1MDB parliamentary probe blames ex-CEO; board of directors resign

File photo of chief executive officer of 1Malaysia Development Bhd (1MDB) Shahrol Halmi.
File photo of chief executive officer of 1Malaysia Development Bhd (1MDB) Shahrol Halmi. PHOTO: BLOOMBERG

KUALA LUMPUR - The Malaysian parliament's bipartisan Public Accounts Committee (PAC) has blamed the founding chief executive of 1Malaysia Development Berhad (1MDB) for the state investor's financial troubles which have rocked market confidence in the country and fuelled calls for Prime Minister Najib Razak's resignation.

The panel in charge of reviewing government financial practices, however, did not finger a single politician, or anyone outside the company, in its 100-plus-page report tabled to federal lawmakers on Thursday (April 7), after repeated delays since it began its inquiry last May.

Several hours after the tabling of the report,  1MDB said its board of directors had collectively offered their resignations to the finance ministry.

“This has been a difficult decision to take but we believe it is the right thing to do, given the circumstances, in order to facilitate any follow-up investigations as recommended by the PAC,” 1MDB said in a statement. 

 

The PAC said in its findings that "former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi must take responsibility for these weaknesses and problems. Enforcement agencies are requested to investigate Datuk Shahrol Azral Ibrahim Halmi and anyone else related," the report said in its conclusion.

Mr Shahrol had been interviewed twice by PAC and remains a member of the 1MDB board, as well as director of oil, gas, energy and financial services in the government's Performance Management and Delivery Unit (Pemandu). 

The panel, which found the financing and performance of 1MDB “unsatisfactory”, also called for the advisory board headed by Mr Najib  to be abolished and any reference to the prime minister to be changed to finance minister in the company’s memorandum and articles of association.

In response to the report, opposition MP Tony Pua - who has been a staunch critic of the finance ministry-owned firm - called for the police to immediately investigate Mr Shahrol and his associates.

 
 
 

"I will go further to call not only for Datuk Shahrol Halmi be sacked with immediate effect, but the entire Board of Directors who have failed to protect the interest of the government and the tax payers to be removed as well," Mr Pua said.

Another opposition lawmaker Wong Chen claimed the report showed that 1MDB's management - which was led by Mr Shahrol until 2013 - refused to carry out board directives 19 times, and misled the board six times, and the auditors thrice.

But Mr Najib said in a statement that the PAC report disproved allegations that money has gone missing from the company. 

"It is now clear that Tun Mahathir’s allegations against 1MDB have been false. He was motivated by personal interest, not the national interest, and a desire to unseat the government,"  he said, referring to former premier Mahathir Mohamad who has led a campaign to topple him.

Mr Najib acknowledged the weaknesses found in 1MDB's management and said the government "will study and act on the report’s recommendations". 

Defence Minister Hishammuddin Hussein, who is Mr Najib's cousin, said the PAC findings show the government has "acted fairly to resolve issues in 1MDB" and would allow the public to digest the report before deciding on the panel's recommendations.

"As long as we are transparent with the public, why should we go around pointing fingers at anyone? The investigation is happening so we can get to the bottom of it. That I think is the fairest way to go forward," the Umno vice-president told reporters. 

Police chief Khalid Abu Bakar also said the police force would study the findings "in depth to ascertain any elements that require further investigation and action".

The PAC had based its probe on the Auditor-General's review of 1MDB's books, which found its debt to have soared to over RM50 billion (S$17.2 billion) by January this year. However, the audit report itself remains classified. 

Mr Najib had promised to punish any wrongdoing found when he ordered the audit and PAC probe in March last year.

However, after reports in July 2015 that US$700 million (S$949 million) was deposited in his personal accounts via companies linked to 1MDB, the prime minister insisted he had never used public funds for personal gain, and that the bulk of the money were donations from the Saudi royal family.

The Attorney-General cleared Mr Najib in January of any corruption or criminal offences, also saying that the money transferred into Mr Najib’s personal bank account was a gift from a member of Saudi Arabia’s royal family and most of it was returned.

The PAC began its probe into 1MDB in May last year but faced several delays. Work of the committee stalled in July when chairman Nur Jazlan Mohamed stepped down from his post after being appointed as deputy home minister in Mr Najib’s government.

New PAC chief Hasan Arifin said in a statement on Thursday that the bipartisan panel completed the report "collectively", and found that "1MDB's capital structure was overly dependent on borrowings".

"PAC is satisfied with... 1MDB's rationalisation plan and steps taken by the government in the short term for the company's recovery," he added.