Bank Negara Malaysia Must Be More Transparent

Between 1991 and 1993, Bank Negara Malaysia is said to have lost RM44 billion in the foreign currency market.

In an interview with the New Straits Times and Utusan Malaysia on January 28, former Bank Negara Malaysia assistant governor Datuk Abdul Murad Khalid said the central bank lost US$10 billion (RM44 billion), far higher than the RM9 billion than what was announced by Bank Negara Malaysia in its annual report in 1994.

Is this true? How come there were no investigations? How will it affect the rakyat?

WHAT IS FOREIGN EXCHANGE MARKET?

Before we go on, we must understand what is the foreign currency market.

As an example, when Ali wants to buy US$1 dollar, at current rates, he must pay RM4.20 to buy one US$1 dollar.

But sometimes Ali has to pay RM5 to buy a US$1 dollar as the rate changes all the time depending on the foreign currency market based on supply and demand.

Sometimes this is due to speculative activities, where one person spread false news and as a result our ringgit become weaker and falls further to RM5.

The more the ringgit weakens, the more money you lose and this is called foreign exchange losses and this is what happened to Bank Negara.

However, is it Bank Negara’s duty to trade in the currency market?

BANK NEGARA MUST COME CLEAN

Datuk Abdul Murad claimed that the losses was never announced and no investigations were carried out.

Why is this so? The central bank as the regulator of the country’s banking industry must be transparent by informing the rakyat.

This is because the amount of money involved is huge and those guilty must be brought to justice.

This is important because Bank Negara must be clean and it cannot sweep any wrongdoings under the carpet to set a good example to the country’s banking industry.

INVESTORS CONFIDENCE MUST BE MAINTAINED

One of the reasons why foreign investors like to come here is because it has confidence in our financial system and that includes the banking system.

Foreign investors like our banking system as it is easy for them to get a loan plus other benefits offered by the banks and the government such as tax breaks.

Thus a loss of billions of ringgit such as this will definitely erode investors confidence and they will ask a lot of questions on what happened to the money.

Foreign investors might not come here to invest their money to set up their factories because they are afraid that their money will be lost too.

This will definitely affect our economy and when the economy is bad, the rakyat will suffer as they might lose their jobs and not be able to provide for their families.

So Bank Negara has to be transparent and be truthful to the rakyat.

BANK NEGARA MUST BEEF UP PROPER DOCUMENTATION, INTERNAL CONTROLS

As a central bank, Bank Negara would surely have proper documentation and internal controls.

Datuk Murad however claimed that at the time, Bank Negara did not have proper documentation and the losses were never revealed.

Is there a cover up?

Bank Negara must take steps to strengthen these procedures so that investors confidence can be restored and the economy can grow again.

When the economy is good, the rakyat will be happy and they will be proud with Bank Negara for doing a good job monitoring the country’s banking sector.

PUBLIC ACCOUNTS COMMITTE MUST REOPEN CASE

Datuk Murad claimed that the loss were never reported to Bank Negara’s accounts division and it only involved a junior officer and a senior central banker.

He also claimed that the losses were never reported to the Public Accounts Committee and the losses were transferred to another reserve account.

This is a very serious allegation and thus the Public Accounts Committee must reopen the case so that the truth will come out and investors’ confidence in the country will not be affected.

BANK NEGARA MUST CONDUCT OWN PROBE

Bank Negara Malaysia has been advised to conduct its own internal investigation over the RM44 billion loss and the Malaysian Anti-Corruption Commission (MACC) said it would only step in when the internal

Investigations unearthed any element of corruption.

“If they find any element of corruption, the report should be submitted to MACC and we will open an

Investigation,” MACC deputy chief commissioner (operations) Datuk Azam Baki told the New Straits Times on January 28.

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