PETALING JAYA: Lembaga Tabung Haji (TH) should have recorded a net loss of RM1.4bil in 2017 instead of the RM3.4bil profit reported that year, according to the newly declassified Royal Commission of Inquiry (RCI) report.
The report showed that TH’s financial standing was critical for the 2017 financial year.
The commission found several points raised in Pricewaterhouse Coopers’ (PwC) financial review to be accurate.
Among the factors that contributed to the financial crisis were high hibah (profit distribution) payments and the eagerness to pay high hibah from 2014 to 2017, which exceeded TH’s financial capabilities.
“If the Malaysian Financial Reporting Standards (MFRS) had been fully applied for the 2017 financial year, TH should have recorded a net loss of RM1.4bil instead of the RM3.4bil profit reported in its 2017 Financial Statements,” it said.
The report said this indicated that TH’s financial position had already reached a critical state in the 2017 financial year.
“The high profit distributions (hibah) made before 2018 caused TH’s reserves to decline,” it added.
The 211-page report was released last night by the Department of Islamic Development Malaysia following the Cabinet’s decision to declassify the document and make it available to the public.
The six-member RCI was chaired by former Chief Justice Tun Md Raus Sharif, while its members included former Chief Secretary to the Government Tan Sri Samsudin Osman and RHB Group founder Tan Sri Abdul Rashid Hussain, who is also TH’s current chairman.
The three other members were former Bank Muamalat (M) Bhd chairman Tan Sri Dr Mohd Munir Abdul Majid, Sultan Abdul Halim Mu’adzam Shah International Islamic University Vice-Chancellor Prof Dr Asmadi Mohamed Naim and chartered accountant Norsyahrin Hamidon.
The RCI report said TH’s management engaged in “creative accounting” practices to declare hibah.
“Between the 2014 and 2017 financial years, LTH’s management did not use the asset values reported in TH’s annual financial statements audited by the National Audit Department.
“Instead, TH used the Realisable Asset Value to determine compliance with Section 22 of the Tabung Haji Act,” it said.
The report also questioned the lack of firmness by the Auditor-General, saying that as a statutory body, TH’s annual financial statements are required to be audited by the department.
“The objective of the audit is to ensure that the financial statements provide a true and fair view of TH’s financial position.
“The Commission found that TH’s financial statements from 2014 to 2017 were given unqualified audit opinions, despite the audit report for the 2017 financial year containing a ‘Matter of Emphasis’ section,” it noted.
The lack of firmness by the National Audit Department was also evident in its failure to reprimand TH over the high hibah declared from 2014 to 2017.
The department’s officials stated that it was not responsible for the hibah declared by TH.
The Commission found this statement inconsistent with the department’s responsibility to audit statutory bodies.
The department should have raised concerns over the excessively high hibah, which were inconsistent with TH’s financial capacity, the RCI report said.
