This article first appeared in The Edge Financial Daily, on May 5, 2016.

KUALA LUMPUR: Minister of Finance Inc (MoF Inc) confirms its acceptance of the resignation of 1Malaysia Development Bhd’s (1MDB) current board of directors effective May 31, in line with the governance changes and asset transfer.

MoF Inc also announced that 1MDB’s board of advisers, chaired by Prime Minister Datuk Seri Najib Razak, will be dissolved under the changes to the troubled strategic investment fund’s governance.

Accordingly, MoF Inc said in the statement yesterday that the Article 117 of 1MDB’s memorandum and articles of association will be removed and all references of “prime minister” will be changed to “Minister of Finance”.

The ownership of Bandar Malaysia Sdn Bhd, TRX City Sdn Bhd, Air Itam land and Pulau Indah land will also be transferred from 1MDB to MoF Inc, according to the statement.

MoF Inc’s announcement comes on the heels of 1MDB having defaulted on interest payment of US$50.3 million to its bondholders on April 25. 1MDB’s default triggers cross default on all its debt papers that are guaranteed by the government, including the RM5 billion sukuk plus RM800 million loan by the Social Security Organisation or Socso.

The MoF Inc, the sole shareholder of 1MDB, said it will appoint new members in due course to reflect the limited business profile of the fund.

MoF Inc said the changes follow recommendations made in the Public Accounts Committee (PAC) report on 1MDB, which included the resignation of the current board of directors.

“After a detailed study and due deliberation, MoF Inc has agreed to fully implement the various recommendations contained in the PAC report on 1MDB,” MoF Inc said in the statement.

According to 1MDB’s website, its board of directors comprises chairman Tan Sri Lodin Wok Kamaruddin, president and group executive director Arul Kanda Kandasamy, former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, directors Tan Sri Ismee Ismail, Tan Sri Ong Gim Huat and Ashvin J Valiram.

The current board members on April 7 offered their resignations to MoF Inc.

MoF Inc said, nevertheless, Arul Kanda will remain in his current role as president of 1MDB until further notice. “He will continue to focus on his specific mandate to implement the rationalisation plan, which will include resolution of the recent contractual dispute with International Petroleum Investment Co.”

To recap, besides the change of governance and asset transfer, one of the highlights in the PAC report is that the committee wants an investigation into 1MDB’s former chief executive officer Shahrol Azral and other executives. The committee, however, did not reveal those names.