This article first appeared in The Edge Financial Daily on November 1, 2018 - November 7, 2018

KUALA LUMPUR: Bank Negara Malaysia (BNM), which is under the purview of finance ministry (MoF), has yet to close the chapter on the RM2.066 billion land purchase in January.

Two months after the resignation of its former governor Tan Sri Muhammad Ibrahim in early June, the central bank initiated a review by an independent party in relation to the acquisition of the tract, Lot 41, which is adjacent to its Sasana Kijang complex.

“The review is still ongoing. To facilitate the review, relevant officers of BNM have opted to take leave of absence,” said BNM in a brief statement yesterday.

The central bank announced that the review started in August. However, it did not reveal the details on the independent party that is conducting the review.

The land purchase raised eyebrows when it was first announced as some quarters believed it had overpaid MoF for the tract. The unit price of the land worked out to be RM823 per sq ft based on an area of 67.41 acres.

There were also questions on why BNM had to pay market price for government land that is meant to be developed into an educational financial hub.

Two weeks before Muhammad relinquished his post, the MoF dropped a bombshell saying that the former government led by Barisan Nasional bailed out debt-laden 1Malaysia Development Bhd (1MDB) through funds raised from BNM’s purchase of a piece of land for RM2 billion and redemption of RM1.2 billion of the RM3 billion preference share issued by Khazanah Nasional Bhd. To recap, MoF redeemed the remaining of RM1.8 billion worth of preference shares issued by Khazanah in March 2014.

Nonetheless, in an internal circular sent to BNM’s employees after his resignation, Muhammad wrote to defend that it was “totally untrue” that the land acquisition was made to intentionally aid and abet the misappropriation of public funds pertaining to the corruption and scandal surrounding 1MDB.

“Sceptical as many may be, the [central] 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,” Muhammad commented in the circular.

“It is simply unthinkable for us to be associated with such a controversial entity mired with accusations of fraud and mismanagement,” he said.

Muhammad, who has only served two years of a five-year term, also highlighted that the central bank had over the years acquired several pieces of land nationwide to enable the discharge of its mandates.

He cited the central bank’s own headquarters in 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 his predecessor Tan Sri Dr Zeti Akhtar Aziz’s tenure at BNM.