PUTRAJAYA: Former Bank Negara Malaysia (BNM) governor, the late Tan Sri Jaafar Hussein, was shocked to learn of the massive losses caused by the bank’s foreign exchange (forex) trading back in the early 1990s.
This was revealed by former Special Assistant to the Governor, Lee Siew Kuan, who was the one who had personally informed Jaafar of the losses, amounting to around RM9 billion accrued between 1990 to 1993.
Recounting the event, Lee, 86, told the Royal Commission of Inquiry (RCI) probing the losses today that he was offered a contract position in the central bank following his retirement from the Auditor General office's in 1986.
His last role was as Assistant Auditor General.
“I was contacted by former Deputy Governor Tan Sri Lin See Yan to clear up a scandal involving over 20 cooperatives, sometime in early 1987. Because I am a contract player, I was given the role of “Special Assistant to the Governor,” and not an “Advisor to the Governor”,” said Lee.
He said that between 1990 to 1993, he was instructed by the former Accounts Manager at the Accounts Department, Ishak Ismail, to look into the bank’s accounts.
This, he said was because he was told “the total number of forex transactions exceeded the Gold and Foreign Exchange Reserves of Bank Negara Malaysia.”
Ishak was also an RCI witness and had testified during the proceedings yesterday.
Lee said, upon checking the accounts, he found that around RM9 billion had been lost due to forex trading.
Lee said he immediately informed the Governor about the huge losses suffered by BNM.
"He (the governor) did not believe me. He told me that the losses couldn't be that much and instructed me to check again,” said Lee.
“I did and found the same amount of losses which was up to RM9 billion. I then informed (former deputy governor) Lin and together we briefed (former governor) Jaafar.
"This time, the governor had to accept the loss. He did not say anything but he looked worried and shocked.”
Lee was later queried by RCI panel member, Datuk Seri Tajuddin Atan.
“Mr Lee, why were you the one who alerted the governor of these losses? Why didn't he know about the losses prior to this?,” asked Tajuddin, who is also the chief executive officer of Bursa Malaysia Bhd.
“I am trying to establish whether this lack of communication is an organisational behaviour or the culture of Bank Negara at that time… where everyone was territorial and only take care of their areas without informing anyone else," Tajuddin added.
Lee replied that each Advisor to the Governor was tasked with their own roles and looked at different areas, which are bank supervision, forex and economic policies, respectively.
“For the most part, being an advisor to the bank was an ‘exclusive club’ and I was not part of it,” said Lee.
The RCI proceedings continue.
Additional reporting by NOR AIN MOHAMED RADHI