The Royal Commission of Inquiry (RCI) into the management and operations of Lembaga Tabung Haji (TH) has recommended a forensic audit on 14 past investment decisions that led to significant asset impairments at the Islamic pilgrimage fund.
The recommendation was made following the RCI’s investigation into TH’s management practices between 2014 and 2020, with the identified investments highlighted in a report released today.
The 14 investments proposed for further forensic review include:
- PT TH Indo Plantations
- Emrail Sdn Bhd
- Wellspring Worldwide Ltd
- Deru Semangat Sdn Bhd
- Trurich Resources Sdn Bhd
- Abraj Sdn Bhd
- Putrajaya Perdana Bhd
- Al-Rawda Real Estates Development & Project Management Co Ltd
- Alfareeda Residential Fund
- TH Plantations Bhd
- TH Properties Sdn Bhd
- Alam Maritim Resources / TH Marine
- TH Hotel & Residences Sdn Bhd
- FGV Bhd
The RCI said investment transactions that remain subject to court cases or arbitration proceedings should continue to be closely monitored by TH’s management and board to ensure the processes are managed effectively and deliver the best possible outcomes for the institution.
It also recommended strengthening out-of-court settlements and arbitration processes to enable disputes to be resolved more efficiently while protecting TH’s interests.
The commission emphasised that TH’s investment management and profit distribution functions must continue to operate independently and professionally.
It noted that both fund management and haj management should remain under the same entity due to the element of cross-subsidisation currently practised by TH.
The RCI further proposed that TH’s investment management function remain within the organisation as a dedicated department, potentially named “Dana Haji”, which would oversee TH’s investments while being regulated by the Securities Commission Malaysia.
The commission also advised TH to focus on fund management activities and avoid involvement in high-risk investments, particularly those categorised as strategic investments.
Meanwhile, the RCI urged Urusharta Jamaah Sdn Bhd (UJSB) to consider early redemption of sukuk issued following the transfer of assets from TH to UJSB.
The report stated that TH assets were transferred to UJSB at a value of RM19.9 billion, despite having a market value of RM9.7 billion at the time, representing a premium of RM10.2 billion above market value.
As part of the asset transfer arrangement, UJSB issued fully subscribed zero-coupon Sukuk Murabahah, comprising:
- Sukuk Series 1: RM10 billion
- Sukuk Series 2: RM9.6 billion
- Cash payment: RM300 million
The RCI noted that income generated from UJSB’s sukuk contributed nearly 26% of TH’s annual income and accounted for more than one-third of the annual profits distributed to depositors.
It warned that any failure or constraints in UJSB meeting its obligations could pose a major risk to TH’s financial position and potentially create wider implications for Malaysia’s financial ecosystem.
“The government must give serious attention by ensuring an annual allocation of RM1.73 billion is provided, as agreed by the Cabinet, for the early redemption of UJSB’s sukuk,” the RCI said.
The commission was also informed that UJSB is currently in discussions with the Ministry of Finance (MOF) to seek consideration for a government guarantee and has begun negotiations with TH on the terms of a new Government Guaranteed Sukuk.
