KUALA LUMPUR, Jan 24 — The US Central Intelligence Agency (CIA) has claimed the Mahathir administration was involved in the Bumiputera Malaysia Finance Limited (BMF) scandal that the country cost billions in the 1980s.

The conclusion was contained in a report that was part of a trove of 13 million pages from 800,000 of the agency’s files that were declassified and released online last week

In the report’s summary, it said that Tun Dr Mahathir Mohamad’s position as prime minister then was at risk due to the graft scandal, as the Malaysian government-owned Bank Bumiputera (Bank Bumi) reputation was marred by the "questionable” operations of the BMF, its wholly-owned Hong Kong subsidiary.

"Circumstantial evidence suggests that the scandal extends into the Mahathir administration. As a government-owned bank, Bank Bumi is closely monitored by both the Finance Ministry and Central Bank and no important decisions are made without their agreement of knowledge,” the nine-page report titled "The Bank Bumiputera Scandal: More Trouble Ahead for Malaysia’s Mahathir?”

"It is unlikely that the government was unaware of Bank Bumi’s increase on lending limits for its overseas branches to allow more funds to be channelled to Hong Kong,” the CIA report added.

Bank Bumi and its offshore subsidiary BMF issued billions in bad loans to numerous Hong Kong property speculators, including the Carrian Investment Limited (Carrian Group) between 1979 and 1983.

The scandal cost nearly US$1 billion (RM3.57 billion) in two botched loan deal. It also involved the brutal murder of a young Malaysian Bank Bumi auditor.

The scandal affected Dr Mahathir’s leadership within Umno and Barisan Nasional (BN) following the now-defunct Carrian Group’s former chief executive George Tan’s move to declare bankruptcy.

The CIA said that BMF, unlike other banks in Hong Kong, had continued to extend credit to real estate despite concerns of a weakening property market.

The report also said that despite a probe into the graft scandal, government’s response to the losses incurred was "surprisingly restrained”.

"Equally damaging to to the administration has been the perception that the government has only half-heartedly pursued the issue,” it stated.

The CIA said although there had been no direct connections found between Dr Mahathir and the banking scandal, his administration was tainted by the "hint of association”.

"The secrecy of the government’s investigation — defended as necessary under Malaysia’s Banking Secrecy Laws — and a year’s delay after the problems surfaced in effecting any management changes at BMF have made the government suspect.

"Many businessmen and bankers believe that the government is using the six accused BMF officials as scapegoats in an effort to avoid implicating senior government officials,” the report added.

The former PM has repeatedly denied any involvement in scandal, saying just last year that the money lost in the 1980s  ”belonged to the bank” and not the country, and absolved himself of any blame.

"I did not steal any money. No money went missing, what went missing was money belonging to the bank.

"I am not a bank manager, nor am I a bank adviser. So many banks lost money during that time. Why should I be blamed for them?” he was quoted as saying back in May 2016.

The BMF and other financial scandals from his administration have tempered the credibility of Dr Mahathir’s current attack against Putrajaya over alleged mismanagement of funds.