THE Pilgrims’ Fund Board, or Lembaga Tabung Haji (TH), has no business going into high-risk investments and should return to its original aim – to help poor Muslims save up enough to perform the haj in Mecca, said analysts.

Part of that aim involves allowing TH to invest so that returns can be used to finance part of the cost of performing the haj.

However, after years of mismanagement by the former administration, TH should not be allowed to invest in high-risk instruments or play the stock market as this puts depositors’ monies at risk, they said.

Analysts added that the fund should only be allowed to invest in low-risk instruments so that it could continue subsidising the cost of the ritual, which can run up to more than RM20,000 per person.

“TH is not the same as any other investment fund, whose sole purpose is to invest and generate high returns for its members,” Nazarry Rosli of Jupiter Securities told The Malaysian Insight.

“TH was established with the sole purpose of helping its depositors acquire enough money to perform the haj. It has no business going into high-risk investments, such as stock investing and forex trading,” Nazarry said.

It can invest diligently so as to generate enough money to subsidise the cost of the haj but not in high-risk investments, he said.

Recently, Pakatan Harapan announced plans to restructure the fund after discovering that it was being improperly run by its former top management.

The government also floated the idea of reducing the subsidy TH pays to depositors to perform the haj. This year, the fund will pay out RM12,920 to each depositor going on the haj.

This year, the cost set by Saudi Arabia is RM22,900 per person. Malaysian pilgrims only pay RM9,980 with the TH subsidy. 

The fund’s management strayed from the institution’s original purpose when it invested to ensure high dividends, Nazarry said.

“Depositors were putting millions into the fund because they were attracted to the high dividends. These were people who had already gone on the haj but just wanted to make money.”

As a result, the top management was pressured to make increasingly risky investments to generate high profits and declare high dividends.

One of those investments was in oil and gas company Ramunia Holdings, later known as TH Heavy Engineering. TH is estimated to have lost more than RM549 million because of the depreciation in TH Heavy Engineering shares.

In December last year, ex-TH Heavy Engineering boss, Nor Badli Munawir Mohamad Alias Lafti, was charged with five counts of criminal breach of trust and four counts of money-laundering.

TH even broke its own rules by illegally paying out dividends since 2014, as it had more debts than assets.

Another analyst, Dr Rais Hussin of think-tank Emir Research, said the government has to bring the top management to book and recover monies lost from their ill-conceived decisions.

“It is only just and fair to the depositors that action be taken against these people and the monies recovered. These people committed criminal breach of trust,” said Rais, who is the think-tank’s president.

“When you are given the trust to manage these funds prudently and then you go out and make high-risk investments… that is a breach of trust.”

Rais said lost opportunities from TH failures cost the fund not just billions in losses but robbed the country of an institution that could contribute to the economy.

TH, which has RM70.3 billion in assets, could have made prudent investments to generate economic activity, said Rais. – April 4, 2019.