Bank Negara first raised alarm about Tabung Haji's finances in 2015

Although the transaction was concluded at RM703.44 per sq ft (psf), a source said the special-purpose vehicle (SPV) created by the MoF to undertake the transaction had initially wanted

PETALING JAYA: Bank Negara (BNM) had raised the alarm about the state of Tabung Haji’s finances in late 2015 to then-Minister in the Prime Minister’s Office Datuk Seri Jamil Khir Baharom.

In a Dec 23 letter to Jamil Khir, who was in charge of religious affairs, then-BNM Governor Tan Sri Zeti Akhtar Aziz warned that Lembaga Tabung Haji (TH) was paying out dividends and bonuses using its reserves since 2012.

And as such, the institution’s declining reserves were not enough to manage the poor equities market performance in 2015.

In the letter, Zeti said the value of TH’s reserves had become negative, and this meant at current market values (in 2015), TH’s assets were not sufficient to meet all its financial obligations.

A footnote included in the letter stated that as of end September 2015, the assets’ value was only enough to pay out no more than RM0.96 for every ringgit in liabilities.

Zeti’s letter also warned that in the event of a mass withdrawal, it could cause Tabung Haji to seek government financial aid in order to fulfil its obligations under Section 24 of the Tabung Haji Act 1995.

The letter said Bank Negara officers had met with Tabung Haji’s management and proposed that the fund formulate a reserve policy to strengthen its risk management.

Meanwhile, Zeti, in the letter, also called on Jamil Khir to consider beefing up the Board of Directors with more members with financial expertise and experience.

Bank Negara sources said the central bank raised the concern to LTH because they were looking into the country’s financial stability and the strength of the banking sector.

Tabung Haji is the major shareholder of Bank Islam, which falls under BNM’s jurisdiction.

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