Former CEO gets blame for $17b debt
SHAHROL Azral Ibrahim Halmi, former chief executive of state investment fund 1Malaysia Development Berhad (1MDB), was blamed by a parliamentary standing committee for its financial mismanagement and hence its current total debt of RM50 billion (S$17.2 billion).
The cross-party Public Accounts Committee (PAC) also recommended in a 106-page report tabled yesterday at Parliament that 1MDB's advisory board, chaired by Prime Minister Najib Razak, be abolished.
According to the 14-member panel that convened in May, the 1MDB board of directors has failed to protect the interests of the company and its shareholders by not scrutinising the fund management's activities and cash flow, the Sun Daily reported.
It recommended abolishing a clause in 1MDB's Memorandum and Articles of Association, which states that the PM's written approval is needed for any deals.
The move would be followed by revision of all references to Mr Najib in official communications relating to 1MDB as finance minister, said the PAC, suggesting these changes would restore the authority of approval to the board.
Mr Najib also holds the portfolio of finance minister.
The PAC said reform was needed as the 1MDB management on several occasions failed to follow board decisions or even begun business transactions before getting approvals.
One of 1MDB's many questionable deals that the panel named was the movement of US$3 billion (S$4 billion) to a company called Aabar Investments PJS.
A Wall Street Journal (WSJ) report last year said Aabar was likely a shell company created to resemble an Abu Dhabi wealth fund with a similar name.
The panel found the fund's capital allocation structure and financial performance "unsatisfactory" and slammed it for depending on debt for capital.
The debt, which started at RM5 billion in 2009, had surged to RM50 billion by January this year.
The findings led the panel to conclude that Mr Shahrol was chiefly to blame for all the troubles in 1MDB.
"Therefore, (the) enforcement agency is urged to investigate Shahrol Azral and the related management," it said.
Mr Shahrol, who helmed 1MDB as CEO from its inception in 2009 till 2013, remains on the fund's board, reported CNBC television.
Despite widespread allegations linking Mr Najib to the problems in 1MDB, the PAC report did not allude to any wrongdoing by him.
PAC member Tony Pua, from the opposition Democratic Action Party, told the media this was because members of 1MDB whom the panel interviewed made no mention of the PM.
But Mr Pua said it was clear that Mr Najib was aware of all the 1MDB deals because he signed his approvals in the capacity of prime minister, reported the Malay Mail.
"At the very least, he should be held ministerially accountable," added Mr Pua.
A recent WSJ report alleged that Mr Najib had received more than US$1 billion in his private accounts from various entities, including some linked to 1MDB.