Malaysia will dissolve the advisory board of 1Malaysia Development Bhd., which is headed by Prime Minister Najib Razak, as global investigations into the state investment fund continue, The Wall Street Journal reports.
The dissolution comes nearly a month after a parliamentary inquiry into the fund, known as 1MDB, called for a law enforcement investigation into its former chief executive and urged changes in its governance.
Malaysia’s Finance Ministry said in a statement Wednesday that it accepted the resignation of the board of directors, a separate body, that followed the public release of the parliamentary inquiry’s report. The resignations will take effect May 31.
The statement said that in accord with the recommendations of the Public Accounts Committee, the role of the prime minister in 1MDB will end and the finance minister — a post Najib also holds — will assume it.
The move is another step in a gradual winding up of 1MDB, which last week defaulted on an interest payment on a bond, triggering a partial cross-default on other debts guaranteed by the government.
1MDB’s next interest payment, on a different bond, is due May 11.
Najib, who launched the fund after taking office in 2009 and chairs the advisory board, has been at the center of escalating controversy around 1MDB that has led to calls for his resignation.
The newspaper, citing Malaysian and global investigations, has reported that investigators have found more than US$1 billion was transferred to Najib’s personal bank accounts, the majority originating from 1MDB and moving via a web of intermediary entities.
Probes are under way in seven countries.
Najib has denied wrongdoing or taking money for personal gain.
Malaysia’s attorney general has said that US$681 million deposited into Najib’s account was a legal donation from Saudi Arabia’s royal family, and that most of it was returned. He also cleared Najib of wrongdoing.
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