The newly appointed 1MDB Board of Directors must carry out its duties to the Government and Malaysian tax-payers by ensuring good corporate governance and accountability

The Ministry of Finance (MOF) today announced the appointment of new board of directors for 1Malaysia Development Bhd (1MDB), succeeding the previous board, which officially resigned yesterday.

The new three-member board is chaired by Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah, Senior Private Secretary to the Chief Secretary of the Government Datuk Norazman Ayob and Chief Operating Officer of Prokhas Sdn Bhd Datuk Kamal Mohd Ali.

We also welcome the steps taken by MOF to dissolve the 1MDB Board of Advisors, remove of the current Article 117 and change of all references from “Prime Minister” to “Minister of Finance”. Article 117 had given the Prime Minister vast powers to arbitrarily interfere in the operations of 1MDB, including the appointment of Board of Directors and top company executives as well as all major financial transactions where his “written approval” is explicitly required.

However, the amendments to 1MDB’s Memorandum and Articles of Association (M&A) as well as the changes to the Board of Directors would be an absolute waste of time if these new directors do not exercise the powers entrusted with them to ensure that the rogue management complies with all the required practices of good governance and corporate accountability.

The number one item on the agenda for the first Board of Directors meeting, which should hopefully be held soon, must be the demand for the company’s auditors, Deloitte to commence and complete the much delayed audit of 1MDB for the financial year ending 31 March 2015 and March 2016.

Without a clear and accurate picture of the financial position of the Company, the Board of Directors would be acting in a vacuum, rushing headlong into decisions without knowing the underlying status of the company.

The auditors must also be specifically directed to audit the US$7 billion (RM28 billion) of missing funds from 1MDB which the Auditor-General has been unable to verify due to the lack of cooperation from the management and the previous Board of Directors.

The sum included:

•  The sums of US$700 million and US$330 million which was misappropriated to Good Star Limited, a company which Bank Negara has identified as owned by Jho Low and is completely unrelated to the 1MDB-Petrosaudi joint venture in 2009 and 2011.

•  US$3.51 billion which was paid to a British Virgin Islands (BVI) incorporated Aabar Investment PJS Limited “Aabar (BVI)” in the form of collaterals, options termination compensation and further unexplained “top-up security” payments despite obvious doubts over who owns Aabar (BVI). Aabar (BVI) has since been found to be a fraudulent entity and dissolved since the June of last year.

•  US$940 million worth of “units” which was parked at the Swiss Bank branch of BSI Bank in Singapore. BSI Bank, Singapore has since been ordered to close but the whereabouts of US$940 million remains a mystery.

Another US$1.56 billion of investments by 1MDB’s wholly-owned foreign subsidiary, 1MDB Global Investments Limited

In fact, the Chairman of the new Board, Tan Sri Irwan Serigar must direct 1MDB President, Arul Kanda who kept his executive position, to immediately supply all documentary information and evidence pertaining to the above to be tabled for the very first Board meeting.

If Arul Kanda fails to satisfactorily explain the massive US$7 billion unaccounted funds, then the Board of Directors have now within their powers, after the removal of Article 117, to sack Arul Kanda for incompetence, cover up and collusion with the fraudsters who have resulted in billions of dollars of losses for Malaysians.