Malaysia 1MDB Scandal Update: Najin Razak Not Named In Scathing Report, But Board Of Directors Offer To Resign

A Malaysian Parliament inquiry has determined that billions of state development dollars have gone missing, prompting the agency's board of directors to offer Thursday to resign en masse. But investigators continued to overlook Prime Minister Najib Razak's alleged role in the massive money laundering and corruption scandal that has rocked Malaysia for months amid slumping oil prices and economic woes.

The committee’s report found that the Malaysia Development Bhd., or 1MDB, made billions of dollars in unexplained payments and transfers, including $3.5 billion to a company called “Aabar Investments PJS Ltd." It singled out senior management for keeping crucial information from the board and making payments without approval.

The fund has been the focus of corruption investigations in Malaysia and at least six other nations, but the findings by the Public Accounts Committee mark the first time a Malaysian investigating body has made allegations of fraud against the government body, the Wall Street Journal reported.

Global investigators have found 1MDB transferred hundreds of millions of dollars to Najib’s personal bank accounts through intermediary entities. In the United States, the Department of Justice is reviewing dealings between Deutsche Bank, JPMorgan Chase, Goldman Sachs and 1MDB, Fortune reported.

“The Board has successfully steered 1MDB through a uniquely challenging period and trusts that, with the release of the PAC Report, a line has been drawn,” the 1MDB board said in a statement Thursday.

The Parliament inquiry did not name Razak, who created the development board in 2009 and oversees its board of advisers, which is separate from the board of directors. Najib has denied that he did anything illegal.

Malaysia’s attorney general in January cleared Najib, concluding that $681 million of the money that entered his accounts in 2013 was a legal donation from Saudi Arabia’s royal family that was eventually returned. The attorney general didn't mention the other money in Najib’s accounts.

Najib said in a statement Thursday the parliamentary report “identified weaknesses in 1MDB’s capital structure and management. We will study and act on the report’s recommendations. We must ensure that lessons are learned, and action will be taken if any evidence of wrongdoing is found."

Tony Pua, a member of the committee and of the opposition Democratic Action Party, said the report didn’t examine Najib's role in the scandal because 1MDB’s management never claimed to have been directed by him. Pua said the report, "confirms gross mismanagement and wanton neglect of all principles of good governance and accountability."

The development fund has amassed $11 billion in debt since it was founded in 2009.