Ghost of Bank Negara forex scandal awakens


The ghost of the multi-billion ringgit Bank Negara forex speculation scandal, perhaps the largest financial scandal in Malaysian history, has returned with a vengeance to haunt the masterminds.

I remember this mother of all banking scandals well. (It was rivalled in scale only by the non-performing loans crisis which hit our nation with the onset of the Asian financial crisis in the late 1990s and some US$3.5bn from government/public funds had to be used to rescue the banking system.)

In the case of the Bank Negara forex gambling scandal, billions of ringgit were lost. RM10bn? RM30bn? Or many times more? No one outside the corridors of power knows for sure  but it left Bank Negara splattered with red ink. And as usual, there was no accountability to the public.

Some of the principal personalities around at that time were:

  • Mahathir – PM for 22 years until 2003;
  • Daim Zainuddin – Finance Minister from 1984 until he resigned in 1991;
  • Anwar – Finance Minister from 1991 until he was sacked by Mahathir in 1998;
  • Jaffar Hussein – Bank Negara governor from 1985 until he resigned in 1994, the period when Bank Negara was in the thick of it and landed up in dire straits;
  • Nor Mohamed Yakcop, the then Bank Negara advisor in charge of the investment department. He served in Bank Negara from 1968 until he resigned in 1994 (only for him to return to Bank Negara during the Asian financial crisis for another stint from 1997 to 2000);
  • Kit Siang – Opposition leader.

So who among this lot were the ‘mastermind(s)’ behind the scandal? Retired Bank Negara deputy manager Dr Rosli Yaakop has named those he regards as the “forex scandal elite club masters” in this Free Malaysia Today report. His revelation merely confirms the suspicions of many.

Wikipedia describes the scandal as follows:

In 1985, following the “Plaza meeting” of G-5 finance ministers in New York City, the US dollar fell sharply causing major losses in Bank Negara’s dollar reserves. The bank responded by starting a program of aggressive speculative trading to make up these losses (Millman, p. 226). Jaffar Hussein, the Bank Negara Governor at the time, referred to this strategy as “honest-to-God trading” in a December 1988 speech in New Delhi.

In the late 1980s, Bank Negara under Governor Jaffar Hussein, was a major player in the forex market. Its activities caught the attention of many; initially, Asian markets came to realize the influence Bank Negara had on the direction of forex market. Alan Greenspan acting the Federal Reserve chairman later realized Bank Negara’s massive speculation activities and requested the Malaysian central bank to stop it.

BNM sold between $500 million on September 21, 1990 – $1 billion worth of pound sterlings in a short period, driving the pound down 4 cents on the dollar (Millman, p. 228). In response, bankers began front running Bank Negara’s orders. Two years later, Bank Negara attempted to defend the value of the British pound against attempts by George Soros and others to devalue the pound sterling. George Soros won and Bank Negara reportedly suffered losses of more than USD 4 billion. [1] Bank Negara lost an additional $2.2 billion in speculative trading a year later (Millman, p. 229). By 1994, the bank became technically insolvent and was bailed out by the Malaysian Finance Ministry (Millman, p. 229).

This is a commentary by Himanshu Bhatt of theSun:

BNM saga reawakened
Posted on 6 June 2012 – 07:27pm
Last updated on 6 June 2012 – 09:22pm

THE ghost of Bank Negara Malaysia’s (BNM) epic foreign exchange trading losses, said to have run into tens of billions during the 80s and 90s, has reawakened.

Like a dormant volcano whose time to re-erupt has come, the controversy involving the central bank’s infamous speculative practices blew up with such a shudder last weekend that even Tun Dr Mahathir Mohamad was called to respond.

Mahathir, who was prime minister at the time, commented to reporters that he was not afraid to be investigated. The Opposition can open any file they had on him, he said in response to DAP adviser Lim Kit Siang’s assertion that Pakatan Rakyat, should it take over the federal government, must initiate a royal commission of inquiry into the affair.

Other key figures reportedly implicated are the then finance minister Tun Daim Zainuddin and BNM governor during that period, the late Tan Sri Jaffar Hussein. A fourth person, the then BNM deputy governor, Tan Sri Nor Mohamed Yackop, is now a minister in the Prime Minister’s Department.

Although the issue has been raised before, this time it was perhaps more damning and detailed. This is because the individual who spoke about it at a forum organised by the Penang Institute, a state government think-tank, on Saturday was privy to the internal happenings at BNM until 1994.

Dr Rosli Yaakob was a senior manager during the crucial years when the speculative practices were said to occur, and was even on the panel that prepared and presented the bank’s semi-annual brief. He is currently Negri Sembilan PAS deputy commissioner.

Incidentally, Opposition Leader Datuk Seri Anwar Ibrahim, who was finance minister from 1991 to 1998, also spoke at the forum. Anwar maintained that the matter was kept from him after he assumed the post. He has however been accused of covering up for it, including by Lim – the opposition leader and DAP’s Tanjung MP in the early 90s – who held Anwar personally responsible for the losses.

The problem with this whole affair is that there has been neither an official investigation nor an inquiry into the matter to assuage public confusion and concerns. No one, aside perhaps from the perpetrators, knows how much money, if any, was lost or how this was done.

Rosli’s account, delivered to a packed hall seated in stunned silence, would have raised more curiosity about what could have occurred.

Even the volume of money that was supposedly involved has come into question. Lim has put the losses at about RM30 billion. Rosli, however, pointed out that it was once reported that at the height of the speculation BNM had spent RM270 billion. “This is no small amount,” he said. Full article here.

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From the pass till today, Malaysian are still clueless about the basic of forex. Foreign reserved are mean to stabilised short and mid term international commercial trading, it is NOT mean for paying foreign debt , nor it is used for profit gaining, speculation. Unfortunately, Bank negara and the half-baked media keep playing the “forex reserved” figures , just to fools those naive people think that the country financial standpoint are sound, which is never the purpose of forex reserved. And the first to break the hell lose , is none other than “forex speculation king” dr.m. There is no… Read more »


George Soros trades in lots of US$1 million, but, BNM traded in US$50 millions lots because BNM has no accountability for any loss?


Anwar, Azmin, LGE, Khalid & PR lie This is pure speculation & exxageration
Surely the Scorpene is not ???? Opp maybe the French also lie. No No No, the whole world lie except Ah Cheap Kor, AMMO and B End


They create stories after stories for cover ups… And their covering-ups are so successful because they are tried in the UMNO court by the UMNO laws and they are the UMNO judges !!! Now, tak semacam lor !!! The angmo court and the angmo judges are coming fast on them… can run but cannot hide lor … After weeks and all their brains screwed dried, still cannot come out with any dongeng dongeng, tak boleh delete records la, so the assistant PM just came out to say, we will investigate, ha ha ha !!! Altantuya is not resting, Gelak k,… Read more »

Gerakan K

Pure speculation and exaggeration ala RPK style. Another cerita dongeng.

Andrew I

So RPK has fallen out of favour with you now. I remember he was your darling not long ago…or is that with another Gherkin?


You rub my back I rub yours.
Most probably RPK didn’t rub his back.


Comparing to when the earth was flooded by subterranean seas of water bursting thro’ the earth’s crust in seemingly unlimited flow for 40 days while Noah & his family and selected species of animal were kept safe & warm in an ark, our nation’s Ah Kong’s wealth was siphoned off in exponential volume never to ever return for 2 short decades for unholy adventurism better known in the schemes of things of the inexperienced yet pandai-knew-it-all egoistic ApaNama. It was truly a Malaysian curse to have had such an entrusted leadership since the days of the last cursing by the… Read more »

Gerakan K

With hudud or without hudud corruptions still there to stay. Few things for sure: 1) Malaysia is isolated from ASEAN and the rest of the world except Afghanistan and few others 2) Most middle-upper class people will migrate to Singapore, or other western nations 3) FDI is a history for Malaysia 4) The biggest victims are females 5) Rapists are very difficult to convict 6) Malaysia version of “Spring” campaign may started after few decades of turbulence / suffering 7) My mini market no longer to sell canned lunch pork meat, instead my staff busy punching HALAL label everyday even… Read more »


The biggest deserving ‘victims’ of hudud laws will be the leeches of Ah Kong’s monies (national coffers), the corrupts & the murderers of innocent lives. If one is of good conscience & conduct, there’s no need to worry or wanting to emigrate to other lands. Instead, Malaysia will be richer with well managed national resources, national coffers & more righteous people including the civil servants. Which BTW, will attract investors looking to do profitable & non-corrupted businesses. Men need not live on pop corns & Kotor lies anymore. The Words of God need to be constant reminder in the minds… Read more »


Since when have you woke up but I still you are still sleeping


Gila, looks like you are not aware, (pro-)UMNO muslim only drink luke warm water. (Pro-)UMNO muslim cannot take 100 plus.

So, your staff have to punch NO 100 plus for UMNO muslims.

We are happy happy with hudud. Hudud will potong tangan lor, jangan corrupt lor all the abang abang in UMNO/MIC/MCA. Party Gerakan sudah mati no need to mention here.


Looks like this is another reason for Najib to delay the GE, as he has to give up another round of his BR1M bribe to divert the attention away form this issue and the submarine issue.


We are rich and yet poor
That`s why we need a CHANGE or it will be forever so

Andrew I

270 billion. What’s the biggest jackpot ever paid out by Toto, Gherkin?


with past scandals under serious probes many barang naik fence sitters shall align to IKATAN enroute to PAKATAN while Road To Putrajaya is happening now …….

hooray hooray hooray ….. ini betul betul Jom Heboh !!!!