By P Prem Kumar
KUALA LUMPUR (AA) – The Malaysian government has said it will dissolve the advisory board of a debt-ridden state investment vehicle headed by Prime Minister Najib Razak following a probe by a parliamentary action group.
The finance ministry announced Wednesday that the government will accept the resignation of 1Malaysia Development Berhad’s (1MDB’s) board of directors, following a call last month from Parliament’s Public Accounts Committee (PAC) for the board to be abolished on the back of various issues related to governance and bad business decisions.
The wrong decisions and weak administration also resulted in the state fund bearing 42 billion Ringgit ($5.9 billion) of debt in just six years of operations, the PAC highlighted.
“The Minister of Finance Incorporated, as the 100 percent shareholder of 1MDB, is pleased to announce that, after a detailed study and due deliberation, it has agreed to fully implement the various recommendations contained in the PAC report on 1MBD,” the ministry said.
The government also accepted the resignation of the board of directors with effect from May 31, with new board members to be appointed in due course.
The ministry said 1MDB’s current chief executive Arul Kanda Kandasamy will however remain as company president until further notice.
“Kanda will continue to focus on his specific mandate to implement the rationalization plan, which will include resolution of the recent contractual dispute with International Petroleum Investment Co (IPIC),” the statement read, referring to the 1MDB’s strategic investor.
Razak, who launched the fund after taking over the premiership of the country in 2009, has been at the center of escalating controversy around 1MDB that has led to calls for his resignation as prime minister.
Both opposition politicians and former leader Mahathir Mohamad have called on Razak to step down over alleged mismanagement at the fund, but both he and 1MDB have consistently denied wrongdoing.
