Tabung Haji Drops Midnight Explanation, Defends 2018 Bailout
TH says it bought back land for less than it sold it for but the original sale price was inflated by design, as part of the bailout mechanism itself.
- TH defended the 2018 bailout as unavoidable, citing a RM10 billion asset-liability gap that threatened the fund's solvency.
- TH highlighted recent asset buybacks, including TRX land and UJ Estates, as evidence of financial recovery following the restructuring.
- TH's statement remained silent on controversial issues like excessive bonuses, police reports, and senior managers quietly reinstated after dismissals.
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Lembaga Tabung Haji (TH) issued a lengthy rebuttal to the recent Royal Commission of Inquiry’s report about the fund’s operations in the early hours of Friday, laying out why the 2018 restructuring was unavoidable and pointing to recent asset buybacks as proof of recovery.
Here’s the thing, a lot of it isn’t new. The core of TH’s buyback narrative first appeared in a TH statement dated 20 July, nine days before the report was made public.
What changed in Friday’s version seems to be the framing: the same recovery story, now stitched together with a direct rebuttal of the RCI’s specific criticisms.
The Core Defence: “We Had No Choice”
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TH’s argument is that the asset-liability gap identified at end-2017 grew past RM10 billion by end-2018, and that without action, TH would have breached the Tabung Haji Act’s requirement that assets exceed liabilities before declaring any hibah (profit distribution).
Notably, TH spreads the blame beyond its own management.
It says Bank Negara Malaysia had flagged concerns as far back as 2014 about high hibah payouts eroding reserves into negative territory.
It also says the Auditor-General’s 2017 financial statement should arguably have gone further – the RCI apparently felt the Auditor-General should have flagged the accounting issues as outright non-compliance rather than a softer “Emphasis of Matter.”
Framed with the government facing four options in a tight window before the 2018 financial year-end, TH says it went with selling off underperforming assets to the government at a premium value, to close the gap and stay solvent.
Worth noting: TH’s statement does acknowledge, in passing, that this was all necessary because of “various misconduct since 2014” that hurt the fund.
Also worth noting are TH’s hibah rates which climbed from 1.25% in 2018 to 3.50% in 2025, 75% of RCI recommendations implemented, and genuine debt/asset cleanup work.
How the Rescue Actually Worked
A government-owned special purpose vehicle, Urusharta Jamaah Sdn Bhd (UJSB), bought RM9.7 billion worth of TH’s problematic assets for a total of RM19.9 billion, funded by two tranches of government-backed sukuk paying profit rates of 4.05% and 4.10% a year.
That transfer was what allowed TH to declare a hibah for 2018 at all.
If this wasn’t done, TH said a forced fire sale into a “deposit run” could have shaken financial market stability more broadly, not just TH’s own books.
TH also flags that RM2.6 billion in troubled assets couldn’t be transferred to UJSB in 2018 “for certain reasons” – left unexplained – and were instead written down gradually through to the end of 2025.
TH was given a right of first refusal to buy back any of those transferred assets if UJSB ever decided to sell them, subject to TH’s own investment criteria at the time.
And according to TH, it has started exercising that right.
It bought back a parcel of TRX land this year for RM270 million – well below the RM400 million it originally sold it for – and the UJ Estates oil palm plantation for RM695 million, against an original sale price of RM800 million.
But this warrants a second look.
UJSB’s own 2019 disclosure said the RM400 million TH received for the TRX land back in 2018 was already a deliberately inflated price – a premium built into the deal precisely to plug TH’s hole – and an independent valuation just months later, in March 2019, put the land’s actual market value at only RM205 million.
So a RM270 million buyback price appears to be the land’s value catching up to where it always should have been.
What’s Going On Now
For all its detail on the balance-sheet mechanics, the statement is silent on the parts of the RCI report that seemingly generated the most public anger.
This includes the bonuses paid out at up to thirteen months’ salary between 2010 and 2017, including a RM74 million provision in 2014 alone, while PwC’s own findings showed the fund in deficit for several of those years.
It also doesn’t touch on the four police reports and six MACC referrals that produced no charges, or the five senior managers whose dismissals were softened to demotions on appeal – four of whom remain in senior roles at TH today.
Since the RCI report’s declassification:
- MACC has set up a dedicated task force, led by investigation division senior director Hafaz Nazar, to examine possible corruption, criminal breach of trust, forgery, abuse of power, and money laundering arising from the RCI findings.
- Amanah has publicly pushed for swift police and MACC action, arguing the RCI report does point to matters warranting criminal investigation – despite what it called attempts by some politicians to suggest otherwise.
- Former TH chairman Datuk Seri Abdul Azeez Abdul Rahim says he’s willing to face a fresh probe, denies any wrongdoing, and has questioned the timing of the report’s release given the ongoing Negeri Sembilan state election.
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