He said that Bank Negara usually followed the Government’s policy and the move to relax the deadline for the merger exercise was decided by both him and the First Finance Minister, Tun Daim Zainuddin.
He said he was unaware of the reason for Bank Negara’s "silence", telling reporters: "Perhaps they have nothing to announce, so they are silent. I don’t think you should read too much into this".
I agree with Mahathir that there could be no conflict between the Government and the Bank Negara, as the central bank is one of the important institutions in the country which has lost its independence and professionalism and if the Bank Negara Governor, Tan Sri Ali Abul Hassan should ever entertain the thought of crossing the path of the Prime Minister, his only option is one of ignominious exit from his present post.
In fact, Ali’s appointment as Bank Negara Governor came as a total surprise to the banking and business circles as he had no banking background whatsoever, as compared to his predecessors. There is no doubt that his important credential for being given this unusual appointment as Bank Negara Govenor is his total and absolute dependence to carry out the directives given out to him by his political masters.
The question is how despite such a credential of total and absolutely dependability, Ali could go so out of a limb as to damage his own credibility when he had to "eat" his own diktat issued to major shareholders of domestic commercial banks to his office on July 29 to drop the "bombshell" of forced bank mergers of the 58 financial institutions into six banking groups with five inflexible deadlines for the consummation of the shot-gun bank marriages by April 1, 2000?
When Mahathir said that Bank Negara "usually followed the Government’s policy", surely he was not suggesting that Bank Negara was not implementing government policy when Ali announced the accelerated bank merger programme!
The issue here is not whether Ali would "follow" the government policy, but whether he should consider tendering his resignation as Bank Negara Governor as he had clearly quite a mess in the accelerated bank merger proposal, gravely undermining investor confidence by highlighting the lack of good governance in Malaysia - whether government or corporate.
Mahathir said the "first decision" to scuttle the accelerated bank merger programme announced by Ali was also made by both him and Daim.
Mahathir was presumably referring to his first pronouncement in London on Oct. 2 that the mergers in the banking sector would not be too rigid, whether in terms of the number of anchor banks or the deadline for the completion of the bank merger exercise.
If this was the case, why wasn’t the Second Finance Minister, Datuk Mustapha Mohamad informed beforehand, so that he would not be placed in the embarrassing position of misleading a World Bank seminar in Washington and another seminar of British investors in Kuala Lumpur that the government was right in being "aggressive" in the forced bank merger plan and that the various deadlines would be adhered to.
May be this is why Mustapha did not turn up for the All eyes on Malaysia investors conference in Kuala Lumpur yesterday, as all eyes would be on him as to how he could explain being so out of the decision-making process - sending instead the Deputy Finance Minister, Datuk Wong See Wah to deliver his speech.
In his prepared text, Mustapha said that the plan for bank merger was not new as the government had been advocating the consolidation and mergers of the banking sectors since the banking crisis in the mid 80s.
This is not what those who attended the All eyes on Malaysia want to hear. They would expect the second Finance Minister to clarify the many questions begging for an answer and at reduce the utter confusion prevailing at present on bank mergers and the consolidation of the financial institutions.
It is very clear from Mahathir’s remark yesterday that it is not only Bank Negara forced bank merger plan for which MOUs had been signed on Sept. 29 had been scrapped, even the deadline for all bank mergers to be completed by April 1, 2000 had been scuttled.
Suddenly, Mahathir blamed foreigners for the Bank Negara’s forced merger plan, as he had said: "We are not in a hurry although unsolicited foreign advisers have urged us to do it quickly."
Who are these "unsolicited foreign advisers" who had mistakenly urged the Bank Negara to formulate its disastrous accelerated bank merger plan? Is it Salomon Smith and Barney Holdings Inc. or other Jewish financial advisers?
Instead of depending on the "unsolicited" views of foreign advisers, DAP calls for the establishment of a Malaysian Special Task Force to study and make recommendations within three months on bank mergers and consolidation of financial services sector in Malaysia.
The terms of reference of the Task Force on the future of Malaysian
financial services sector should include the following five areas:
The Barisan Alternative on 22nd August 1999 made several proposals on bank mergers and the consolidation of the financial services sector in Malaysia and it should be invited to send a representative to serve on this Special Task Force.
(15/10/99)