Simplified: The Tabung Haji RCI report and what it said

The Monsoon of Malaysia, Aug 11 — The Royal Commission of Inquiry (RCI) report on Malaysia's Muslim pilgrims' fund, Lembaga Tabung Haji (TH), has been released after a three-year investigation. The 252-page report, chaired by former Chief Justice Tun Md Raus Sharif and comprising five members, is now in the hands of the Malaysian government.

The primary purpose of TH is to manage the savings and investments of over 9.8 million depositors, as well as handle matters related to pilgrims' welfare. The fund operates under the Tabung Haji Act 1995, which allows TH to engage in joint ventures, buy and sell shares, and establish companies if approved by the Religious Affairs Minister.

The RCI's primary objective was to investigate TH's management and operations from 2014 to 2020, determine any concealment of information and misleading statements, and recommend appropriate action for any breaches of the law. The RCI's report delves into several key issues plaguing TH during the given timeframe.

Firstly, the report highlights a financial crisis TH experienced in 2017, when it recorded a RM1.4 billion net loss despite previously reporting a RM3.4 billion net profit. This crisis was attributed to TH's 'creative accounting practices' and 'creative accounting practices' in order to declare high dividends. TH used various accounting methods to increase asset values for dividend calculations, going against the Tabung Haji Act's guidelines.

The RCI also found that TH's dividends from 2014 to 2017 were higher than its actual profits and its liabilities exceeded its assets in 2016 and 2017.

Secondly, the RCI found that TH paid excessively high bonuses to its employees between 2010 and 2017, even though audited financial statements showed liabilities surpassing assets during this period. TH's subsidiary, TH Properties Sdn Bhd, was also found to have given unauthorised bonuses totaling more than RM2.19 million. The RCI recommended the return of these bonuses to TH Properties' directors and officers.

Lastly, the RCI proposed amendments to the Tabung Haji Act to improve TH's governance. This includes prohibiting active politicians from serving as directors and mandating specific expertise, such as banking and accounting, for TH directors. The RCI also suggested a forensic audit of TH's investments, particularly concerning 14 problematic investment decisions, and advised TH to focus on fund management instead of high-risk investments.