Malaysia to dissolve the Najib-led 1Malaysia Development Berhad advisory board as global investigations into allegations of embezzlement and money laundering intensifies.
The Minister of Finance Inc., that double as a shareholder of the state-owned investment company has accepted the resignation of the board of directors with effect from May 31, according to a Bloomberg report on Wednesday. Arul Kanda is expected to remain as the company’s president pending proceedings.
The decision was as a result of last week default on a $1.75 billion bond by the fund, the fund withheld $50 million coupon payment after a fall-out with Abu Dhabi’s International Petroleum Investment Co. or IPIC, the total payment including two others guaranteed by the fund is now $1.9 billion.
Kanda “will continue to focus on his specific mandate to implement the rationalization plan, which will include resolution of the recent contractual dispute with IPIC,” the Ministry of Finance said, adding it “will appoint new board members to reflect the limited business profile of 1MDB.”
Since the investigations started last year, the economy has plunged amid global oil glut and fleeing foreign investors. The local currency, Ringgit, depreciated 40 percent to 4.127 against the U.S dollar, Its highest slide in 17 years. This year the currency gained 10 percent before dipping last week to 9 percent after the news of the default broke-out.
The prime minister, Najib Razak and 1MDB board have denied any wrongdoing.