RCI: Tabung Haji Should Not Have Declared RM2.75 Bln 2017 Hibah
KUALA LUMPUR, July 30 (Bernama) -- The Royal Commission of Inquiry (RCI) on Lembaga Tabung Haji (TH) said the Islamic pilgrimage fund should not have declared a 4.50 per cent annual profit distribution (hibah) and a 1.75 per cent hajj hibah, totalling RM2.75 billion, for the 2017 financial year.
The commission said TH's aggressive approach to paying high hibah from 2014 to 2017, beyond its financial capacity was among the factors that contributed to the fund's financial crisis, according to its report released on Wednesday night.
The RCI also found that TH's management had engaged in creative accounting practices to enable the declaration of the high hibah.
It said TH's financial statements from 2014 to 2017 received unqualified audit opinions despite the 2017 audit report containing an "emphasis of matter".
On the audit of TH's 2017 financial statements, the RCI said the National Audit Department should not have issued an unqualified audit opinion because the matter highlighted under the "emphasis of matter" should have been classified as a non-compliance issue.
The commission said the Auditor General had taken into account matters beyond the audit scope in the findings on TH's 2017 financial statements, reflecting a lack of firmness by the National Audit Department in auditing the statutory body's accounts.
The RCI also said the National Audit Department failed to raise concerns over TH's high hibah payments between 2014 and 2017.
According to the report, the generous hibah payments made before 2018 depleted TH's reserves.
"These high hibah payments attracted depositors seeking higher returns. In meeting those expectations, TH drifted from the objectives for which it was established.
"This exposed TH to the risk of large-scale withdrawals, or a bank run, if the hibah declared was considered too low," the report said.
The RCI said this risk materialised in 2019 after TH announced a hibah of 1.25 per cent, which led to a contraction in deposits.
"TH's deposits declined from about RM73 billion before the hibah announcement to RM69 billion by the end of 2019. TH was fortunate that the withdrawals, and their impact, were smaller than feared," it said.
The commission said the National Audit Department should have raised objections to TH's declaration of hibah that exceeded its financial capacity.
-- BERNAMA