Kadir: Zeti’s performance under public scrutiny

Bank Negara Governor not managing contagion effects of 1MDB on economy, ringgit.

KUALA LUMPUR: Bank Negara Governor Zeti Akhtar Aziz’s reputation, according to a veteran newsman, was at stake over her extended silence on the 1MDB issue and her “penchant for hiding behind banking secrecy and confidentiality”.

“She’s in danger of losing public confidence and respect.”

Former New Straits Times Group Editor in Chief Kadir Jasin attributes Zeti’s dilemma to Prime Minister Najib Abdul Razak dragging her into the 1MDB controversy when he openly said that the company could not bring back cash from the Cayman Islands because of Bank Negara’s restrictions and had to deposit the monies in Singapore.

“It does not help to raise our confidence when Bank Negara appears to be playing a game of catch-up.”

He pointed out that Zeti confirmed on May 26 that Bank Negara had received a report from its Singapore counterpart, the Monetary Authority of Singapore (MAS), on a complaint lodged by BSI Bank about 1MDB’s account with them. BSI is the Swiss private bank where 1MDB deposited its proceeds from the Cayman Islands.

Only after more than a week of receiving the MAS Report, he added, did Bank Negara announce on June 3 that it has commenced a formal inquiry to examine whether 1MDB had contravened any financial rules and regulations.

“Finance Minister II Ahmad Husni Hanadzlah has since announced that the USD1.103 billion from the Cayman Islands was in the form of ‘units’ at BSI and not cash as originally stated or ‘asset certificates’ as subsequently clarified.”

There are other issues on the horizon as well, said Kadir, which doesn’t inspire confidence in Zeti. “The confidence in the economy was waning, despite repeated assurances that our economic fundamentals are strong. The contagion effects are becoming more apparent.”

The ringgit, he lamented, had already fallen to a nine-year low at RM3.772 against the US dollar, and analysts have blamed this on the sustained outflow of foreign funds from the equity and debt markets.

He noted that Zeti trotted out the “excuse” that the fall of the ringgit was temporary and blamed the “external environment”. “She said that emerging market currencies including the ringgit continue to be affected by external uncertainties, and as a result the ringgit was trading at levels that were not reflective of the fundamentals of the Malaysian economy.”

It may all sound clever, he conceded, but in reality the effect of the falling ringgit and the loss of confidence in the Najib administration are already being felt by the rakyat. “Strong economic fundamentals means nothing to them if they are not reflected in a stronger ringgit, net capital inflow, cheaper goods and services, rising income and ample jobs.”

If the US decides to raise interest rates, he ventured, the ringgit could fall as low as RM3.90 or even RM4 to a US dollar.