May 7, 2016
Time to Act Against 1MDB Directors for Dereliction of Fiduciary Duty
by Kow Gah Chie
The Finance Ministry and 1MDB should take action against the former board of directors over the debts the state-owned company had incurred, lawyers said today.
They said legal action was needed following the statement that Minister of Finance Incorporated (MOF Inc) had accepted the resignation of the 1MDB Board of Directors that will come into effect on May 31.
Former Bar Council chairperson Lim Chee Wee wants the new Board of Directors to probe the wrongdoings highlighted in the Public Accounts Committee’s (PAC) report on 1MDB that was released last month.
“It needs to probe if there is a case against the directors and management,” he told Malaysiakini in a text message.
“They (Finance Ministry and 1MDB) have a duty to act against the wrongdoers who may include shadow directors.Shadow directors are individuals who are not named directors but whose instructions are followed by the company.If investigations by the new board reveal criminal wrongdoing, then the new board has to lodge reports with the relevant law enforcement agencies,” he said.
Another lawyer, Razlan Hadri Zulkifli, called on the Finance Ministry to mull legal action against the former 1MDB board of directors for possible breach of fiduciary duty.
“Accepting their resignation is not an asnwer,” he said.”The Finance Ministry should consult its lawyer to take civil action if the attorney-general does not want to take crimimal action,” he said, adding that the board members should be hauled up to court if they were sleeping and unable to prevent the fiasco.
“It is quite normal for public-listed companies to sue their former directors,” he told Malaysiakini. PAC has pointed out there were clear-cut breaches of fiduciary duty on the part of the ex-CEO Shahrol Azral Ibrahim Halmi, and on the part of the Board Directors for failure to supervise Shahrol,” he said.
Make no bones about it –This Guy belongs in Jail, not Putrajaya
The advisory board might need to be held responsible for its inability in supervise Shahrol’s action, said Razlan.
When contacted, both treasury secretary-general Irwan Serigar Abdullah and 1MDB President Arul Kanda Kandasamy declined to comment.The PAC, in its 106-page report, had identified a number of weaknesses in the governance and decision-making of 1MDB.