THE Malaysian government is forming a Royal Commission of Inquiry (RCI) to investigate a multi-billion dollar foreign exchange scandal that took place during Dr Mahathir Mohamad’s reign as prime minister in the 1980s and 1990s.
On Wednesday, the Prime Minister’s Office (PMO) said Cabinet had agreed to form the RCI to investigate the central Bank Negara Malaysia’s (BNM) alleged US$10 billion in forex market losses incurred during the former statesman’s tenure as prime minister.
Dr Mahathir ruled Malaysia from 1981 to 2003, making him the country’s longest-serving prime minister. He is currently an opposition figurehead and leading a campaign to unseat Prime Minister Najib Razak, who was his second hand-picked successor.
The formation of the RCI – which comes following the recommendation of a special task force – has been criticised as a diversionary tactic to steer public attention away from the ongoing 1Malaysia Development Berhad (1MDB) financial scandal. Najib, who established the state fund in 2009, is at the centre of the multi-billion dollar controversy.
The setting up of the RCI also comes as the nation gears up for the next general election, with rumours that Najib will likely call for snap polls in the later half of the year. His current term will expire mid-2018.
— Charles Santiago (@mpklang) June 21, 2017
“Its formation is in line with public interest, as it will be able to determine the BNM losses, which involved national reserves,” PMO said in a statement, as quoted by the New Straits Times.
The office said the task force had established that the losses incurred during the time was more than what was declared to Cabinet and Parliament, adding there were attempts to cover up the matter.
“The task force had also found that there had been attempts to conceal actual facts on the losses – with confusing information given to the Cabinet and parliament,” PMO said.
“The Cabinet unanimously agreed with the task force’s recommendation, that there was a need to form the RCI… it would hopefully be able to unravel the issue which has shackled the nation for 23 years,” it added.
— Nurul Izzah (@n_izzah) June 21, 2017
The announcement of the RCI’s formation also comes a week after the United States Department of Justice launched a third civil suit to recover about US$540 million in assets that authorities say were stolen by financiers associated with 1MDB, a sovereign wealth fund established by Najib.
The assets listed under the seizure suit included a Picasso painting that was given to A-list actor Leonardo DiCaprio and the rights to two Hollywood films.
In recent years, Najib has been widely criticised by the social media-savvy opposition and its largely urban-dwelling supporters over a multi-billion dollar scandal involving a sovereign state fund.
Dr Mahathir, who is apparently at the center of the RCI, is currently one of Najib’s staunchest critics.
US investigators traced nearly US$700 million to bank accounts that were allegedly siphoned from 1MDB into Najib’s personal account. The leader, however, has denied taking money from 1MDB or any other entity for personal gain.
The so-called forex scandal investigated by Malaysia’s government was re-emerged in the limelight after former BNM assistant governor claimed billions of ringgit was lost in forex dealings during that period but no investigation was carried out to hold anyone to account.
Oh no!! Lim Kit Siang got his wish!
Cabinet to set-up Royal Commission of Inquiry (RCI) into the BNM US$10… https://t.co/8Np2rvoo4A
— Lim Sian See (@LimSianSee) June 21, 2017
In response, BNM said it would provide cooperation with the RCI.
“It is important to note that in any country, the legitimacy, integrity and credibility of the central bank is paramount in preserving public confidence in maintaining a sound financial system and a stable economy,” the central bank said in a statement as quoted by The Edge.
“Bank Negara Malaysia would like to assure the public and the financial market that we shall not be distracted from discharging our national duty in delivering our mandates. We shall be steadfast in safeguarding the nation’s monetary and financial stability, as well as the smooth functioning of the payment systems.”