Malaysia must open a probe into the former boss of 1Malaysia Development Berhad (1MDB), a Malaysian parliamentary committee said on Thursday, after the committee's own investigation found "restrictions and weaknesses" at the troubled wealth fund.
1MDB's board must be abolished, the committee's report also said, and enforcement agencies must investigate former chief executive Datuk Shahrol Azral Ibahim Halmi.
Sharol was the founding managing director and CEO of 1MDB, which was set up in 2009. He remains on the fund's board.
"The PAC is of the opinion that the former CEO of 1MDB Shahrol Azral Ibrahim Halmi has to take responsibility for those restrictions and weaknesses," the parliament's bipartisan Public Accounts Committee (PAC) said in the 106-page report that was tabled Thursday.
"As such, enforcement agencies are asked to investigate Shahrol Azral Ibrahim Halmi and anyone else related."
The 1MDB board is headed by Prime Minister Najib Razak, who has been plagued by Wall Street Journal reports that as much as $700 million passed from 1MDB to his personal bank accounts. In total, the prime minister received more than $1 billion from various government entities, the WSJ has alleged.
Najib has vociferously denied any wrongdoing and was reportedly not named directly by the PAC.
The PAC report said that as well as the board being abolished, any reference to the prime minister in the fund's memorandum and articles of association should be changed to references to the finance minister. Najib currently serves as both prime minister and chief finance minister.
In a statement following the PAC report, the prime minister said, "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."
Najib noted in his statement that the "comprehensive, conclusive and definitive" report had found no evidence of 42 billion ringgit ($10.7 billion) being missing from 1MDB, as he said had been alleged by former Malaysian Prime Minister Mahathir Mohamad.
An initial statement released by 1MDB itself focused on the WSJ's interpretation of Thursday's events, saying that the WSJ's coverage "betrayed its biased and incorrect coverage about the company."
The news outlet's main story on the PAC findings said that the report had found that billions of dollars were missing from 1MDB and that the committee had called for a criminal investigation. CNBC was unable to independently verify these claims.
A later statement from 1MDB said the report "dispelled numerous allegations" about the fund, adding that the board would resign.
"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. However, given the findings of the PAC Report, the board has collectively this morning decided to offer its resignation," the release said.
After the PAC's report was released, opposition leader Tony Pua told a press conference that the findings vindicated critics of 1MDB, Reuters reported.
It confirmed the "gross mismanagement and wanton neglect of all principles of good governance and accountability at the fund," he said. Pua was part of the PAC team, Reuters said.
Reuters said the PAC opened its investigation in May last year but faced delays after the committee chairman stepped down to become deputy home minister in Najib's government
The fund remains at the center of several international investigations into its financial dealings.
1MDB teetered on the verge of default in early 2015 after racking up 42 billion ringgit ($11 billion) in debt in just five years.
After missing various deadlines to repay loans to creditor banks, speculation was rife that the company wouldn't be able to service the rest of its obligations. Because the fund is wholly owned by the government, Najib's administration is responsible in the case of a default.
At the time, 1MDB was widely considered a serious liability risk for an economy in which finances were already under strained by the oil price crash. Crude oil-related income accounts for 30 percent of Malaysia's government revenues.
A debt rationalization program was launched in May 2015 to reduce 1MDB's burden by selling assets, and in November the beleaguered fund sold its energy assets for $2.3 billion to a Chinese nuclear power supplier.
However, alongside its debt problems, the fund has been hit by various accusations of improper behavior, most prominently the WSJ reports that cash from the fund was funneled to the prime minister in order to pay for election campaigning.
However, in January Malaysia's Attorney-General cleared Najib of any corruption or criminal offences, saying that $681 million transferred into Najib's personal bank account was not from 1MDB but was, in fact, a gift from a member of Saudi Arabia's royal family.