Former Accounts Manager of Bank Negara Malaysia's (BNM) Accounts Department Saleha Lajim told the Royal Commission of Inquiry (RCI) to investigate the central bank's foreign exchange (forex) losses in the 1990s that she received oral instructions from then Deputy Governor Tan Sri Dr Lin See-Yan to make changes to the bank's annual financial statement.

She said the instruction was given to her at a meeting which she attended, following which she instructed the staff at the Accounts Department to make the changes.

"I believe my superiors had discussed and thought of the best way to address the losses incurred. My superiors then (post of advisers and above) had known about the status on profit and losses from forex trading based on the weekly report given at the meeting," she said when reading her witness testimony during the RCI proceeding at the Palace of Justice here today.

Saleha, who joined BNM in 1986 as a senior accounts officer, said if the draft board paper was approved, it would be verified by the governor and submitted to the Accounts Department to make the changes.

She also said that when she took over as manager of the Accounts Department in 1993, BNM did carry out forex trading, but was not told whether the activity was merely to stabilise the ringgit or in the form of speculation.

"In the weekly meeting that was held, as far as I can remember, most of the status of the forex activities that were carried out suffered losses and it was known to the then deputy governor," she said, adding that the report on the profit and loss in the forex activities was stated in the weekly report for the meeting with the deputy governor.

However, Saleha said that in 1993, the foreign exchange activity was not stated in the financial statement, instead it was categorised as deferred expenditure.

"Up to the financial statement for 1993, I am not able to remember the total losses incurred by BNM, but the amount was quite big," she said.

Meanwhile, former Assistant Auditor- General P. Kanason, 78, said, he was told by the then Head of the Advisory Services, at the Attorney General's Chambers, Tan Sri Ainum Mohamed Saaid that BNM forex trading was not in order or not in compliance with the requirements of the Central Bank Malaysia Act 1958.

Kanason said the auditors sought the advice because of their concern over a day's forex transaction amounting to over RM50 million, which was brought to the meeting by the auditor in charge of the Audit section of BNM.

He said a meeting was held and Section 31 of the Central Bank of Malaysia Act 1958 and its provisions, was discussed.

"We asked for legal advice whether the trading in forex by BNM was in compliance with the law and the advice was given verbally across the table by Ainum.

"Days passed without the expected written advice, and I was told by her and to the best of my memory she said 'orang atasan cakap jangan campur tangan', (the people higher up say to not interfere) and i was promised a reply, and the written advice from the Attorney-General's Office was that the issue should be resolved between the auditor general and the Governor of Bank Negara," he said in his witness statement today.

However, Kanason said that he did not ask Ainum who was the "orang atasan' (the people higher up) she was referring to and neither did she mention who they were.

The public proceeding chaired by Tan Sri Mohd Sidek Hassan will resume on Aug 30.

Mohd Sidek, who is also Petronas chairman, is assisted by High Court judge Datuk Kamaludin Md Said and Bursa Malaysia Berhad chief executive officer Datuk Seri Tajuddin Atan, Special Task Force to Facilitate Business (Pemudah) co-chairman Tan Sri Saw Choo Boon and Malaysian Institute of Accountants member, K. Puspanathan.

-- BERNAMA