Anwar Ibrahim was DPM and Minister of Finance from 1993 t0 1998.The question is why did Anwar continue to serve Mahathir even after the Bank Negara debacle. Why stay and serve a bad leader if you are so morally upright?
As finance minister wasn't it his job to advise Mahathir and if he refused to listen than Anwar should have, as a matter of principle, resign his position as finance minister.Now, he disclaimed everything, making Mahathir the sole badass.
Some are born great, some achieve greatness and some have greatness trust upon them.....(Shakespeare)
Unfortunately, Anwar has none of it, and he should know "God's mill grind slow but sure". If you are not yet fated to be prime minister, you'll never be, no matter how hard you try.
This excessive Mahathir's bashing may have negative effects on Pakatan.Mahathir is still a very popular man in spite of all the mud slinging against him.
Mahathir's Disastrous Financial Speculation
A murky and embarrassing case is closed, hiding top government officials’ involvement
Sometime over the next few days, a court in Kuala Lumpur will put the finishing touches to an agreement that allows Tajudin Ramli, the former head of Malaysian Airline System, not only to walk away from charges that he had allegedly looted the airline of tens of millions of US dollars but with an RM580 million (US$293.2 million) out-of-court settlement from the government.It appears to be a settlement that the government would rather keep to itself. At the heart of the agreement with Tajudin is a convoluted story that began as long ago as the 1980s when Malaysia’s central bank, Bank Negara Malaysia, at the urging of then-Prime Minister Mahathir Mohamad, began speculating aggressively in global foreign exchange markets, at one time running up exposure rumored to be in the region of RM270 billion -- three times the country’s gross domestic product and more than five times its foreign reserves at the time.
Eventually, playing with the big boys came home to roost. In 1992 and 1993, Mahathir became convinced he could make billions of ringgit by taking advantage of a British recession, rising unemployment and a decision by the British government to float the pound sterling free of the European Exchange Rate Mechanism.
Mahathir ordered Bank Negara to buy vast amounts of pounds sterling on the theory that the British currency would appreciate once it floated. However, in what has been described as the greatest currency trade ever made, the financier and currency wizard George Soros’s Quantum hedge fund established short positions borrowing in pounds and investing in Deutschemark-denominated assets as well as using options and futures positions.
In all, Soros’s positions alone ac counted for a gargantuan US$10 billion. Many other investors, sensing Quantum was in for the kill, soon followed, putting strenuous downward pressure on the pound. The collapse was inevitable. Quantum walked away with US$1 billion in a single day, earning Mahathir’s eternal enmity and earning Soros the title “the man who broke the Bank of England.”
Mahathir and Bank Negara, on the other hand, walked away with a US$4 billion loss, followed by another US$2.2 billion loss in 1993, the total equivalent of RM15.5 billion. Although the disastrous trades destroyed the entire capital base of Bank Negara, after first denying it had taken place, the then-Finance Minister Anwar Ibrahim repeatedly reassured parliament that the losses were only “paper losses” and, now that he is Opposition Leader and head of the Pakatan Rakyat opposition coalition, has managed to skate free of the controversy.
Eventually, the Finance Ministry had to recapitalize the central bank, almost unheard of for any government anywhere. It is reliably estimated that Bank Negara lost as much as US$30 billion in this and other disastrous currency trades, costing the head of the central bank and his currency trader deputy their jobs.
It was at one with Mahathir’s unfortunate penchant for believing he could beat the global financial system in other ways. In the early 1980s, at his behest the Malaysian government attempted to corner the tin market through Maminco Sdn Bhd, a dummy company set up to buy tin futures and physical tin to push up prices on the London Tin Market. Malaysia at that point was producing 31 percent of the world’s tin.
However, the rising prices as a result of Malaysia’s action caused miners to increase production in the other 69 percent of the tin world. At the same time the US government released its tin stockpile. The price collapsed, costing Malaysia RM1.6 billon with the subsequent low prices wrecking Malaysia’s tin industry. Mahathir has repeatedly railed against western governments for rigging the rules against him.
The attempt to corner the tin market and the subsequent loss established an interesting precedent in terms of what would take place with the speculation in the pound sterling. Rather than acknowledge the losses in the tin speculation, the government set up another dummy company called Makuwasa Sdn Bhd, creating new shares supposedly reserved for ethnic Malays which were allocated to the Employee Provident Fund, the country’s retirement fund for private and public workers. The plan was to sell these cheaply acquired shares at market price for a profit to cover Maminco’s losses. Finally, in 1986, Mahathir was forced to admit that Makuwasa was created to recoup the government’s losses from the Maminco debacle and to repay loans to Bank Bumiputra.
Fast forward to today and the out-of-court settlement between several government-linked companies and Tajudin Ramli, in which the government quietly cancelled Tajudin’s debt of RM840 million. It is believed to be the biggest such sum awarded in Malaysian history. Read more.
