Subscribe to our FREE Newsletter, or Telegram and WhatsApp channels for the latest stories and updates.
The Royal Commission of Inquiry (RCI) report into Lembaga Tabung Haji’s (TH) affairs between 2014 and 2020 was declassified on Wednesday, and it paints a bleak picture of the institution.
It’s the sort of classic case of political interests and weak governance winning out over millions of depositors who fund their pilgrimage through it.
Board Appointments Were Done Improperly
The 211-page report found that political considerations shaped decisions on everything from hibah (profit distribution) payouts to board appointments.
A freeze on haj fees for Muassasah pilgrims since 2009 forced TH to dip into its investment profits to subsidise pilgrimages, a move the commission said undermined its long-term sustainability.
Politically appointed board members and chairmen between 2014 and 2018 – including former chairman Datuk Seri Abdul Azeez Abdul Rahim – stirred unease within the community and left the fund open to criticism, the RCI noted.
Warning Signs Were Also Ignored
Consultancy Roland Berger flagged in 2017 that TH had been running down its reserves to pay hibah in 2012, 2014 and 2016, and warned that incoming accounting standard MFRS 9 would expose an estimated RM2.6 billion in losses.
Management reportedly never brought the findings to the board – this in the run-up to the tightly contested 2018 general election.
Hibah payouts themselves weren’t immune to creative accounting either. For FY2017, management calculated the payout using realisable asset value (RAV) – which came in higher than the audited asset value – despite the Tabung Haji Act requiring assets to exceed liabilities before any distribution.
Management argued the Act “does not have a clear definition of assets,” a position that later triggered a 2019 police report.
The RCI’s forensic recommendations point to 14 problematic investments, the costliest being TH’s RM1.06 billion unrealised loss on FGV Holdings shares bought around its 2012 IPO – a position later transferred to Urusharta Jamaah to dodge crystallising the loss.
Other casualties included:
- A RM364.31 million write-off on Kalimantan plantation venture Trurich Resources
- A combined RM278 million impairment at TH Marine
- A RM225 million loss on the Deru Semangat plantation deal in Pahang after buyers rejected its output over deforestation breaches
- A RM170 million impairment at TH Plantations tied to underperforming estates
The commission blamed a bloated, poorly coordinated decision-making process – one where the Investment Panel leaned on management’s own recommendations and ministers signed off without independent advice.
Governance was further strained by senior officials wearing too many hats: former CEO Datuk Johan Abdullah sat on 18 subsidiary boards, while former CFO Datuk Rozaida Omar was on nearly two dozen.
Bonuses Were High, But Accountability Low
Remarkably, TH kept paying generous bonuses throughout – staff bonuses ran one to thirteen months’ salary between 2010 and 2017, including a RM74 million provision in 2014 alone, even as PwC found the fund in deficit for several of those years.
Subsidiary TH Properties separately paid bonuses in 2017 and 2018 that the RCI found breached the Companies Act.
Accountability, however, has been thin.
Four police reports and six MACC referrals – covering alleged misrepresentation, concealment, corruption and forgery – produced no charges from the Attorney-General’s Chambers.
Five former senior managers faced internal discipline over matters including the sale of PT TH Indo Plantations, but dismissals were later softened to demotions on appeal, and four of them remain with TH in senior roles today.
Chaired by former chief justice Tun Md Raus Sharif, the six-member commission was appointed by the Yang di-Pertuan Agong in January 2022 for a six-month term.
Share your thoughts with us via TRP’s Facebook, Twitter, Instagram, or Threads.
RCI Bombshell: How Did Tabung Haji Pay Bonuses While Losing Money?
Entertainment Flash Report
Comments
Post a Comment