KUALA LUMPUR • The Public Accounts Committee (PAC) has called for the advisory board of 1Malaysia Development Berhad (1MDB) to be abolished for better management of the state investment arm.
In a 106-page report tabled in Parliament yesterday, the committee said the board should be abolished together with Clause 117 in the company's memorandum and articles of association, which states that the Prime Minister must give his written approval for any deals, including the firm's investment or any bid for restructuring.
Prime Minister Najib Razak, who is also Finance Minister, is chairman of the 1MDB advisory board.
"All references to the Prime Minister should be changed to the Finance Minister to streamline with the provisions of the Minister of Finance Incorporated," said the report.
The report found that the 1MDB board of directors had failed in its responsibilities. "They were found not to be proactive in scrutinising the management and keeping track of the cash flow activities of the company. The board of directors should closely monitor the company's activities by questioning the prices of asset purchases and cost of debts," it said.
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Key findings
- •As of January this year, 1MDB's debt stood at RM50 billion (S$17.2 billion), compared with assets of RM53 billion. Within its 2014/2015 fiscal year, the company spent RM3.3 billion on payment of interest incurred upon its debt.
•The Public Accounts Committee (PAC) called for 1Malaysia Development Berhad's advisory board to be abolished for better management of the state investment arm.
•The PAC found that former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi should be held responsible for the "weaknesses and constraints" faced by the firm. The panel urged the authorities to investigate Datuk Shahrol and others in the management.
• The management of 1MDB acted without the approval of the board of directors in the joint venture with PetroSaudi International. The RM3.895 billion joint venture was done without due diligence.
THE STAR/ASIA NEWS NETWORK
The PAC also revealed that 1MDB's debt stood at RM50 billion (S$17.2 billion) as of January. It said the debts were incurred due to - among other things - 1MDB's over-reliance on a refinancing exercise to pay off matured debts.
"In January 2016, their debt stood at RM50 billion, compared to their assets valued at RM53 billion, where 1MDB has spent RM3.3 billion to pay off the loan interests between April 1, 2013 and March 31, 2015," said the report.
"It is clear that the debt level and repayment of interest are too high compared to the cash flow of the company."
THE STAR/ASIA NEWS NETWORK
