Zeti Akhtar Abdul Aziz, who retired last year after helming BNM since 2000, said supervision of the central bank’s board of directors had been significantly enhanced.
She said there was now audit, risk management and governance committees to oversee the BNM’s operations.
“The risk management committee will look into what are the risks entered into by the management of the bank,” she said when questioned by conducting officer Muhammad Saifuddin Hashim Musaimi.
Zeti said there was a significant difference with the setting up of the committees as the panel members can question the board of directors.
In 2007, Zeti had ordered her subordinates to prepare a report on the accounting treatment for reserve management between 1988 and 1994.
Zeti said the report revealed BNM suffered losses amounting to RM32 billion after taking into account a profit of RM2.473 billion made in 1990.
She told the tribunal members, led by Mohd Sidek Hassan, that the report was also prepared in view of a new legislation that was being drafted to replace the Central Bank of Malaysia Ordinance (CBO) 1958.
Zeti, who was in BNM’s London office when the financial scandal took place, said she only came to know of the losses through a senior officer in Kuala Lumpur.
“That officer informed me BNM suffered significant losses from active reserve management,” she said.
Another witness, Ainum Mohd Saaid, who was then head of advisory services in the Attorney-General’s Chambers (AGC), said as legal adviser to government agencies, it could not provide an opinion due to lack of expertise.
“We are not obligated to provide answers or direction to the legal issues raise by the auditor-general,” she said.
In this case, she said the issues raised by the auditor-general needed specialist expert knowledge on finance which “we don’t have and neither is the AGC authorised to decide on this financial matter”.
Last week, retired senior auditor P Kanason told the tribunal that the audit department had written a letter to the AGC in early 1990 to inquire if BNM could indulge in forex speculation under the CBO.
The RCI’s scope of inquiry is to:
- Determine the authenticity of the allegation on the foreign exchange losses suffered by BNM in the 1990s and its implications on the national economy;
- Determine whether BNM’s involvement in the foreign exchange activities, which caused the losses, contradicted with the CBO 1958 or any relevant laws;
- Determine whether there were elements of hidden facts and information relating to foreign exchange losses suffered by BNM and misleading statements given to the cabinet, Parliament and the public;
- Recommend suitable actions to be taken against those found to be directly and/or indirectly involved in causing the losses and hiding the facts and information on the losses, and;
- Recommend appropriate measures to ensure the incident will not recur.