Bank Negara's forex trading losses: shocking revelations

Shocking article about Bank Negara's forex trading losses of ca. 20 years ago. Revelations from former Bang Negara deputy manager Dr, Rosli Yaakop.

Will we ever see independent in-depth research on this scandal, revealing the immense size of it (rumoured to be around RM 30,000,000,000), the people who were responsible for it, if rules were breached, if certain persons should be (belatedly) punished?

Most countries in the world had their fair portion of scandals, but the way Malaysia deals with them is so disappointing: all conveniently swept under the carpet. Are Malaysian taxpayers not allowed to at least know where their precious money went to? How can we learn from mistakes of the past if they are not revealed?


A former Bank Negara insider has named four powerful elites as main players to have caused the central bank’s massive RM30-billion loss in the international foreign exchange speculation scandal some 20 years ago.

In his explosive revelation, retired Bank Negara deputy manager, Dr Rosli Yaakop named former Prime Minister Dr Mahathir Mohamed, ex-finance minister Daim Zainuddin, ex-Bank Negara Governor, the late Jaffar Hussein and current Minister in Prime Minister’s Department in charge of Economic Planning Unit Government Nor Mohamed Yakcop as the “forex scandal elite club masters.”

He said certain people would have been in jail as criminal elements existed in the forex scandal. He said the criminal elements were negligence, overstepping of power, falsification of accounts, “creative accounting”, misinformation, breach of trust and corruption. “But, they had protectors,” he said.

In 1995, a book on international high finance, "The Vandal’s Crown" by Gregory J. Millman had this to say about the Bank Negara forex scandal:


"Using all the resources a central bank commands - privileged information, unlimited credit, regulatory power, and more - Malaysia’s Bank Negara became the most feared trader in the currency markets. By trading for profit, Bank Negara committed apostasy against the creed of central banking. Instead of working to ensure global financial stability, Bank Negara repeatedly shoved huge sums of money into the most vulnerable market situations in order to destabilize exchange rates for its own profit" (p.226)

"(Bank) Negara operated behind a thick veil of secrecy. The bank seldom spoke publicly about its controversial trading activities. Yet it was increasingly clear to foreign exchange traders that Bank Negara’s operations in the foreign exchange markets went far beyond simple self-defense. It became the most awesome currency trader in the world." (p. 227)

"(Bank) Negara’s market manipulation was so egregrious that one American central banker said, ‘If they tried this on any organized exchange in the world, they’d go to jail.’ However, in the unregulated international currency markets, there were neither police nor jailers. The only rule was the rough justice of the vandals, and it was this rule that eventually brought (Bank) Negara down.

"In 1992, (Bank) Negara took on a large pound sterling position, apparently expecting Britain to maintain the discipline required by the European Exchange Rate Mechanism. It was a bad economic and political judgement. (Bank) Negara lost approximately $3.6 billion when Britain withdrew from the ERM, letting sterling collapse. The next year, (Bank) Negara lost an additional $2.2 billion. By 1994, Bank Negara was technically insolvent and had to be bailed out by an infusion of fresh money from Malaysia’s finance ministry." (p.229)