KUALA LUMPUR, July 30 — Weak governance, including political interference in the management of Tabung Haji (TH) and the distribution of its profits, was among the key findings of the Royal Commission of Inquiry (RCI) into the pilgrim fund's operations from 2014 to 2020.
The RCI report, released last night, found that political involvement in TH's management between 2014 and 2018 had fuelled public concern amid political rivalry.
According to the report, the situation allowed certain parties to exploit decisions made by TH as a subject of criticism, undermining the institution's credibility.
"There were several TH decisions, such as the payment of profit distribution (hibah), the determination of haj charges, and Haj Financial Support (HAFIS), that were driven by political elements," the report said.
The report found that the situation also stemmed partly from weaknesses in the Tabung Haji Act 1995 (Act 535), which it said was no longer suited to current needs as it conferred broad powers to the minister over haj operations, funds and investments.
The report said the minister responsible for TH was the Minister in the Prime Minister's Department (Religious Affairs).
It also found that the expertise of the three Religious Affairs Ministers who oversaw TH during the period under investigation — Datuk Seri Jamil Khir Baharom, Datuk Seri Mujahid Yusof Rawa and Datuk Zulkifli Mohamad Al-Bakri — was confined to religious affairs.
"This limitation resulted in the Religious Affairs Minister relying entirely on recommendations submitted by the management and the board in carrying out responsibilities relating to fund management and investments.
"It was found that the minister did not receive any additional input before making decisions on fund management and investments. The situation might have been different if matters relating to TH's fund management and investments had been placed under the responsibility of the Finance Minister.”
The RCI also found that Act 535 empowers the minister to appoint the chairman and members of the board, but does not prescribe specific criteria for the appointments other than requiring them to be Muslims and Malaysian citizens.
Accordingly, the commission identified related legislation prescribing specific appointment criteria, such as requiring appointees to be "persons with knowledge and experience in finance, business, economics, accounting or any other related discipline”, as a guide.
"Such broad provisions resulted in the appointment of a TH chairman and several board members from among politicians during the 2014 to 2018 period," the report said.
The commission also took the view that the provision under Act 535 empowering the minister to terminate the appointment of any board member at any time without giving any reason was no longer appropriate under the current circumstances.
"The minister exercised this power in two instances, including the termination of Datuk Nik Mohd Hasyudeen Yusoff's service as chief executive officer on May 5, 2021, before the expiry of his actual term on August 31, 2021.
"It also exercised the power to terminate the appointment of Tan Sri Md Nor Md Yusof as chairman of the board on October 15, 2021, before the expiry of his renewed two-year term, which commenced on July 20, 2020," the document said.
The RCI also found that the involvement of TH board members and senior management in its subsidiaries had reduced their focus on their core responsibilities at TH and created conflicts of interest in the management of the institution and its subsidiaries.
Following these findings, the commission recommended amendments to Act 535 to strengthen TH's governance and regulatory framework, as well as a restructuring of its governance to place haj management under the Minister in the Prime Minister's Department (Religious Affairs), and financial, fund and investment management under the Finance Minister.
The RCI also recommended that the Investment Panel, Syariah Advisory Committee and Haj Management Committee be expressly provided for under Act 535 to further strengthen TH's governance.
