LEMBAGA Tabung Haji is expected to set up a special purpose vehicle (SPV) to take over its underperforming assets as part of its turnaround plan, The Edge Financial Daily reports.

The report said the move would allow Tabung Haji to close the gap between its assets and liabilities. The pilgrimage fund is believed to have around 80 sen in assets for each ringgit in liabilities.

“To get Tabung Haji back on track, it needs to make the assets at least equal to the liabilities so it can pay dividends,” a source was quoted as saying in the report.

The plan, which is expected to be unveiled soon, will see SPV issuing sukuk to raise cash to acquire Tabung Haji’s underperforming assets. The SPV will then work over a period of years to recover the value of those assets, said the report.

Danaharta Nasional Bhd undertook a similar exercise when did it took over the non-performing banks loans after the 1997-1998 Asian financial crisis.

The Tabung Haji turnaround plan also includes separating the pilgrims management from the deposit-taking operations. The move will place the latter, which currently lacks regulatory oversight, under the supervision of Bank Negara.

Tabung Haji is besieged with problems due to the previous management continuing to pay high dividends in the past few years despite its assets being worth less than its liabilities.

Last week’s reports stated Tabung Haji had inflated its profits to justify paying dividends.

The 2017 Auditor-General’s Report revealed that Tabung Haji failed to record an asset impairment of RM227.81 million in three subsidiary companies and three associate companies, especially its investment in associate company TH Heavy Engineering Bhd amounting to RM164.58 million.

Last Friday, Tabung Haji lodged two police reports against former chairman Abdul Azeez and CEOs Ismee Ismail and Johan Abdullah as well as four senior management staff — over misuse of funds and wrongful conduct in a corporate deal.

In the first report, Tabung Haji alleged that RM22 million from Yayasan Tabung Haji’s 2017 programme was spent on political activities. Tabung Haji had contributed RM7 million to the programme.

Its trustees then were Abdul Azeez, Ismee, Johan, chief operating officer Adi Azuan and chief financial officer Rozaida Omar.

In the second report, Tabung Haji alleged that Ismee, Hazlina Mohd Khalid (legal adviser) and Rifina Md Ariff (senior general manager of corporate services and real estate) misrepresented and withheld material information related to Tabung Haji’s sale of its 95% stake in PT TH Indo Plantations to PT Borneo Pacific for US$910 million. – December 5, 2018.