As expected, the Royal Commission of Inquiry (RCI) on Bank Negara's foreign exchange losses kicked off this morning amid objections from lawyers representing Pakatan Harapan chairperson Dr Mahathir Mohamad and the coalition's de facto leader Anwar Ibrahim.

They questioned if the commission's composition was lawful and whether it breached natural justice.

Lawyer Haniff Khatri Abdulla, who is representing Mahathir, and Anwar's counsel R Sivarasa, argued that the RCI's membership should not be similar in composition to the task force which had earlier recommended the setting up of the RCI.

Both lawyers also asked permission to actively participate in the proceedings.

However, Petronas chairperson Mohd Sidek Hassan, who heads the six-member commission, pointed out that the appointment of the members had been consented to by the Yang di-Pertuan Agong.

"Therefore we have made the position that we shall continue (with the inquiry),” he said.

“On the issue of representation, you (Mahathir and Anwar) will be represented but issues you can raise are subject to the relevancy of issues as per terms of reference decided earlier," he added.

The hearing will reconvene on Aug 21. Other dates allocated for the hearing are Aug 24, 29, 30, Sept 6, 7, 18, 19, 20 and 21.

Earlier, Haniff had asked that they are allowed a written application on the above-mentioned issues.

The lawyer also pointed out that there was precedence of active participation in previous RCIs with interested parties concerned.

Sivarasa, on the other hand, said there was "nothing personal" with regard to their objection to the RCI's composition.

"The concern is because the chairperson (Mohd Sidek) and [special task force to facilitate business (Pemudah) co-chairperson] Saw (Choo Boon) sat on the task force," he pointed out.

Sivarasa: Real likelihood of bias

However, the RCI's conducting officer Suhaimi Ibrahim argued that there were no rules against the composition of this commission.

"The law is silent on whether a person involved in the task force can also be in the panel. Which part of natural justice does this breach?" he asked.

Suhaimi further argued that the composition of the commission was not similar to a typical court.

"Commissioners are sitting here as a body that is required under Section 8 of the Commission of Enquiry Act (Act 119) to enquire. It's a fact finding mission.

"It's important to note that in court cases, judges make a decision in a dispute between two parties. There are no two parties here.

"Where is the issue of natural justice? We are here to assist," he said, adding that he saw no reason for the hearing not to proceed.

Citing the previous 11 RCIs formed in the country, Haniff pointed out that no task force was set up by the cabinet to determine whether a RCI was needed or otherwise.

"What were the issues which prompted the task force to recommend the setting up of a panel?

"The role of members of the task force should not intertwine with the members of the panel. Your views taken earlier could predetermine the outcome of RCI," he argued.

Sivarasa, on the other hand, reiterated that this was not about "personal bias".

"This concerns the fact that the chairperson and one member who were part of the task force, made recommendations. They are now going to make recommendations on key issues.

"For an observer, the fact that two members were part of the task force, seems like there would be a real likelihood of bias," he added.

Following the RCI's decision to proceed with the hearing, both Haniff and Sivarasa said they will await further instructions from their clients before proceeding with the next course of action.

Apart from Mohd Sidek and Saw, others on the panel are High Court judge Kamaludin Md Said, Bursa Malaysia Bhd chief executive officer Tajuddin Atan and Malaysian Institute of Accountants member K Pushpanathan.

Finance Ministry Strategic Investment Division director Yusof Ismail serves as the commission’s secretary.

The commissioners are tasked to carry out the enquiry with the following terms of reference:

- To determine the validity of the claim that losses had been incurred by Bank Negara due to foreign exchange dealings in the 1990s and its impact on the economy of the country;

- To determine whether Bank Negara's foreign exchange dealings which incurred losses had contravened the provisions of the Central Bank Ordinance 1958 or any other relevant laws;

- To determine whether there were elements of deliberate concealment of facts and information and misleading statement made to the Cabinet, Parliament and public regarding the losses incurred by Bank Negara due to the foreign exchange dealings;

- To recommend appropriate action to be taken against parties involved directly and/or indirectly if they are found to have caused the losses incurred by Bank Negara and concealed the fact and information regarding the said losses; and

- To recommend a course of action to ensure similar events will not be repeated.

The Prime Minister’s Office in a statement on July 18 said the RCI would complete its probe within three months from the date of its setting up on July 15, 2017 and thereafter submit its report to the Agong.

The forex scandal occurred during the 1990s when Mahathir was prime minister, prompting certain quarters to accuse Prime Minister Najib Abdul Razak of attempting to exact political revenge against his nemesis and deflecting attention from the 1MDB scandal.