The Man Who Bankrupted Malaysia ~ Morally & Financially!

From Asia Sentinel, 5 March 2012...

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.

Crocodile tears

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 accounted 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.”

[Read the full story here.]

The Piratization of Malaysia, Inc

"Almost all the scandals involved the government directly, or senior officials and businessmen closely connected to UMNO. In some cases, impropriety - whether illegal or merely ill-advised - was officially authorized or condoned for an allegedly higher purpose. Public funds were stolen in various ways, or simply poured into a big black hole in the name of ventures that bordered on the reckless, improbable, or criminal.


The extent of the losses - and in some cases the way the money disappeared - was never fully documented. Dr Mahathir's administration generally did not hold Malaysians accountable for the financial disasters, and often laid the blame on others. By the early 1990s, cynics remarked that it had been a good decade for bad behaviour, or a bad decade for good behaviour."

[Source: MALAYSIAN MAVERICK: Mahathir Mohamad in Turbulent Times by Barry Wain]