North Borneo was granted its Independence on 31 August 1963(1). Sixteen days later it formed Malaysia with Sarawak, Singapore and the Federation of Malaya i.e. on 16 September 1963.
Donald Stephens, Tun Fuad as he was known then, was appointed Sabah's first Chief Minister while Datu Mustapha was appointed her first Head of State. Datu Mustapha had expected that as Head of State, he would retain many functions previously in the purview of the all powerful Governor. When he realized that contrary to his expectations, it was the Chief Minister who wielded power, he became frustrated and refused to co-operate with Stephens. It got so bad that the government was unable to efficiently go about conducting the business of governing. The Prime Minister, Tunku Abdul Rahman, mediated and the solution was for Stephens to step down. Stephens stepped down on 31 December 1964 and took up the position of federal minister for Sabah Affairs and Civil Defense. Replacing him as Chief Minister was Peter Lo who previously held the position as Federal Minister without portfolio.(2)