The aphorism that heavy is the head that wears the crown could not be more apt to describe the appointment of Arul Kanda Kandasamy as the new CEO for much maligned sovereign fund, 1 Malaysia Development Berhad. (1MDB) which is 100% owned by Ministry of Finance Inc.

Stories about cash flow difficulties have been making their rounds for some time now at 1MDB and The Edge Financial Daily reported today that it had defaulted on a RM2 billion loan which was due on Dec 31, 2014.

In an interview with Bloomberg, Arul Kanda said that 1MDB was a “responsible borrower” and that it had “never defaulted on its debt.”

1MDB has had a somewhat chequered past as it has changed its CEO 3 times in the last 5 years. In addition it has replaced its Chairman twice in the period and to make matters worse its auditors have been changed 3 times in the same time period.

There were talks that the change of auditors was brought about due to the reluctance of the incumbent auditors to sign off the accounts 1MDB in view of its ballooning debt. The auditors that have been engaged by 1MDB include Ernst & Young and KPMG. The current auditors in office are Deloitte. All three firms are part of of the international Big Four accounting fraternity.

1MDB has come under fire from opposition politicians especially due to its lack of transparency in navigating its corporate moves.

The Edge Financial Daily reported, quoting sources, that the central bank, Bank Negara Malaysia in a recent meeting with the Chairman of 1MDB, Tan Sri Lodin Wok Kamaruddin and other top executives had given a “dressing down” to the fund.

1MDB had borrowings of RM42 billion and suffered a negative cash flow of RM2.25 billion in FY14 with its debt servicing at around RM2.5 billion.

Credit default swaps insuring Malaysian government debt against non payment jumped 10 basis points to 125 basis points according to Royal Bank of Scotland Plc prices. Data by CMA showed that this was the highest level in 11 months.

Arul, 38, has a Masters in Law from University College, London has got wide ranging experience in the financial industry.Arul was on the board of RHB Capital Bhd from July 2009 to May, 2011, as a non-independent non-executive director representing Abu Dhabi Commercial Bank PJSC.

He was executive vice-president, head of investment banking and head of corporate finance at Abu Dhabi Commercial Bank.

Arul will have to manage 1MDB’s cash flow issues and also the public relations side of things to allay accusations that 1MDB lacks transparency. First and foremost he must regain the trust of 1MDB’s critics that decisions undertaken by the fund are in the nation’s best interest.