Finance Twitter : The new Pakatan Harapan government of Mahathir had to refrain from announcing the bankruptcy of Tabung Haji 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-led Barisan Nasional government, with endorsement from the PAS Islamist party to a certain extent, had transformed Tabung Haji into a Ponzi “get-rich-quick” scheme. As it turned out, there was a reason why  the fund could distribute “hibah (dividends)” ranging from 6.25% up to 8.25% in the period between 2013 and 2017 under the Najib administration.

At a time when fixed deposit rates were at about only 3%, the unbelievable dividend returns from Tabung Haji were so attractive that a single depositor had invested more than RM190 million in the fund. But it was just the appetizer. 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 top of 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.”

Exactly how did the Najib government bankrupt Tabung Haji? It had lost RM5.7 billion in Felda alone. The Federal Land Development Authority (FELDA) was forced to write off huge sums of money after its subsidiary, Felda Investment Corp (FIC), went on an aggressive overseas diversification spree, including the purchase of the Merdeka Palace Hotel & Suites in Kuching for RM160 million – despite valuation of the property at only RM80 million.

Similar overpriced acquisitions occurred internationally, including the Grand Plaza Serviced Apartments in London for a whopping RM524 million in 2013 – overpaid approximately RM180 million. Worse, the recipient companies only accounted for roughly RM448 million, leaving RM76 million untraceable. Clearly, the top management of both FELDA and Tabung Haji had plundered the Malay institutions.

But that was nothing compared to the RM2.77 billion acquisition of a 37% non-controlling stake in Indonesia’s Eagle High Plantations in 2015 – overpaid a massive premium of over 95% relative to the market price of the shares. The company was owned by Indonesian billionaire Peter Sondakh, a close friend and associate of Najib Razak. Felda said Najib cheated it into investing in his tycoon friend’s Rajawali Group.

It was also not a coincidence that Tabung Haji and FELDA, not to mention MARA, PNB, LTAT, KWAP and whatnot were similarly milked and plundered at the period when the 1MDB scandal was exposed and needed bailout. Yes, to cover up the 1MDB scandal, disgraced Najib sold not only national strategic assets such as power plants, lands like Bandar Malaysia and projects like ECRL to China in exchange for kickbacks, but also actively raping the Pilgrims’ Fund.

Under Najib government, Tabung Haji also made losses of RM670 million from its attempt to rescue Ramunia Holdings Bhd and RM144 million from buying 30% of Putrajaya Perdana’s ownership (a company linked to Najib’s partner-in-crime Jho Low), not to mention RM1.1 billion losses in Felda Global Ventures (FGV) investment. The fund also did not record an impairment totalling RM227.81 million against investments in three subsidiary companies, primarily TH Heavy Engineering Bhd.

Najib and other so-called UMNO defenders of Malay, Islam and Monarch knew that like the 1MDB scandal, the Tabung Haji scandal was too complicated for the Malays and Muslims to understand. Even if they understood, which they don’t, the Malays would easily forgive fellow Malays under the pretext of Malay unity and Muslim Brotherhood.

To cover up the financial trouble of Tabung Haji, extraordinary “hibah (dividends)” were declared. Crooked Najib dared not reveal the true financial health, as his mismanagement and incompetence will be exposed. 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.

Ahead of the 14th general election on May 9, 2018, 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.

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 were their own money used to pay themselves. And the United Malays National Organization (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.

The depositor who had invested more than RM190 million in the fund would have made a cool RM15.675 million for doing nothing in the year it yielded 8.35% of dividend. But a Ponzi scheme is unsustainable. The Tabung Haji’s Recovery and Restructuring Working Plan reveal­ed the stunning high concentration of depositors to a small segment where 1.3%, or a mere 117,000 of them (depositors), contributed to 50% of its deposits. 

This means if the small number of powerful and rich depositors pull out, the scheme would definitely collapse. Overstated profits, understated value of assets, unbalanced profile of depositors and questionable transactions were all uncovered in the review of the financial position of Lembaga Tabung Haji (board of pilgrim’s fund) back in 2018. 

In April 2019, Tabung Haji announced a “hibah (dividend)” of 1.25% – the lowest in the history – for the financial year 2018. Even at 1.25%, the payout was at a staggering RM913 million to its 9.3 million depositors. 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 as healthy as a horse overnight? 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 was used in the bail out exercise.

Even as then-Finance Minister Lim Guan Eng cracked his head squeezing every Ringgit to bail out the Tabung Haji, crooks from UMNO and PAS spread baseless and fake news that the hajj pilgrims fund board was under the control of Chinese-based DAP. The depositors should be grateful that the fund is guaranteed by the government, unlike entities like Malaysia Airlines.

Worse, in what appears to be an insult to the good name of Islam, the previous government of UMNO Malay nationalist party which was heavily supported by the PAS Islamist party had cooked the Tabung Haji accounting books by selling its shares in Bank Islam Malaysia Berhad to show a profit and then repurchasing the same shares – a breach of listing of stock exchange and cheating of the highest order.

An independent report – “Financial Position Review of TH” by PricewaterhouseCoopers (PwC) – showed that the troubled pilgrims fund made a gain of RM553 million from the disposal of the Bank Islam shares in 2017 and subsequently bought back within four days after trade date at the same price sold through 4 brokers – UOB, Kenanga, TA Securities and Affin.

But since the so-called RM553 million gains were “fake”, former Tabung Haji chairman Abdul Azeez Abdul Rahim, also a Member of Parliament of UMNO, had conspired with the board of directors to dip their hands into depositors’ savings to pay the dividends. This created an illusion that the fund was paying an incredible high return when in fact it came from depositors’ hard-earned money.

The scam would have continued had the old UMNO regime won the 2018 general election. The Ponzi scheme was working incredibly well based on the assumption that “not every depositor” would withdraw their money in Tabung Haji. The get-rich-quick scheme would be discovered as the bubble would burst eventually due to insufficient funds – liabilities outstripped assets by RM9 billion.

Had the Mahathir-led Pakatan Harapan failed to defeat the long ruling Barisan Nasional government in 2018, the Ponzi Scheme would have continued till today. When you have 9.3 million depositors, but only 30,000 use their money in Tabung Haji to perform Hajj every year, what Najib and his band of crooks needed to do was to pay dividends using the depositors’ own money – to create an illusion that they received extraordinary “hibah”.

After you minus 30,000 from 9,300,000 depositors, the money left in Tabung Haji was pretty substantial and could still be used to pay dividends for ages using Najib’s Ponzi scheme. As a yardstick, it was discovered that the hard-earned savings fund for Muslims to perform the mandatory hajj pilgrimage should have RM64 billion in assets, but had been found to be short of RM4 billion in deposits in 2016.

Theoretically, based on the RM60 billion left in 2016, Tabung Haji could still pay its same number of depositors the same rate of dividend of 6.25% for at least another 22 years – using the depositors’ own money to pay themselves – till zero Ringgit left. After Pakatan Harapan government collapsed in 2020 after just 22 months in power, backdoor Prime Minister Muhyiddin Yassin set up a Royal Commission of Inquiry (RCI) on October 8, 2021.

The RCI report dated July 19, 2022 was then presented to Yang di-Pertuan Agong (King) on August 30, 2022, when UMNO vice-president Ismail Sabir was the Prime Minister. Even then, the RCI only dared to say the crisis was due to Tabung Haji’s  “creative accounting practices” in order to enable it to declare high dividends. It also revealed how unauthorised bonuses totalling more than RM2.19 million were paid to 24 persons.

Still, the burning question is why PM Anwar Ibrahim has only decided to declassify the 211-page Lembaga Tabung Haji RCI report three days before the Negeri Sembilan state election in July 2026 – nearly four years after its completion in July 2022? It’s not rocket science that despicable Anwar was hiding the scandal to protect UMNO – till UMNO declared war with Anwar’s Pakatan Harapan in the Johor and Negeri Sembilan state elections.