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1MDB, istockphoto-1097692246-612x612 - Coggle Diagram

- - - - 1MDB PetroSaudi Ltd (BVI)’s bank.
    - - Owned by another company which was not involved in the joint venture project
    - - Benefit
        
        :star: no processing errors
        :star: opportunity to try to catch possible fraud
  - - - :fire:Board of Directors was not satisfied and directed the management to appoint independent valuers to revalue the assets in the joint venture company
        
        1MDB Board of Directors instructed the management to take corrective measures to Obtain written confirmation from JP Morgan on the approval of the use of funds held in the joint account
        
        1MDB management has repeatedly ignored the specific instructions given by the Board of Directors> Did not carry out the second valuation on the joint venture company's assets as directed by the Board of Directors on 3 October 2009
      - that valuation report will take several months and can only be ready by March 2010
        
        But,
        
        A clause in the joint venture agreement, which stipulated that 1MDB should appoint an independent valuer to evaluate assets of PetroSaudi Holdings (Cayman) Ltd. and must submit the report on or before 30 September 2009
  - - - Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period
      - significant effect on the balance sheet at the time of occurrence or on the future operations of the reporting entity.
    - - Reasons
        
        1.The company's name was misleadingly similar to that of an IPIC subsidiary (Aabar Investments PJS)
        
        Payments made was enhancing the credit given by IPIC as the bondholder itself.
- - - - In our view, the Chairman of 1MDB does not carry out his responsibilities as a leader of the BOD and the firm sufficiently and comprehensively.
        
        :red_cross: Ineffective leadership :red_cross: Insufficient oversight :red_cross: Failing in control and accountability
- - - - No approval given by 1MDB Board of Directors to transfer the money into two separate accounts.
        
        The Board of Directors was not informed about the change of plan to transfer an amount of USD700 million from 1MDB into an account which was not owned by the joint venture company.
        
        Their actions are not consistent to the principle of accountability. Management of a company must be accountable to its board of directors and the board, in turn, must be accountable to shareholders and other stakeholders. The principle of accountability should be promoted by ensuring rigorous scrutiny of a company’s financial statements by independent outside directors.
      - No minute or document to show that the 1MDB Board of Directors was informed about the USD700 million advance loan before the joint venture agreement was signed.
      - The advance loan was never presented or discussed by the management of 1MDB before the joint venture project was finalised.
  - - - Detailed information and profile
        of PetroSaudi was never submitted and presented to the
        Board of Directors until the joint venture agreement was signed on 28 September 2009.
        
        This is not consistence to the principle of responsibility. The board should be responsible for establishing the company's code of conduct and ethics and, along with management, putting it into practise. This includes controlling conflicts of interest, avoiding the misuse of authority, corruption, insider trading, and money laundering.
  - - - Did not practice accountability, Management must responsible for the integrity and accuracy of their act. Without checks, balances, and consequences for wrongdoing, a company cannot retain the confidence of its customers, regulators, or the markets.
- - - - Control through a strictly regulated verification process to ensure that money is transferred to outside bank accounts only for the purpose of funding authorised projects.
  - - - Only one position should be held by a single individual to prevent abuse of power
- - - - Weak of Internal Control
        The change of plan not be inform, change of bank account, unclear the status of ownership, all action done in short period, and the management of 1MDB doesn't take the BOD opinion.
      - Loan to Joint Venture
        The advance loan amount USD700 million has not existence and no evidence of loan for this transaction. More, the period of loan was five days. The funds have been distributed to other parties without inform to the BOD.
        Subscription of USD1 billion in JV must be paid within two days after sign agreement. The funds had transfers at two separate account without approval by BOD.
      - Lack of Management
        1MDB BOD has directed to the contribution of PetroSaudi of 50% cash or at least USD1 billion and 50% assets to 1MDB PetroSaudi was not carried out by 1MDB management. Also, not presented profile PetroSaudi to BOD.