KUALA LUMPUR, June 21 — A Royal Commission of Inquiry (RCI) will be convened to investigate the billions of foreign exchange losses allegedly incurred by Bank Negara Malaysia nearly three decades ago.

The Prime Minister's Office issued a statement today saying the Cabinet agreed on the formation of the RCI after the special taskforce on the same matter determined there was sufficient evidence to merit further investigation.

"The formation of the RCI is also to safeguard public interest by establishing the extent to which the foreign exchange losses had affected national reserves,” the statement said.

"This is because the preliminary findings of the special taskforce found that the actual losses were greater than what was previously presented to former ministers and Parliament.”

The special taskforce also discovered that facts of the case had been obfuscated through the presentation of misleading information to ministers and lawmakers previously, it added.

Putrajaya formed the task force in February after former BNM assistant governor Datuk Abdul Murad Khalid claimed in an interview that the central bank racked up US$10 billion (RM42.8 billion) in foreign exchange losses during the early 1990s.

The scandal was among the biggest from Tun Dr Mahathir Mohamad's time as prime minister.

The PMO today also thanked former Chief Secretary to the Government Tan Sri Mohd Sidek Hassan for heading the task force that included senior officials from the Finance Ministry, Malaysian Anti-Corruption Commission, the police’s Commercial Crimes Department, the Securities Commission, and others.