Bank Negara’s silence on 1MDB bailout tarnishes its integrity

 

Members of the Public Accounts Committee (PAC) have grilled many people including ministers and civil servants in the course of its hearings.

Some came up with unembellished facts and figures, while there were many who feigned ignorance or told half-truths or simply could not remember events of the past.

Chief among them was a civil servant, entrusted with billions of ringgit, claiming she did not know what cash flow meant to a project!

Unfortunately for the rakyat whose money the PAC is trying to protect, its proceedings are held in private and we can only rely on statements or utterances by its chairperson or members on what had transpired.

So, when OC Phang, the former general manager of the Port Klang Authority which developed the scandal-ridden Port Klang Free Zone (PKFZ), claimed that no cash flow projections were made before embarking on the project, the exasperated faces of the members could not be described or recorded, even for posterity.

Former general manager of the Port Klang Authority OC Phang (left) charged in court over the PKFZ scandal

Despite claiming to have a Westminster system of parliamentary democracy, unlike the select committee meetings in the British parliament, hearings of our PAC are not open to public.

Hence, we have to depend on what the PAC wants to tell us and that depends on the subject, the key protagonists, and other factors which in the past, have influenced its chairperson and some of its members.

Readers may remember the furore caused by the amendments made to its findings on the 1MDB in 2015 and the resultant “cari makan” remark by its then chairperson.

Although it is supposed to be bi-partisan, the PAC’s then actions changed its façade and image, and its integrity came under a cloud.

But this week, the PAC laid bare the facts which had previously been the subject of intense speculation and discussion.

Sacred cow

The happenings in the central bank, considered the sacred cow among government institutions, was laid bare – Bank Negara purchased a plot of land from the federal government for RM2.07 billion in 2017 to pay off 1MDB's debts. The Valuation and Property Services Department had valued the land at RM1.422 billion.

Amidst the rumours and speculation at that time, Bank Negara then governor Muhammad Ibrahim retorted: “This is totally untrue. Bank Negara will never be party to any such activities that would betray the public trust in us. We abhor any semblance of corruption and abuse of power.”

Former Bank Negara governor Muhammad Ibrahim

As usual, there has been stoic silence from the bank but former prime minister Najib Abdul Razak, as usual, tried to deflect any inkling of wrongdoing by claiming the PAC findings as “DAP propaganda”.

Najib, who has been accused of dipping his hands into the 1MDB coffers can rave, rant and plead innocence on the holy book, but what about the members of the Bank Negara board at that time?

The PAC report provides the chronology of events that led to this shameful deceit.

The offer to sell was made by the Finance Ministry in August 2017 and four months later, the money was paid in full.

But what is more telling is that the board made the decision on Aug 24, 2017 – three days after receiving the Finance Ministry proposal. To agree to part with more than RM2 billion surely needed time to investigate, verify and consider the proposal.

Who will take responsibility?

The key question remains unanswered: Why did the directors agree to pay RM642 million more than the market price?

Their continued silence despite having been fingered by the PAC has challenged their integrity, some of whom are prominent names in the banking and financial industry.

Didn’t anyone have the fortitude and courage to stand up and say: “It is overpriced and we will not do the deal” or are they afraid to admit that a few phone calls prompted such a decision?

Bank Negara governor Nor Shamsiah Mohd Yunus

According to the notes of proceedings, the current Bank Negara governor Nor Shamsiah Mohd Yunus was asked if there was any pressure from the finance minister to buy the land. Her response: “I cannot answer that question because I was not there when the transaction was effected.”

So, who will take responsibility for this shameful episode which has blemished Bank Negara’s impeccable history and image? Why isn’t Bank Negara, which insists on the highest standards of governance, acting when its own system and its role as the regulator of banks is now under question?

The central bank must realise that this problem will not go away because each time the 1MDB issue comes up, the role of government agencies which propped up and filled the deep financial holes will come up.

But then again, with multiple agencies linked to the 1MDB scandal, the question to ask is: “Which government agency or statutory body remains untainted?

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R NADESWARAN has been following the 1MDB scandal since the Wall Street Journal broke the story in 2014. Comments: citizen.nades22@gmail.com. - Mkini