KUALA LUMPUR, April 7 — Parliament’s Public Accounts Committee (PAC) declared in its final report released today that 1Malaysia Development Bhd’s (1MDB) board of directors had failed to ensure the fund’s management complied with good accounting practices.

The panel said the apparent negligence on the part of the board should be blamed for the management’s decisions that led to the fund amassing a debt pile of RM42 billion in just five years.

“The board of directors had failed to perform its responsibility to protect the interests of the company and shareholders and that it failed to take proactive or necessary measures to scrutinise and supervise the management’s activities and cash flow.

“Thorough supervision by the board of directors was absolutely necessary, especially on the matter of asset prices and debt pile,” the report’s summary said.

The PAC said 1MDB’s advisory board needed to be abolished, along with Article 117 of the company’s Memorandum and Articles of Association that states that the prime minister must give his written approval for any deals.

“All references to YAB Prime Minister must be changed to the Finance Minister, in line with the provisions in other companies owned by Minister of Finance Incorporated (MOF Inc),” said the PAC, referring to the Finance Ministry’s investment arm.

Prime Minister Datuk Seri Najib Razak also holds the finance portfolio in Cabinet and chairs 1MDB’s advisory board.

The PAC found that 1MDB Group’s capital financing structure and financial performance was unsatisfactory, noting that in January 2016, 1MDB’s debt hit RM50 billion, compared to its assets worth RM53 billion. 1MDB spent RM3.3 billion on interest payments for its debts between April 1 2014 and March 31 2015, according to unaudited estimates.

According to the parliamentary panel, 1MDB’s debt started at RM5 billion in 2009 and rose to RM42 billion, compared to assets worth RM51 billion, by the financial year ending March 31, 2014, where 1MDB spent RM2.4 billion on interest payments for its debt.

“It’s clear that the level of debt and interest payments are too high compared to the company’s cash flow. Therefore, 1MDB had relied on refinancing to pay back mature loans and to take new loans to, among others, pay previous interest payments,” said the PAC.

The parliamentary panel said 1MDB’s business model was too dependent on loans, which has burdened the company as it does not have enough income to pay off its loans and operational costs.

PAC said the use of excessive debt in a company’s capital structure cannot be allowed, especially when the firm’s cash flow is not sufficient.

1MDB is currently under probe by the authorities in several countries, with Luxembourg the latest to investigate the state investment firm for alleged money laundering.