Forex scandal: Haunted by Acton's ghost

COMMENT “Power tends to corrupt; absolutely power corrupts absolutely,” is one of the more renowned sayings of Lord Acton that deserves its fame for its simplicity.

Something comparably penetrating that Lord Acton said about nature of public affairs is set to gain a relevance to Malaysia that would not only showcase its perceptiveness but also its applicability as a political truism.

“Nothing is safe that does not show it can bear discussion and publicity,” may lack the lilt of Acton’s aphorism on power, but the force of its truth can hit you four square.

That, at least, must have been the reaction of a packed audience to the revelations unveiled at the public forum organised by the Penang Institute in Georgetown yesterday that was themed ‘Bank Negara Forex Scandal: When government becomes speculator’.

Chief Minister Lim Guan Eng opened the forum, at which the speakers were Opposition Leader Anwar Ibrahim and Dr Rosli Yaakop (right), a former Bank Negara official, by highlighting the Freedom of Information Bill the Penang legislature passed last year.

Its passage displays to advantage the merits of the DAP-led Pakatan Rakyat government of Penang with its emphasis on openness and transparency, derided as a sham by its BN critics but lauded by admirers as exemplary governance for both state and nation. 

Staggering sum of money

Presumably, a comparable bill, had it been promulgated by the federal government, would not have left unexposed for so long one of the more damaging scandals to beset the country which occurred nearly two decades ago.

This was the Bank Negara foreign currency trading scam in which a mind-boggling sum was conjectured (its precise amount, until yesterday, was a figment of public speculation than of authoritative disclosure) to have been lost and was, at the time of its initial revelation, officially dismissed, in what must now be viewed as a staggering euphemism, as “paper losses.”

“They were real, not paper losses,” said Anwar, who revealed that he first came to know of Bank Negara’s speculative forays on the forex markets from a friend in Zurich in 1991 and, later, from the editor of the now defunct Far Eastern Economic Review.  

At that time the losses were incurred, as the first gleanings of the disaster reverberated across the political arena, these were disclosed as amounting to RM10.16 billion until 1992, and as RM5.76 billion, in 1992 alone.

Rosli Yaacop, in his presentation yesterday, held that losses suffered were closer to a stupefying RM30 billion.    

What Rosli, a deputy manager in Bank Negara at the time the scandal ran its course (between the late 1980s to the early 1990s) and what Anwar, the finance minister on whose watch it came to light, revealed to the 400-plus people at yesterday’s forum reinforced the truth of Acton’s insight on the futility of camouflaging what democracies, including Malaysia’s makeshift version, would inevitably engender over time: the outing of the truth about tawdry goings-on.

Greenspan raised alarm

The Bank Negara foreign currency trading scandal was, in yesterday’s sketches by Rosli and Anwar, conceived in secrecy and conducted by subterfuge between the then central bank’s governor, Jaafar Hussein, and its foreign currency arbitrageur, Nor Mohamed Yakcop, with the knowledge, if not connivance, of then finance minister, Daim Zainuddin, and prime minister Dr Mahathir Mohamad.

Anwar, who replaced Daim as finance minister in early 1991, did not know about the machinations of Nor Mohamed (right) who apparently enjoyed a free hand; governor Jaafar was not obliged, on account of the central bank’s statutory independence of the Treasury, to brief the finance minister.

After Alan Greenspan, the chairman of the US Federal Reserve, raised the alarm in 1991 that Malaysia’s exposure on forex trading was alarmingly high - drawing a typically combative rebuke from Mahathir - the qualms about Bank Negara’s speculative forays, viewed as reckless gambling by finance moguls in the know, burgeoned to the point where Anwar demanded in 1994 that Jafaar come clean on the matter.

By then, when the stupendous losses suffered had escalated beyond the point where the huge profits garnered in earlier years had become a tantalising mirage that paved the way to disaster, Anwar raised the matter with Mahathir.

Mahathir allowed that the forays had brought huge gains in the initial stages but that subsequent losses had made the exercise no longer sustainable.

Mahathir publicly maintained that the losses were only on paper to a public to which DAP’s Lim Kit Siang strenuously raised the alarm that a numerically feeble opposition could not sustain above nuisance-level.

Public right to know

This scenario has now changed with the opposition’s beefed-up numbers and pretensions to take over Putrajaya.

The half-buried financial and corruption scandals of past decades in Malaysia, scams that would have brought down most democratic governments, are now on course for disinterment by a fortified opposition and a newly sensitised public.

But Anwar’s take on the whole gamut is that the public has a right to know, but that the imperative of understanding must overcome the impulse for vengeance.

He said the country must have its own version of South Africa’s truth and reconciliation commission whose purpose was to expose the enormities of the apartheid era with a view to sedating the torments of that oppressive period.

In that Anwar said he was moved by what Nelson Mandela told him when the father of that nation invited him, wife Dr Wan Azizah Wan Ismail and children to Johannesburg to be his guests shortly after Anwar’s release from jail, after serving six years on corruption and sodomy convictions, in 2004.

Mandela was apologetic for not doing enough to free Anwar. He had seen Mahathir personally to plead in Anwar’s cause. But Mahathir was reportedly silent and unmoved.

“I told Mandela ‘Never mind, yours was a 27 years march to freedom, mine was a short six year walk’,” recalled Anwar.

In other words, life is too short to be small but scandals must see the light of an Actonian reckoning.