KUALA LUMPUR - Although the Public Accounts Committee (PAC) did not find Malaysian Prime Minister Najib Razak culpable for 1Malaysia Development Berhad's (1MDB) crippling debt, it recommended the removal of the need for his approval for any significant decision taken by the state investor.
It noted that clause 117 of 1MDB's memorandum and articles of association (M&A) was used as an excuse by founding chief executive Shahrol Azral Ibrahim Halmi to ignore the board's orders not to issue a RM5 billion (S$1.7 billion) bond when the firm was still known as the Terengganu Investment Authority (TIA). It was renamed 1MDB in 2009.
"Shahrol.... did not follow orders by the board of directors because the real power laid with the shareholder according to Section 117," the bipartisan parliamentary panel said in its final report on 1MDB tabled to federal lawmakers on Thursday (April 7).
The report said the clause made "written approval" by the Prime Minister - who also chairs 1MDB's advisory board - a requirement for any changes to the M&A, any appointments or terminations of directors and top management, as well as any "financial commitments (including investments), restructuring or matters involving government guarantees".
"The advisory board should be removed, along with Article 117 in the company's M&A. All references to the Prime Minister should be changed to the Finance Minister, in line with provisions in other firms owned by the Minister of Finance Incorporated," the PAC said in its recommendations.
Opposition MP and prominent 1MDB critic Tony Pua said the findings showed that Datuk Seri Najib could not claim ignorance over the company's troubles.
"PM knew the deals absolutely because he signed all these deals. Because 117 actually is the key link, if there is any implication, it's the key link to implicating the Prime Minister. At the very least, he should be held ministerially accountable," he told reporters.
The report also requests for enforcement agencies to investigate Datuk Shahrol and anyone related to 1MDB's mismanagement, which saw debt soar to over RM50 billion this year. The firm's troubles have rocked market confidence in Malaysia, and fuelled calls for Mr Najib's resignation over the past year.
The calls grew louder after reports surfaced last July that US$700 million (S$949 million) was deposited in Mr Najib's personal accounts via companies linked to 1MDB. He has denied using public funds for personal gain and insisted the bulk of the money were donations from the Saudi royal family.
This article was first published on April 7, 2016.
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