Parliament report on Malaysia's 1MDB blames board; calls for probe into ex-CEO

Parliament report on Malaysia's 1MDB blames board; calls for probe into ex-CEO

The bi-partisan Public Accounts Committee (PAC), which tabled the report in parliament, said in its much delayed report that it found the financing and performance of 1MDB "unsatisfactory".

KUALA LUMPUR: A Malaysian parliamentary inquiry into 1Malaysia Development Bhd (1MDB) said the board of the troubled state fund had failed to carry out its responsibilities and its former chief must be further investigated.

The bipartisan Public Accounts Committee (PAC), which tabled the much delayed report in parliament on Thursday (Apr 7), said it found the financing and performance of 1MDB "unsatisfactory".

It called for the advisory board of the fund - chaired by Prime Minister Najib Razak - to be abolished and any reference to the prime minister be changed to finance minister in the company's memorandum and articles of association.

This is one of the final reports on investigations into alleged mismanagement at 1MDB, and a financial scandal surrounding Mr Najib. Mr Najib, who founded the state investment fund 1MDB in 2009, has battled for months to fend off allegations that billions of dollars were looted from 1MDB in complex overseas financial transactions. He and 1MDB have consistently denied wrongdoing.

But the PAC said more than US$3 billion in unapproved payments were made from 1MDB funds, and alleged "restrictions and weaknesses" in 1MDB's management. The PAC said former 1MDB CEO Shahrol Azral Ibrahim Halmi has to take responsibility.

"As such, enforcement agencies are asked to investigate Shahrol Azral Ibrahim Halmi and anyone else related," according to a summary of the report. Mr Shahrol was 1MDB's CEO from 2009 to 2013.

The Prime Minister's Office lauded the PAC report as comprehensive and conclusive.


Shortly after it was released, opposition leader Tony Pua, who was part of the PAC, told a news conference the report vindicates critics of 1MDB. It "confirms gross mismanagement and wanton neglect of all principles of good governance and accountability" at the fund, he said.

"I think at the very least (Najib) should be held ministerially culpable. Anything else we don't know, as we don't have the overseas bank statements of 1MDB," said Mr Pua, an MP with the Democratic Action Party (DAP). Mr Najib was not named directly in the report.

Mr Pua lamented the failure to get crucial information on 1MDB's foreign banking transactions, which are the subject of money-laundering and fraud investigations in the United States, Switzerland, Luxembourg and Singapore. The 1MDB fund has denied those allegations.

Concern over 1MDB began after its debt rose from 5 billion ringgit in 2009 to 42 billion ringgit (US$10.77 billion) by 2014, the report said. The fund sold its land and power assets last year as part of a restructuring plan to pare down its debt pile.

The PAC began its probe into 1MDB last May. The committee's work stalled in July when PAC chairman Nur Jazlan Mohamed stepped down after being appointed deputy home minister.


Pua said "many other shocking misdeeds and transgressions" were disclosed in the report which would provide "sufficient damning evidence to indict not only the entire top management, but also the entire Board of Directors".

An interim report by the auditor-general last year found nothing suspicious after vetting the fund's accounts. Malaysia's attorney-general rejected a call by the central bank to initiate criminal proceedings against 1MDB.

The Wall Street Journal, citing documents from international probes, reported that investigators believe nearly US$1 billion moved through state agencies, banks and companies linked to 1MDB before eventually finding its way into Mr Najib's personal accounts.

The 1MDB fund has denied that any of its funds went to the prime minister. The Attorney-General cleared Mr Najib in January of any corruption or criminal offences, saying the US$681 million was a gift from a member of Saudi Arabia's royal family and that most of it was returned.

The scandal has rocked Mr Najib's government as public outrage over the alleged mismanagement and corruption grows. The scandal has fuelled a sense of crisis in a country under economic strain from slumping oil prices and a prolonged slide in its currency last year.

Swiss authorities have said as much as US$4 billion may have been stolen from 1MDB. Authorities in Switzerland, the United States, Singapore, Hong Kong and elsewhere are investigating.


Critics have alleged debt-stricken 1MDB, set up to fuel Malaysian development projects, was bled dry in a vast campaign of fraud and embezzlement stretching from the Middle East to the Caymans.

The Wall Street Journal, which has detailed many of the money movements, also last year revealed the US$681 million payment made to Najib's bank accounts in 2013. It has said in subsequent reports that he may have received more than US$1 billion.

Mr Najib has taken steps to scuttle official investigations, purge officials demanding accountability, and stifle media reporting on the scandals.

He initially denied taking the US$681 million but his government now claims he accepted a "donation" from the Saudi royal family, most of which was given back. Saudi Arabia is yet to confirm that explanation, which is widely dismissed in Malaysia as a cover story.

The Journal last week said documents show the same bank accounts of Mr Najib were used to purchase US$15 million in luxury goods and pay out millions more to political figures ahead of 2013 elections.

The newspaper also reported that some of the money used to make Hollywood hit The Wolf of Wall Street, a movie about financial corruption starring Leonardo DiCaprio, was laundered from 1MDB.

1MDB cross


"The report has identified weaknesses in 1MDB’s capital structure and management," Mr Najib said in a statement released on Thursday afternoon by the Prime Minister's Office. "We will study and act on the report’s recommendations. We must ensure that lessons are learned, and action will be taken if any evidence of wrongdoing is found."

He added: "The PAC’s report shows that 42 billion ringgit (US$10.8 billion) is not missing from 1MDB, as had been alleged by (former Prime Minister) Mahathir.

"It is now clear that Mr Mahathir’s allegations against 1MDB have been false. He was
motivated by personal interest, not the national interest, and a desire to unseat the

Former Prime Minster Mahathir Mohamad has been a vocal critic of Nr Najib, calling for the latter to step down over his role in the 1MDB saga.


On Thursday afternoon, the board of 1MDB offered its resignation to the Ministry of Finance. "This has been a difficult decision to take but we believe is the right thing to do, given the circumstances, in order to facilitate any follow-up investigations as recommended by the PAC," it said in a statement.

Source: CNA/Agencies/rw