Malaysia’s formidable central bank governor Zeti Akhtar Aziz endured quite a month in October. It began with her contemplating the fresh lows that her beloved ringgit had plumbed on September 30, having lost 40% of its value in a year to become Asia’s worst-performing currency, and taking much of her carefully-tended reserves nest egg with it.
While in Lima networking at the annual IMF-World Bank meetings, she stood up to Malaysia’s prime minister Najib Razak to defend the independence she had so painstakingly won for Bank Negara Malaysia (BNM), the country’s central bank. On October 9, BNM said it would pursue criminal prosecution of Malaysia’s controversial sovereign fund 1Malaysia Development Berhad (1MDB) for breaching Malaysia’s exchange controls.
BNM said its investigation had found that 1MDB, chaired by Najib as finance minister, had provided inaccurate information to the BNM when it had applied for permission to send $1.83 billion abroad.
A day earlier, Najib’s new attorney general Mohamed Apandi Ali said he had seen the BNM findings into 1MDB, and concluded that the fund had done nothing wrong.
Zeti begged to differ, and promptly revoked the 1MDB permissions to send funds abroad. She also demanded the immediate return of state money that 1MDB had already despatched to foreign accounts unknown.
Then on October 13, Abdul Rahman Dahlan, the urban wellbeing, housing and local government minister, attacked Zeti for making ‘reckless accusations’ against 1MDB. Three days later, Malay Jaringan Melayu Malaysia (JMM), a pro-Najib nationalist group, demanded the police investigate Zeti for ‘undermining’ Najib’s government with her challenge to Apandi’s office. The Malay group called Zeti’s decision to revoke the 1MDB permissions ‘fishy’.
“The decision made by the Bank Negara Malaysia governor is as though there is a hidden agenda and we believe that there are other mistakes involving BNM that the public does not know about,” said JMM’s secretary general Hamdan Mohd Salleh.
Then followed another week of nasty claims about her and her family, an acceleration of a vicious year-long online and whispering ‘hidden-hands’ campaign accusing her of corruption and incompetence. In an interview with Euromoney in September, Zeti dismissed the campaign against her as laughable but she admitted that it was hurtful.
On October 15, as if to underline who makes the rules in Malaysia’s finances, an undaunted Zeti issued a clarification. “The Bank would take enforcement actions, also known as administrative actions, on parties that are found to have transgressed or have not complied with the rules and regulations issued under these laws,” the BNM said. “These actions may be taken concurrently with, and are separate and distinct from, criminal proceedings that are under the sole purview of the attorney general.”
After that, there was little surprise when on October 19, as Zeti returned to work in Kuala Lumpur after her Lima trip, fresh rumours swept Malaysia that she had resigned and/or had been placed under house arrest.
The punchdrunk ringgit duly took another hit, as did Malaysian stocks, before bargain-hunters stepped just before the close of trading.
Such rumours are increasingly and, as Zeti sees it, boringly commonplace in a Malaysia rendered sclerotic by the corruption scandal that has engulfed 1MDB and Najib, who is still to account for some $700 million unearthed in his private bank accounts.
Zeti has just over six months to run in her official term, and intends to see it out, she has told Euromoney. By the time she goes on April 30 next year, she will have been BNM governor for 16 years.