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KUALA LUMPUR (June 6): Former governor of Bank Negara Malaysia (BNM) Tan Sri Muhammad Ibrahim, whose resignation Prime Minister Tun Dr Mahathir Mohamad today confirmed he has accepted, said the purchase of Lot 41 land was not the first time the central bank has done such a transaction.
In an internal letter Muhammad sent to BNM's staff following his resignation, he noted that the central bank had over the years acquired several pieces of land throughout the country to enable the discharge of its mandates.
He cited the central bank's own headquarters on Jalan Dato' Onn here, which was built on three separate land acquisitions made in the 1950s and 1980s.
"The Bukit Perdana land, acquired in 2013 at a price of RM1,235 per sq ft, was also based on an independent professional valuer, upon which the ongoing construction of the Asian School of Business and the Financial Industry Training Centre are being done, are also the nearest examples," he said. The transaction was done during Tan Sri Dr Zeti Akhtar Aziz's tenure at BNM.
BNM drew much controversy in January this year when it acquired 22.5ha of land, known as Lot 41 land, from the federal government for RM2 billion, the proceeds of which was said to go to partly pay debt amounting to US$600 million owed by 1Malaysia Development Bhd (1MDB) — a wholly-owned unit of the Minister of Finance Inc — to International Petroleum Investment Co PJSC.
However, in his letter, Muhammad dismissed the perception that the purchase of the land was made to intentionally aid and abet the misappropriation of public funds pertaining to the corruption and scandal surrounding 1MDB as "totally untrue".
"BNM 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.
"Skeptical as many may be, the bank did not know nor did we have any control over the proceeds of the land purchase that would be used to settle 1MDB's obligations. It is simply unthinkable for us to be associated with such a controversial entity mired with accusations of fraud and mismanagement.
"It is not in our nature to do such things. We even took enforcement action against them earlier," he added.
Muhammad went on to defend the central bank's move to purchase the land, saying it had indicated its interest as early as September of 2016.
"We believe that it was an excellent opportunity to secure an asset on fair terms that will be central to sustain our future long-term growth. We have a vision for a financial education hub that will also host among others, a global Islamic finance university, a shariah academy and research centre, a financial services library, innovation labs, a cybersecurity operations centre and an integrated security command centre," he said.
"We ensured that everything was done in the right manner, with proper governance and accountability, including compliance with all relevant laws. Internally, we deliberated this at a number of board meetings.
"We even recommended to the government for the sale to be best done by way of a public tender which we would be glad to participate competitively in along with any other interests. We also chose to publish a press release in January 2018 to inform the public of the purchase in our effort to be transparent," he explained.
Coming out fresh from the experience of a Royal Commission of Inquiry on foreign exchange losses of 30 years past, Muhammad said the central bank was careful to make sure everything is above board.
"We knew that we need to pass the test of public scrutiny in everything we do to maintain our reputation and confidence of the public," he said.
Still, Muhammad conceded that the 1MDB scandal has cost the country dearly. "As a Malaysian myself, I am deeply angered, distressed and outraged. This is indeed a matter of significant public focus and I can understand why any association with the scandal, unintended or otherwise, is invariably met with a strong sense of public outrage," he added.
"I am prepared to relinquish my post if I no longer have the strong trust and support of the public. I cannot in good conscience continue if it affects the bank's image and reputation," said Muhammad.
"For more than 34 years, I have always strived to serve, to do my best in the interest of the country, its values and its people. The office of the Governor is a heavy responsibility with great capacity for good. It is also a privilege, as it entails working with possibly the best talents Malaysia has to offer.
"Malaysia is at a critical juncture in our history, it is important for us to stand united as an institution in rising to the occasion. The Malaysian people expect nothing less than our full dedication and commitment," he added.
