Malaysia to investigate foreign exchange scandal during Mahathir era

Malaysia to investigate foreign exchange scandal during Mahathir era

KUALA LUMPUR: Malaysia will form a Royal Commission of Inquiry (RCI) to investigate a multi-billion-dollar foreign exchange scandal involving the central bank over two decades after the issue first came to light, the government said on Wednesday (Jun 21).

A preliminary investigation found evidence of a possible cover-up of the case, which occurred during the tenure of then-Prime Minister Mahathir Mohamed in the 1980s and 1990s, the government said.

The taskforce that carried out that investigation was set up to find out how much Bank Negara Malaysia lost during a foray into currency trading more than 20 years ago, the office of Prime Minister Najib Razak said in a statement.

The task force "found that the extent of losses is larger than what was reported to Cabinet and Parliament", the statement said.

The investigation came just months after Dr Mahathir formed a new political party aimed at toppling Najib, his former protege, who has been linked to a multi-billion-dollar financial scandal tied to state fund 1Malaysia Development Berhad (1MDB).

The 1MDB scandal is at the centre of a clutch of civil suits filed by the US Department of Justice, which is seeking to seize assets believed to have been bought using money stolen from the state fund.


Dr Wan Azizah a leading member of Malaysia's opposition coalition with Dr Mahathir, has called for the government to set up an RCI on US claims on 1MDB as well.

Speaking to media on Thursday (Jun 22), Dr Wan Azizah said she welcomed the move to investigate Bank Negara's foray into currency trading two decades ago. 

"The establishment of the RCI is a step that should be taken in line with the principles of good governance and public accountability," Dr Wan Azizah said.

But she added that Malaysia needs to also investigate the US department of justice complaint to recover an additional US$540 million in assets allegedly bought with funds stolen from 1MDB. 

"Setting up an RCI to investigate the DOJ allegations on 1MDB is an important to step to show that the establishment of an RCI to investigate the Bank Negara Malaysia scandal is not an act of selective politics or an attempt for the government to divert attention from the latest allegations made by the DOJ about the 1MDB scandal," she added.  

Additional reporting by Sumisha Naidu. 

Source: Reuters/CNA/am