Malaysia’s finance ministry said on Wednesday it would dissolve the board of advisers at 1Malaysia Development Berhad (1MDB) and take over its remaining assets, in an apparent move to scale down a state fund whose scandals have rocked the government.
Prime Minister Najib Razak is facing calls to step down over 1MDB, which was his pet project and whose advisory board he chaired. The fund is now being investigated for money-laundering in at least six countries including the United States, Switzerland and Singapore.
Last month, parliament’s Public Accounts Committee (PAC) called for 1MDB’s advisory board to be abolished, after a investigation into the fund, whose debt in January had totaled about 50 billion ringgit ($12.5 billion).
The PAC criticized the board for being irresponsible but stopped short of implicating Najib.
However, it said Najib, who is also finance minister, was authorized to sign off on the fund’s major transactions.
The prime minister has denied any wrongdoing.
The ministry said in a statement ownership in 1MDB’s subsidiaries and four land assets would be transferred to it.
It did not say what happens to debt linked to the assets.
The ministry also accepted the resignation of 1MDB’s board members, who collectively stepped down last month. New members would be appointed to reflect the limited business profile of 1MDB, it said.
Reuters reported last year that the fund would be left as a skeletal structure and possibly dissolved under a debt repayment plan.
The ministry said it would also remove Article 117 in the fund’s company articles, which requires the prime minister’s written approval for all its financial commitments, including investments and matters such as appointment of the board of directors.
It would also change all references of “prime minister” to “minister of finance”.
Critics say Najib was a beneficiary of 1MDB’s funds, after about $681 million was deposited in his bank account before a 2013 election.
Najib and 1MDB have dismissed that. The state-appointed attorney-general said the funds were a gift from Saudi Arabia’s royal family and most of it was returned.
But global inquiries into 1MDB’s money transfers are picking up pace and weighing on Malaysia’s economy and its currency..
Swiss authorities have said about $4 billion was misappropriated.
Last week, 1MDB missed a deadline to pay a $50.3 million coupon on a $1.75 billion bond following a stand-off with Abu Dhabi sovereign fund International Petroleum Investment Co (IPIC), which says 1MDB never met payment obligations.
Another interest payment is due on May 11.
“The change of board does not detract from broader global investigations into the finances of 1MDB which is still a residual overhang notwithstanding 1MDB’s improved balance sheets after the sale of its energy assets,” said Weiwen Ng, an ANZ Research economist.