Ailing Tabung Haji – Model Pilgrims’ Fund No More

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Allegedly, scammed successfully because out of 9.3 million depositors, apparently only 30,000 would use their money in Tabung Haji to perform Hajj every year.

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 was being 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, a pilgrimage to Mecca they are obligated to perform at least once. Over the decades, the fund board gained respect in the Islamic world for its management of the savings and Shariah-compliant investments, enabling over 30,000 Malaysian Muslims to perform Hajj every year.

Flushed with cash, the fund, however, caught a pair of glowing greedy eyes of Najib, who decided to secretly milk it. By December 2015, Zeti Akhtar Aziz, 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.

The letter warned that the pilgrims’ fund was on the brink of collapse and a massive bailout by taxpayers may be required. Governor Zeti also warned that the fund’s obligations far exceed its assets, as she observed that Tabung Haji was paying out far more than it had made in profits in recent years, in the form of excessive “dividends” and “bonuses”.

It would take slightly more than two years later to discover the horror story of the Tabung Haji financial situation. All hell breaks loose after the stunning downfall of the Najib regime on May 2018. By December that very same year, it was found that the Pilgrims’ Fund was insolvent – a nicer and more polite word to say that the Malay Muslim institution was bankrupt.

Of course, the new government of Mahathir Mohamad has refrained from announcing the bankruptcy of the institution for fear of spooking the depositors. It would do more harm than good. After all, 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 ultimately revealed in December 2018 that Umno, with endorsement from the PAS Islamist party to a certain extent, had transformed Tabung Haji into a Ponzi “get-rich-quick” scheme. As it turns out, there was a reason how the fund could distribute “hibah (dividends)” ranging from 6.25% up to 8.25% in the period between 2013 and 2017 under Najib administration.

At a time where fixed deposit rates were at about 3%, the unbelievable dividend returns were so attractive that a single depositor had invested more than RM90 million in the fund. A report prepared by government-appointed accounting firm PricewaterhouseCoopers (PwC) to review the financial position for 2017 unveiled more juicy 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. A report says – “The gap between the assets and liabilities is RM9 billion. If the RM9 billion hole is not covered, no ‘hibah (dividends)’ distribution is possible not just for 2018 but also in the coming years.”

How did Najib government bankrupt Tabung Haji? It had lost RM5.7 billion in Felda alone. The pilgrim’s fund had been illegally distributing “hibah” to depositors since 2014, contravening the Tabung Haji Act 1995 where the fund is not allowed to declare dividends if its liabilities are more than assets. But the crooked dared not reveal the true financial health, as his mismanagement and incompetency will be exposed.

Ahead of the 14th general election on May 9th this year, the pilgrim’s fund even cooked its books to justify paying a 6.25% dividend, amounting to RM2.7 billion. The Pilgrims’ Fund Chairman, Abdul Azeez Abdul Rahim, had conspired with the board of directors to dip their hands into depositors’ savings to pay the dividends. And Najib knew all along about the Ponzi scheme.

Yes, the ignorant Tabung Haji depositors actually applauded Najib for the handsome “hibah”, which went up to as high as 8.25%, without realising that the dividends paid was their own money used to pay themselves. And Umno could afford to scam them successfully because out of 9.3 million depositors, only 30,000 would use their money in Tabung Haji to perform Hajj every year. – Finance Twitter