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BNM Forex Scandal - Possible outcome of RCI Findings

 As some political analysts have pointed out, there may be three possible outcomes from the Royal Commission of Inquiry (RCI) on the losses of FOREX tradings that happened to Bank Negara Malaysia (BNM) about 3 decades ago.  The three outcomes would likely be;

1, The amount of losses.  RCI should be able to determine the amount of losses to BNM.  Whether it is RM5 billion or USD10 billion as some have suggested; we need to know the exact amount lost so that we can have a clear picture of the extent of losses to BNM.  After the amount is determined, we will know the scale of the damages and the magnitude of impact to our country and our economy at that point in time.  In the investigation, RCI should be able to also uncover how the losses came about; whether it is due to pure gambling, or someone has purposely placed lopsided trading positions against market trends, or simply designed to lose BNM's foreign currencies in the foreign currency market on a one-to-one betting arrangement, which all these will form a basis to determine if there is any element of criminality involved. 

2, If the Cabinet is misled.  According to reports, the Cabinet was informed at the material time that the losses were only RM5.7 billion and mostly were "deferred expenditure" and "unrealized losses".  RCI will have access to classified Cabinet papers to find out the amount disclosed in the Cabinet meeting during the material time was lower or the same or higher than the amount determined in number 1 above.  If the amount lost was higher than the disclosed amount and an actual loss, misleading the Cabinet will then be a prima facie case.

3, If the Malaysia Parliament is misled.  According to Parliament records, the Parliament was informed by the Finance Minister in 1993 that BNM Forex losses is a lie and mere opposition propaganda.  In 1994, the Parliament was again informed by the Finance Minister that BNM had, indeed, lost some money gambling on the forex market but it was a small loss and a paper loss and on top of that no money was actually lost.  If RCI can determine the actual money that is lost in the Forex tradings, then misleading the Malaysia Parliament will be a straight forward case.

Opposition leader at that material time was Lim Kit Siang of DAP, and he has pointed out that the scale of the losses due to gambling on Forex market was at 5 times our reserves and 2 times our GDP, which if true, would have been a scenario that could have bankrupted our nation.  BNM was severely weakened because of this and the depleted foreign reserves position has indirectly staged a stage for foreign currency hitmen like George Soros to hit on the Malaysia Ringgit that subsequently seen the Ringgit free-fall to 4.9 before recovering and foreign currency control policy was implemented that fixed our Ringgit at 4.8.  Many businesses at that time were destroyed as a result, jobs were lost, and the standard of living, in general, has worsened during the 1997-1999 economic crisis.

RCI's finding will be able to bring closure to this sad and unfortunate history to our nation, and all findings should be opened to public and be learnt by all citizen in the country that there should not be any tolerance to such rogue action by our administrator and civil servant, ever again.

 

 

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