Friday 29 Mar 2024
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KUALA LUMPUR (April 7): The Public Accounts Committee (PAC) wants former 1Malaysia Development Bhd (1MDB) chief executive officer Datuk Shahrol Halmi and other top executives to be investigated over the affairs of the troubled state-owned company, which had racked up debts of RM50 billion as at January 2016.

In a damning report tabled to Parliament this morning after several months of work in which dozens of people were called to testify, PAC also laid blame on the board of directors for failing to carry out their responsibilities.

The PAC report totalled nearly 100 pages. However, the report was not accompanied by the Auditor-General Report that was submitted to PAC a month ago and classified under the Official Secrets Act (OSA).

It is not clear why PAC did not submit the Auditor-General Report to Parliament.

"Specifically, PAC is of the opinion that former chief executive of 1MDB Datuk Shahrol Azral Ibrahim Halmi must take responsibility for the weaknesses ..." the report said. "As such, we request enforcement agencies to investigate Datuk Shahrol Azral Ibrahim Halmi and others in management."

On the role of the board of directors, PAC said: "The board of directors were found to have failed to carry out their responsibilities to protect the interests of the company and shareholder, and they also did not take the proper action or were not proactive in reviewing the activities of management and the future cash flow of the company."

"More vigilant controls were needed from the board of directors, including questioning the prices paid to buy assets and the costs of debt financing," the report said.

1MDB is owned by the Ministry of Finance Inc (MOF Inc), but unlike other MOF Inc-owned companies, its memorandum of articles 117 required it to report only to the Prime Minister, who chairs the 1MDB advisory board.

On this matter, PAC said: "The advisory board should be abolished together with Article 117. All references to the Prime Minister should be switched to the Minister of Finance, in line with other companies owned by MOF Inc."

It added that all subsidiaries and assets of 1MDB (TRX, Bandar Malaysia, Air Itam land, Pulau Indah land) should be handed over to MOF Inc to ensure better controls and management of these assets.

On 1MDB's financials, PAC noted that from a debt of RM5 billion in 2009, it totalled RM50 billion as at January 2016 against assets of RM53 billion.

1MDB, the report said, spent RM3.3 billion to service interest between April 1, 2014 and March 31, 2015.

"It is clear that the level of debt and interest payments were too high compared with the cash flow of the company," PAC said. "Hence, 1MDB relied on refinancing to pay maturing debts and took on new debts to pay interest on the earlier debts."

 

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