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Tabung Haji’s nefarious ways force gov't's RM20b rescue

QUESTION TIME | Gross mismanagement of depositors' money amounting to more than RM70 billion has resulted in large losses at Lembaga Tabung Haji, forcing the government, through the Finance Ministry, to mount an RM20 billion rescue plan to take over the fund’s impaired assets at cost.

However, the final cost of the takeover will be smaller because there is a realisable value for the assets. Still, losses could be in the order of RM9 billion initially, which is the current shortfall of assets over liabilities at the fund.

It is a matter of great regret and irony that this kind of nefarious mismanagement, and even criminality, took place for years at a fund which was specifically set up to enable Muslims to perform their pilgrimage in Mecca. This cost was estimated at RM22,450 for one person in 2018, with Tabung Haji subsidising about half of that.

To its credit, the new government has made public the problems at Tabung Haji and the new Tabung Haji management under CEO Zukri Samat has announced a comprehensive plan to tackle the problems, which unfortunately involves a government rescue.

Among worrisome acts is that Tabung Haji engaged in false transactions and directly violated Section 22 of the Tabung Haji Act, which prohibits the payment of dividends unless the value of assets exceeds liabilities. This went on since 2014, according to minister in the Prime Minister’s Department Mujahid Yusuf Rawa.

Former Tabung Haji chairperson, politician Abdul Azeez Abdul Rahim, who was previously arrested by the MACC, accused Mujahid of misleading the public, quoting a report by a big four auditor, EY, that the net realisable assets in 2015 exceeded liabilities by RM1.4 billion.

However, net realisable assets are obtained after revaluing assets and are not equivalent to assets which are stated at book value.

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