KUALA LUMPUR, Aug 30 — The Royal Commission of Inquiry (RCI) was crucial to determine whether Lembaga Tabung Haji’s investment losses stemmed from weaknesses in investment decision-making or other factors, said Senator Muhammad Hasbi Muda.
While losses are a normal part of investment activities and did not necessarily indicate criminal wrongdoing, the issues involving Tabung Haji warranted a comprehensive examination given the number of troubled investments highlighted.
He said half of the 14 investments proposed for forensic audits had suffered 100 per cent losses, while Tabung Haji's financial position between 2014 and 2018 also saw its liabilities exceed its assets.
“We can determine from the findings whether the losses were due to weaknesses in the investment panel or whether something else was wrong.
“If the wrongdoing was straightforward, like someone stealing from a mosque collection box, we do not need an RCI. But in the case of Tabung Haji, it was systemic. The misconduct or misappropriation was difficult to determine through the usual methods. That was why we need the RCI,” Hasbi said.
He was speaking as a guest on a recent talk show produced by a local television station, alongside economist Professor Emeritus Barjoyai Bardai.
Hasbi added that the colloquial term 'sakau', which refers to the unauthorised taking of money or property for personal gain, should not be viewed solely in that context.
It could also include improperly obtained benefits such as appointments, promotions, or other gains, as well as offences including false claims and abuse of power.
Meanwhile, Barjoyai said weaknesses in procedures, governance and internal controls were among the issues that needed scrutiny when assessing Tabung Haji's past problems.
One area of concern was how investments were valued, which he claimed Tabung Haji's management and board of directors handled rather than independent professionals through objective assessments.
The Malaysia University of Science and Technology lecturer said investment impairment issues had occurred since 2014 and were flagged by auditor PricewaterhouseCooper but were not reported, even after warnings were issued.
“Every valuation involved discretion because there was no absolutely precise value. But if they were conducted objectively by an independent team, it could have been better. This reflects institutional weaknesses in procedures, governance, and internal controls,” he said.
As such, Tabung Haji should reassess its investment management capabilities as part of reforms to prevent similar weaknesses from recurring.
Barjoyai noted that if it wanted to focus on managing pilgrims and Haj affairs, it could entrust its investment management function to other investment institutions such as the Employees Provident Fund or Permodalan Nasional Bhd.
However, if Tabung Haji chose to continue managing its investments itself, it would need major changes to ensure robust governance, procedures, and professional valuation methods.
The 252-page RCI report was made public on July 29 and debated during a special sitting of the Dewan Rakyat on August 11.
