TH ‘profit’ distributions legally belong to depositors, says FT mufti dept

The federal territories mufti department clarified that Tabung Haji's annual profit distributions, or hibah, from 2014 to 2020 belonged to depositors, as they were unaware of the institution's internal financial situation during that period. The department attributed any issues of mismanagement or non-compliance to TH's management, not the depositors or the public.

It argued that the money was not unlawful or suspect, as depositors had received it under contracts that were fulfilled. The royal commission of inquiry (RCI) report revealed that TH had concealed its true financial state for years, reporting inflated profits when there should have been a net loss. Under Malaysia's wadi'ah yad dhamanah (guaranteed safekeeping) contracts, TH was considered a custodian of depositors' funds.

According to the department, TH could not guarantee profits at the time and hibah was transferred to depositors on a voluntary basis. Once declared hibah, it became the legal property of the depositor through the process of qabd (taking possession). TH is expected to shift to wakalah contracts in December 2019, under which returns would be distributed based on actual net investment profits instead of the current hibah basis.

This change aims to prevent imprudent practices, enhance financial prudence, and promote transparency.