Rafizi: RM554m Tabung Haji investments to go up in smoke

Some RM554 million in Tabung Haji investments are at risk of being lost, claims Pandan MP Rafizi Ramli .

He urged Prime Minister Najib Abdul Razak to disclose what actions he would take to stem the losses in the fund’s investments in TH Heavy Engineering Bhd (THHE).

“The loss of RM554 million from Tabung Haji would come mainly from the poor and the old, and is not something that can be ignored,” he said in a statement today.

He said that according to filings with Bursa Malaysia, THHE has been served with petitions from two foreign companies this month, calling for THHE to be wound up.

The companies are MIB Italiana SpA and Orwell Offshort Ltd, which are claiming US$ 1.3 million (RM5.1 million) and US$7.6 million (RM30.4 million) in arrears respectively.

THHE said in the stock market announcement that it intends to defeat both petitions.

In the meantime, Rafizi claims that his earlier warnings about THHE’s profitability has been vindicated, and THHE’s shares have fallen to historic lows of 6.5 sen per share following the two petitions.

He said that he had previously issued the warnings based on the low crude oil prices, and THHE’s overdependence on its sole major project to lease floating production, storage and offloading (FPSO) facilities to JX Nippon and Petronas Carigali at the Layang gas fields.

“This is proven true when not only that THHE’s shares are traded at its lowest ever prices, market analysts have also slashed its financial performance projections and advised investors to sell their THHE shares.

“The investment firm Maybank Kim Eng issued a market report in July lowering its THHE revenue estimates from 2016 until 2018 by 16 to 32 percent,” he said.

He claimed that the FPSO facilities were supposed to be completed by now following a deadline extension, but there were no signs that this has been done.

“Instead, there are allegations of technical issues complicating changes to the FPSO to meet technical specifications spelled out in the contract with JX Nippon-Carigali.

“To make matters worse, the financial issues and limited cashflows faced by THHE mean that it is at risk of violating contractual obligations and would not be paid,” he said.

Strong financial status

Of the RM554 million that Tabung Haji stands to lose, Rafizi said RM22 million would come in the form of 166,836,833 units of THHE shares, which have already lost RM228 million of its value since they were acquired in 2008.

Another RM50 million would come from RM50 million in sukuk bonds that are not at risk, while the remaining RM275 million are in the form of Irredeemable Cumulative Preference Shares (ICPS).

The government had previously said that it was satisfied with the pilgrimage fund’s management and that the fund has a strong financial status.

“As of Dec 31, 2015, Tabung Haji's total realisable asset value amounted to RM64.5 billion.

“TH's liabilities, meanwhile, amount to RM0.7 billion and total deposits before payment of bonus is RM59.3 billion,” Minister in the Prime Minister’s Department Jamil Khir Baharom told Parliament in a written reply in March.

Meanwhile, Rafizi expressed hope that Tabung Haji under Johan Abdullah’s new leadership would take a ‘different approach’ in handling check-and-balance from opposition MPs.

“Since my analysis and warnings have been proven true, I urged that Tabung Haji retract its police report on this matter against me that has caused me to be charged in court for supposedly slandering Tabung Haji, since what I said before is now happening,” he said.

The police report was made against Rafizi for his allegations that Tabung Haji had provided a RM963 million corporate guarantee to THHE, which the fund has denied.

Johan, the newly-minted Tabung Haji group executive director and CEO, was appointed to his post on July 1. - Mkini