By Nurunnasihah Ahmad Rashid and Durratul Ain Ahmad Fuad
KUALA LUMPUR, Aug 11 (Bernama) -- Lembaga Tabung Haji (TH) incurred losses of nearly RM13 billion through 14 problematic investments, seven of which suffered losses of 100 per cent, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
The largest loss was from TH’s investment in Al-Rawda Real Estates Development & Project Management Co Ltd, a Saudi Arabia-based property development and project management company, he noted.
The minister said the losses of almost RM13 billion comprised RM10.2 billion borne by the government through a bailout carried out via Urusharta Jamaah Sdn Bhd (UJSB) in 2018, as well as RM2.6 billion in impairment losses borne by TH between 2018 and 2025 for investments still being managed.
“More seriously, seven of the 14 investments suffered 100 per cent losses. Not partial losses, but total losses,” he said during the winding-up briefing session of the special Dewan Rakyat sitting to debate the Royal Commission of Inquiry (RCI) report on TH today.
The report was earlier tabled by Minister in the Prime Minister’s Department (Religious Affairs) Dr Zulkifli Hasan.
Amir Hamzah said the Al-Rawda investment represented the largest loss among TH’s problematic investments, involving lease agreements for the period from 2015 to 2017 in which TH paid 1.4 billion Saudi riyals, or about RM1.5 billion, to an intermediary to lease four hotels in Makkah and Madinah to accommodate pilgrims.
According to him, the company concerned was supposed to operate the four hotels and pay TH a rental amount of 2.49 billion Saudi riyals, but the payment was not made, while the substantial investment was only guaranteed personally through a promissory note.
Al-Rawda defaulted on its rental payments starting the first quarter of 2019, eventually forcing TH to provide for a full impairment loss amounting to RM1 billion in 2024, he said.
Amir Hamzah said that TH’s Risk Management Department had previously requested a bank guarantee for the Al-Rawda investment, but the guarantee was not provided, while the due diligence report was also incomplete.
Nevertheless, he said, the TH leadership at the time proceeded with the transaction based solely on the promissory note, thereby placing more than RM1.5 billion of depositors’ funds into an investment without valuable collateral.
“What Tabung Haji had in hand was merely a promissory note. This transaction was clearly flawed from the outset, being one-sided and failing to protect the interests of Malaysian Muslims,” he said.
What need to be investigated are who benefited from the transaction and whose interests are being protected, the minister said, stressing that the authorities must carry out this probe swiftly.
Meanwhile, Amir Hamzah said another problematic investment, which was also identified by the RCI following unrecorded impairment losses, involved the construction of three offshore patrol vessels (OPVs) for the Malaysian Maritime Enforcement Agency (MMEA), a project undertaken by TH’s associate company TH Heavy Engineering Bhd (THHE).
He said that on Jan 19, 2017, the government awarded a contract worth RM738.9 million to THHE Destini Sdn Bhd, a joint venture between THHE’s unit THHE Fabricators Sdn Bhd (holding a 49 per cent stake) and Destini Shipbuilding Engineering Sdn Bhd (51 per cent).
However, he said, the entire construction work was subcontracted to a Destini subsidiary, while THHE only received a letter of appointment for consultancy services, with the actual construction work being carried out by Destini from the start.
Amir Hamzah said a forensic audit of the project identified irregularities involving RM48.1 million in funds, as well as potential further irregularities amounting to RM195.4 million that are still under investigation, including RM31.6 million in contract funds that were transferred to the subcontractor’s parent company, contrary to what had been agreed to.
“The forensic report also stated that a former director of Destini Bhd received RM1 million through a related company.
“In the end, only one of the three vessels was completed, although all three were supposed to have been built within 42 months, or around mid-2020. The first vessel was only delivered on Jan 2, 2024, late by about three and a half years,” he added.
He pointed out that subsequently, the contract for the second and third vessels was terminated by mutual agreement effective Dec 31, 2024.
Amir Hamzah said that it was estimated to require a further RM310 million, or 40 per cent above the original cost, to complete these vessels based on the same assessment for the three vessels.
“The weaknesses in governance for the transaction involving TH and Destini not only resulted in losses, but also forced the government to bear additional costs to complete the remaining two OPVs,” he added.
-- BERNAMA