In
May 2015, Mahathir Mohamad warned Tabung Haji to cancel its land purchase from
1MDB (1Malaysia Development Berhad). He disagreed that the Malaysia’s Pilgrims’
Fund be used to bail out 1MDB – purchasing a small 1.56 acre of Tun Razak
Exchange land for RM188.5 million, when an area as huge as 70 acres was
purchased by 1MDB for only RM194.1 million.
Tabung
Haji was set up about 55 years ago to help Muslims in the country save up for
the Hajj. Over the decades, the fund board gained respect in the Islamic world
for its management of the savings and Shariah-compliant investments. And enabled
over 30,000 Malaysian Muslims to perform Hajj every year.
Najib,
however, decided to “milk” it secretly. By December 2015, Zeti Akhtar Aziz, then
Governor of Bank Negara Malaysia (Central Bank of Malaysia) sent two letters to
the chairman of the fund, Abdul Azeez Abdul Rahim and copied to the Prime
Minister Najib Razak, who was also the Finance Minister about the pilgrims’
fund being on the brink of collapse. A massive bail out by taxpayers may be
required.
The
new government of Mahathir Mohamad refrained from announcing the bankruptcy of
the institution for fear of upsetting the depositors. It would do more harm
than good. If 4-million Malays were gullible enough to vote for Najib’s regime,
despite the exposure of 1MDB scandal, chances are they would not understand why
Tabung Haji could go bust.
It
was revealed in December 2018 that UMNO, with endorsement from the PAS had
transformed Tabung Haji into a Ponzi “get-rich-quick” scheme. At a time where
fixed deposit rates were at about 3%, the dividend returns (6.25% to 8.25%) were
so attractive that a single depositor had invested more than RM190 million in
the fund. A report prepared by government-appointed accounting firm
PricewaterhouseCoopers (PwC) to review the financial position for 2017 unveiled
more interesting stories. Tabung Haji was actually sitting on up to RM10.2
billion in losses of its domestic and international equities as of October
2018. Its liabilities outstripped assets by RM9 billion.
Tabung
Haji depositors actually applauded Najib for the handsome “hibah (dividend)”,
which went up to as high as 8.25%, without realising that the dividends paid
was their own money used to pay themselves. They (TH) could successfully do
this because out of 9.3 million depositors, only 30,000 would use their money to
perform Hajj every year. On April 5, 2019, Tabung Haji announced a “hibah” of
1.25%, for the financial year 2018, the lowest in its history. Even at 1.25%, the payout was at a staggering
RM913 million to its 9.3 million depositors. The Mahathir government also
announced that it will allocate RM500 million in 2020 for the Pilgrims’ Fund
and RM1.73 billion every year until all of its “sukuk” (Shariah-compliant
bonds) were redeemed.
How
could Tabung Haji suddenly become healthy? Two words – Bail Out!! As of January
1, 2019, the Islamic Pilgrimage Fund Lembaga Tabung Haji was placed under Bank
Negara (Central Bank). A Special Purpose Vehicle (SPV) was created to nurse and
rehabilitate the insolvent fund. In short, taxpayers’ money to the tune of RM20
billion is used in the bail out exercise (The “loss” or impaired sum is about RM9
billion as stated earlier).
Everyone
contributes, including the “pendatangs”. Is this good business? Profits to
depositors, bailout by others. How can one go wrong? The better way going
forward, is for the TH to commit to pay a hibah of 2% to the Government as a
gesture of appreciation for the bailout. And that money over 10 years is used
to settle the “deficit” of RM9-10 billion. Isn’t that better?
Reference:
1.
Do Pro-UMNO Malays Realize They Will Be Bailing Out Tabung Haji To The Tune Of
RM20 Billion For The Next 10 Years? www.financetwitter.com/
3.
This is how else the RM24b bailouts for Felda, Tabung Haji could have been used
and abused, 17 Apr 2019, MalayMail
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