Fewer good men left after Nor Mohamed resigns

The king's name shall not be involved or used in vain. That's what constitutional monarchy, which Malaysia practices, should and must be. At no time shall the government of the day drag the king's name through the rut in order to silence his political opponents.

Yet, Prime Minister Najib Abdul Razak is playing a losing hand, breaching all rules and norms in Malaysia due to the debacle of 1MDB, Felda, Mara, Tabung Haji, and even the Land Public Transport Commission (Spad), of which a money politics-tainted politician Isa Samad was appointed as chairperson.

He proceeded to call for a royal commission of inquiry (RCI) on Bank Negara’s foreign exchange (forex) losses in the early 1990s. When former Bank Negara advisor Nor Mohamed Yakcop admitted in his written testimony which he read out at the RCI that he was solely to blame for the losses, the fire and fury of Najib rained down upon him.

Najib would have thought that Nor Mohamed would have to duck and dive or dodge accountability in the forex debacle, but he did not. Sometimes externalising your own image can bring a bigger problem. Najib learned it the hard way in this case.

True enough, Nor Mohamed will unilaterally resign from Khazanah Nasional, one of the last and most healthy government-linked companies that has still some sense of good governance, by the end of September 2017.

Invariably, he will also resign as the chairperson of the Khazanah Research Institute too, again one of the more respectable think-tanks, in a country where many government think-tanks have literally gone to the dogs. What hasn’t these days!

Tried to turn tables around

Several key points are vital in understanding the forex losses in the 1990s, which Nor Mohamed laid out. First, the Group of Seven industrial countries had reached the Plaza Accord in 1986, in which the Japanese Yen was allowed to appreciate. Even the Japanese themselves, despite being a part of the Group of Seven, couldn't say no to the policy of the US Federal Reserve Bank, the Bank of England, and the Central Bank of Germany.

When the Japanese Yen went up, Japanese small and medium industries could physically relocate to Southeast Asia to reduce their cost of exports in 1990s. But Malaysia, that had denominated its loans in cheap Japanese Yen prior to the signing of the Plaza Accord, was caught off guard.

Nor Mohamed, as the banking head of forex in Bank Negara then, tried to turn the tables immediately in the country's favour.

He allowed traders to trade in hundreds of millions of ringgit each day to replenish Bank Negara’s reserves.

The key was to defend the national interest of the country, so that the ringgit was not arbitrarily vulnerable to currency attacks, whereby where the ringgit would or could be shorted.

Nor Mohamed also affirmed that he did not expect the Bank of England to miscalculate the strength of their own British pound. As one central banker to another, the senior bankers in Bank of England had reassured him and Bank Negara that the British pound was stable despite the Maastricht Treaty that would allow a common European monetary policy.

As it turned out, the British pound was weak, and financial speculators like George Soros exploited it to the full, invariably earning the moniker as the "man who broke the Bank of England." When the Bank of England fumbled, so too did Bank Negara, which led to the forex losses.

Thirdly, the fear of financial speculators was indeed real.The worst case scenario happened in 1997-1998. If anything, it proved that he was prescient and correct. He was also enlisted by Mahathir to battle the financial speculators, as it turned out, successfully, against all odds.

The World Bank and International Monetary Fund (IMF) was deriding Malaysia at the time when Malaysia introduced currency pegging and capital control to help stem further currency speculation attacks and to bring about stability in the currency market and the local economy.

It worked even beyond Nor Mohamed’s imagination and has become a successful case study on how to stem currency speculation attacks that can create chaotic currency instability. This was done single-handedly by Nor Mohamed with the political will of former premier Dr Mahathir.

Due to Nor Mohamed’s correct bet and advice between 1997 to 1998, Malaysia has never had any currency attacks anymore until recently when Najib's alleged bad reputation and financial profligacy marked him out as an easy target.

From 2015 to 2017, the ringgit lost more than 25 percent of its value. The current retreat of the ringgit from further falling against the US dollar is being attributed to a tsunami-like retreat, the water receding before coming back on uncontrollably strong waves.

Indeed, this RCI was not about "losses" but bosses. Najib cannot admit to the fact that he has lost his credibility and reputation as a key thought leader. His New Economic Model is in shambles. His National Transformation Program has not created high-value jobs, or just jobs, or increased the salary of all.

Indeed, his Blue Ocean Strategy is resulting in a sea of red ink where 1MDB's assets had not only been frozen and seized , but if and when the US Department of Justice claims them back for Malaysians, a third of US$4.2 billion (RM17.64 billion) must be given to the US first. That is a whopping RM5.82 billion (US$1.386 billion).

It is little wonder that Nor Mohamed has had to resign, having previously served former premiers Mahathir and Abdullah Ahmad Badawi with distinction. With Najib, it would be a professional humiliation to serve under a prime minister who has not only allegedly abused the royal authority of the king, but every other institution in Malaysia, including the judiciary and the Parliament.

The rot has seeped into the board of government-linked companies too, leading Nor Mohamed to do the moral thing: resign. And before he did, one should note that he bravely absorbed all the blame for the forex losses too.

Fewer good men are left.

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RAIS HUSSIN is Parti Pribumi Bersatu Malaysia (Bersatu) supreme council member and policy and strategy bureau head.- Mkini