Haj fund's 'debts higher than assets since 2014'

Islamic Affairs Minister Mujahid Yusof Rawa's comments confirmed that pilgrimage savings fund Tabung Haji had a deficit of RM4 billion, yet was paying out dividends.
Islamic Affairs Minister Mujahid Yusof Rawa's comments confirmed that pilgrimage savings fund Tabung Haji had a deficit of RM4 billion, yet was paying out dividends.PHOTO: THE STAR/ASIA NEWS NETWORK

KL seeks to turn around pilgrimage fund; it will be put under central bank supervision: Minister

KUALA LUMPUR • Malaysia's Muslim pilgrimage savings fund Tabung Haji (TH) has been "illegally" paying dividends to its depositors since 2014, according to the country's de facto Islamic Affairs Minister Mujahid Yusof Rawa yesterday.

He said the dividend payments contravened the Tabung Haji Act 1995 as the fund had more debts than assets in the previous years.

He cited TH's 2017 financial report, which was tabled in Parliament yesterday, that showed it had liabilities of RM74.4 billion (S$24.5 billion) compared to total assets of RM70.3 billion.

This meant TH had a deficit of RM4.1 billion at the end of last year.

His comments confirmed a report in The Sunday Times on Dec 2 that TH has a RM4 billion deficit, yet was paying out dividends.

A senior official had told this newspaper that TH "faked last year's accounts to justify its dividend payout" of up to 6.25 per cent in February, just three months before the May 9 elections. This amounted to RM2.7 billion, just shy of a net profit of RM2.8 billion.

TH depositors are put in a queue for highly-sought-after and scarce places to perform the annual haj. The government agency also organises umrah, or mini-pilgrimages to Mecca in Saudi Arabia for Muslims.

 
 

The fund invests the savings of depositors in a myriad of businesses including palm oil and property, and also earns income from equity investments and the bond market, according to its website.

Mr Mujahid, Minister in the Prime Minister's Department in charge of Islamic affairs, said yesterday that under the Act, TH could pay dividends only if its assets were higher than its debts, and that there must be profits to be distributed.

"TH has been declaring hibah (dividends) since 2014, not in accordance with the Act, because its assets have been less than its liabilities," he told reporters at a news conference in Parliament.

TH's 2017 financial report, audited by PricewaterhouseCoopers (PwC), had recommended the government to initiate a "comprehensive turnaround plan" to address the RM4.1 billion gap, said Mr Mujahid.

Under the plan, Mr Mujahid said, PwC had proposed the setting up of a special purpose vehicle (SPV) to take over, rehabilitate and maximise the recovery of its underperforming assets.

He added that the SPV plan has been approved by the Cabinet and it will be in operation before the end of this year.

Mr Mujahid said TH will be placed under the supervision of the central bank, Bank Negara Malaysia (BNM), from Jan 1 next year, and expressed confidence that the turnaround plan will be implemented by the government as soon as possible.

"Cabinet had discussed the turnaround plan thoroughly and given our full support and endorsement to the plan, so that TH's financial position can be regularised and the people's confidence can be restored.

"To ensure the long-term sustainability and resilience of TH, the government has decided to place it under the supervision of BNM administratively, from Jan 1, 2019."

He said depositors may receive their dividend payouts for 2018.

"Now that the restructuring plan is here, if we can fulfil two conditions and if there is profit, then definitely we will get (dividends).

"But that will be announced before the end of the year, we have not closed out accounts for the year yet."

Mr Mujahid hinted that further action may be taken against the previous administration of Tabung Haji.

"Since 2014, TH has been giving dividends without fulfilling the two conditions. So, where did they get the money? I leave that to you," he said. "That will be dealt with later," he added.

THE STAR/ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Straits Times on December 11, 2018, with the headline 'Haj fund's 'debts higher than assets since 2014''. Print Edition | Subscribe