and being put in charge of more billion ringgit government projects?

    DAP and Pakatan should push hard for this man to be put behind bars for life instead of allowing him to enjoy promotion and the good life!

    we are all of 1 Race, the Human Race

  8. #8 by boh-liao on Sunday, 3 June 2012 - 2:58 pm

    Under MMK, mana ada sistem, apa-apa pun boleh, M’sia boleh

  9. #9 by Winston on Sunday, 3 June 2012 - 2:59 pm

    So, when PR takes over Putrajaya, it will be pay back time.

  10. #10 by sheriff singh on Sunday, 3 June 2012 - 3:00 pm

    ‘ He said the criminal elements were negligence, overstepping of power, falsification of accounts, “creative accounting”, misinformation, breach of trust and corruption. “But, they had protectors,” he said. ‘

    This is how the BN government operates and explains why many individuals can get away from be held liable and accountable for their actions. Who in the government doesn’t have a problem, that cowgirl might say. But they are all involved and affected in some way so cover-ups are the order of the day.

    Change this government and let the incoming government check all the closets full of skeletons.

  11. #11 by sheriff singh on Sunday, 3 June 2012 - 3:16 pm

    Let us face it. Mahathir, Daim and Jaaffar Hussein are all ignorant of the workings of the forex market.

    Nor was the initiator and instigator of this forex trading plan and with his initial successes sold his idea to these three power-holders who gave the go-ahead without analysing and realising the risks and consequences involved. So they all are to be blamed too. Nor was the action-man, the implementor who put his plans into action.

    People in the forex markets used to joke that Nor was forever busy, working late and still in his office hitting Tokyo, London, Frankfurt and New York market dealers and taking them all for a ride. Bank Negara’s offices in London and New York were used in this risky scheme taking instructions from Nor Mohammed.

    Nor is a known gambler and drinker in his younger days, known to take big risks. To think this man was absolved from his many sins and then to be recalled to lead the nation in many important capacities should be cause for concern.

    Indeed, if the losses of up to US$ 30 BILLION is correct, then this fellow and his protectors – accomplices should be hauled up and punished. Instead, he’s been rewarded by many senior government positions and titles. What an irony. Only in 1Malaysia. Malaysia Boleh !!

  12. #12 by Godfather on Sunday, 3 June 2012 - 3:18 pm

    Mamakthir was desperate to prove that Malays could do anything that would make the world sit up and take notice. Unfortunately, the Malays he chose earned global notoriety for squandering and stealing public funds.

    Mamakthir wanted to corner the tin market to teach the mat sallehs a lesson. He failed with Maminco. Mamakthir wanted to build a global bank with Bank Bumiputra. It had to be bailed out twice by Petronas. Mamakthir wanted recognition as a global forex trader. As Rosli says, the whole market ganged up on BNM, and the country lost RM 30 billion.

    Mamakthir gave the Sahid brothers Perwaja. Look where it is now. Abu Sahid went on to build a tollroad which it now sells to another bumiputra company for a profit of RM 1 billion. Mamakthir gave MAS to Tajuddin Ramli, and MAS has never recovered to this day.

    Mamakthir’s favourite crony is none other than Syed Mokhtar. He has banks, ports, airport, tollroads, IPPs, Proton, Perodua, Post Office, whatever you care to name. He is now eyeing Malayan Railways, RTM and acquiring the land of Subang Golf Club. The world’s richest Malay can get anything he wants, it seems. The only problem is his group has RM 26 billion in debts, a large portion of it owing to the EPF. Could this Mamakthir crony survive in a downturn ?

  13. #13 by Godfather on Sunday, 3 June 2012 - 3:26 pm

    The thing about Mamakthir was that he would never put anything in writing that could incriminate himself. All instructions were verbal and were carried out by his trusted henchmen like Aziz Samsuddin and Ali Abul Hasan. It’s virtually impossible to find a paper trail for any of these disasters. It’s always going to be his word against others. Believe me, even if we put all his trusted “implementors” on the stand in an RCI, they would all parrot “I don’t remember”.

  14. #14 by ENDANGERED HORNBILL on Sunday, 3 June 2012 - 5:36 pm

    Tun M not only wants to have the world’s tallest building, he has shown the world he has got the world’s tallest ego….but also a pea-sized brain.
    That’s a fatal mix….donplaypuks…or don of playpuks.

  15. #15 by ENDANGERED HORNBILL on Sunday, 3 June 2012 - 5:39 pm

    It’s time to remind Tun M of his own words…. nobody has a monopoly of wisdom, not even an 85-year-old man, ok?

    Why don’t you just come clean, Tun M. “You shall know the truth and the truth will set you free.” (John’s Gospel). Try it…. even if it is just ancient biblical wisdom.

  16. #16 by boh-liao on Sunday, 3 June 2012 - 6:06 pm

    Pray hard he does not kick d bucket b4 he is brought 2 account 4 his evil, corrupt deeds
    Death is just too easy an escape 4 a crook like him

  17. #17 by dagen wanna "ABU" on Sunday, 3 June 2012 - 9:51 pm

    Good. It only means one thing. If umno should lose the possibility of umno uniting to cause havoc and civil unrest could be minimised. This is because those guilty of smaller scandals woul surely want to distance themselves from bigger culprits and criminals. In other words ppl like crazyomamak jib moo keris etc would hv little support to draw from to start anything stupid.

  18. #18 by ENDANGERED HORNBILL on Sunday, 3 June 2012 - 11:15 pm

    If PMs of Thailand, Taiwan, Philippines, Indonesia can all be hauled to court & charged, why can’t mahathir be charged and a mere minister Nor Yakcop be charged?

  19. #19 by tak tahan on Monday, 4 June 2012 - 12:10 am

    /If PMs of Thailand, Taiwan, Philippines, Indonesia can all be hauled to court & charged, why can’t mahathir be charged and a mere minister Nor Yakcop be charged?/

    Haiyah.We semua boleh what.Can they???We are the best mah.Now the whole world is looking and learning from us from everything-best democracy and governance,human/race/religion rights and freedom.WE SHOULD FEEL VERY PROUD INSTEAD.

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