Forex probe puts spotlight on Mahathir era scandals

After weathering prolonged attacks over the scandal at state-owned 1Malaysia Development Berhad (1MDB), Prime Minister Najib Razak is now turning the tables on his chief political nemesis, former premier Mahathir Mohamad.
Najib’s government declared last week that it would set up a task force to probe allegations of a cover-up surrounding billions of ringgit in foreign-exchange trading losses suffered by Malaysia’s central bank during the 1990s.
Yesterday, Najib’s ruling party Umno said it would embark on a nationwide roadshow with its coalition partners on Saturday to explain the foreign exchange loses probe and why a similar taskforce was not set up to look into the 1MDB debacle.
Political analysts say this move is designed to turn the spotlight on a clutch of Mahathir-era financial scandals and divert attention from Najib and his alleged links to misappropriated funds at 1MDB.
The taskforce will investigate the extent of the forex losses when Tun Dr Mahathir was prime minister – alleged to be a whopping RM44 billion (Bt343.5 billion) and not RM9 billion as was previously disclosed by the central bank – and if the scandal was covered up, say politicians associated with Najib’s camp.
In comparison, 1MDB’s debt burden currently stands at around RM35 billion. Najib has been linked to the alleged misappropriation of US$3.5 billion (Bt122.6 billion) from 1MDB, although he denies any wrongdoing and has not been charged with a criminal offence.
Political analysts are divided over the government’s latest strategy in dealing with the political assault from Dr Mahathir’s camp.
“Diversion is one of the goals, and the other is to dilute the 1MDB issue into something about executive inaction on a financial scandal,” said Tawfik Ismail, a former senior Umno official.
Other financial scandals that occurred under Dr Mahathir’s watch and could be dug up again, Najib’s camp say, include the multibillion-ringgit bailout of national carrier Malaysia Airlines (MAS).
Some observers note that revisiting past debacles could boomerang on the Najib administration.
“Several people implicated in the Bank Negara forex scandal and MAS are still in government. 
It could be a high price to pay for the very limited returns over diverting focus from 1MDB,” said the chief executive of a government-owned entity.
He was referring to the likes of former central bank deputy governor Nor Mohamed Yakcop, who was the chief architect of the doomed forex trading campaign in the 1990s and later played a key role in the restructuring at MAS.
Tan Sri Nor Mohamed is currently deputy chairman of Malaysia’s sovereign wealth fund Khazanah Nasional, which owns MAS.