THE STAR
KUALA LUMPUR: The Parliamentary Public Accounts Committee (PAC) has found that former 1Malaysia Development Berhad (1MDB) chief executive officer Datuk Shahrol Azral Ibrahim Halmi should be held responsible for the "weaknesses and constraints" faced by the state investment arm.
"We urge the authorities to conduct an investigation on Shahrol and those related," said the PAC in a 106-page report on 1MDB tabled on Thursday in Parliament.
The PAC probe into 1MDB began in May 2015 but was abruptly halted in July following a Cabinet reshuffle that saw first-time MP Datuk Hasan Arifin replacing former committee chairman Datuk Nur Jazlan Mohamed, who was appointed Deputy Home Minister.
Among those called to testify before the PAC were former 1MDB chairman Tan Sri Lodin Wok Kamaruddin, current president and CEO Arul Kanda Kandasamy and Shahrol.
As a state investment arm, PAC said, 1MDB should have implemented "best practices in their management."
"After looking through the final reports by the Auditor-General Department and PAC proceedings, we have found that the management and the board of directors was weak.
"The management had repeatedly not complied with decisions and orders made by the board of directors or the management took its own decisions before going though it with the board of directors," said PAC.
There were also a few investments and huge loans secured that were done without proper valuation and its impact on the company's cash flow, said PAC.
KUALA LUMPUR: The Public Accounts Committee (PAC) has called for 1Malaysia Development Berhad (1MDB)’s advisory board to be abolished for better management of the state investment arm.
In a 106-page report tabled in the Dewan Rakyat on Thursday, the committee said the board should be abolished together with Clause 117 in the company.
Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister, is the chairman of the 1MDB advisory board.
“All references to the Prime Minister should be changed to the Finance Minister to streamline with the provisions of the Minister of Finance Incorporated,” said the report.
Clause 117 of 1MDB’s Memorandum and Articles of Association states that the prime minister must give his written approval for any deals, including the firm’s investment or any bid for restructuring.
The Memorandum and Articles of Association was inked in 2009, when 1MDB was known as Terengganu Investment Authority.
The report also found that the 1MDB board of directors had failed in its responsibilities.
“They were found not to be proactive in scrutinising the management and keeping track of the cash flow activities of the company.
“The board of directors should closely monitor the company’s activities by questioning the prices of asset purchases and cost of debts,” it said.
UALA LUMPUR: The Public Accounts Committee (PAC) has revealed that 1Malaysia Development Berhad (1MDB)’s debt stood at RM50bil as of January this year.
In a 106-page report tabled in Dewan Rakyat on Thursday, it said the debts were incurred due to among others, its over reliance on the refinancing exercise to pay off their matured debts by taking in new loans to pay off the interests of their previous loans.
“After thorough investigation, PAC has found the company's financing structure and financial performance to be unsatisfactory,” the report said.
At first, said the report, the debt stood at RM5bil in 2009 and went up to RM42bil, compared to their assets valued at RM51bil in the financial year ending March 31, 2014 and it had spent RM2.4bil to pay off the loan interests.
“In January 2016, their debt stood at RM50bil, compared to their assets valued at RM53bil, where 1MDB has spent RM3.3bil to pay off the loan interests between April 1, 2013 to March 31 2015,” said the report.
The report said 1MDB had paid RM3.3bil for interests on the loans they took from April 1, 2014 to March 31, 2015, which 1MDB said its financial audit had yet to be audited.
“It is clear that the debt level and repayment of interest is too high compared to the cash flow of the company,” said the committee.
It also said that 1MDB relied on the refinancing exercise to pay off their matured debts and also took in new loans, which among others, used to pay off the interests of previous loans.
After being in operations for five years, PAC said, 1MDB faced an imbalance cash flow in Nov 2014.
“The management and the board of directors relied on the Initial Public Offerings (IPO) of Edra Energy Berhad to generate funds, which would be used to pay off the debts and interests.
“However the IPO could not be carried out due to internal and external factors," said PAC.
The PAC also said1MDB faced its first loss at RM665mil, which was announced in Nov 2014, which had resulted in a loss of confidence in the company.
1MDB subsequently could not pay off its almost maturing debts which stood at RM2bil, through its refinancing exercise.
“The company’s business model is overly dependent on loans and this caused a burden on the company as it did not have enough income to sustain operational costs and pay off its loans,” read the report.
PAC found that the Government took immediate steps to fix the company's cash flow problems which surfaced in 2014.
In January 2015, a new higher management was brought in to 1MDB, after which the Minister of Finance Incorporated (Menteri Kewangan Diperbadankan) zoomed in on it seriously.
“After that, research was done and strategic measures were identified and implemented in February 2015,” it said.
