IN 2015, ZETI ALREADY WARNED TABUNG HAJI ASSETS NEGATIVE & PAYING DIVIDENDS FROM RESERVES – BUT NAJIB REGIME CONTINUED TO PLUNDER: NOW 3 YEARS LATER, RM19.9 BILLION OF ASSETS ARE UNDER-PERFORMING – TO BE TRANSFERRED TO FINANCE MINISTRY TO BE ‘TURNED AROUND’

KUALA LUMPUR: The Ministry of Finance would be taking up RM19.9bil of Lembaga Tabung Haji’s (TH) underperforming assets comprising equities and properties.

Group managing director and chief executive officer Datuk Seri Zukri Samat said the assets would be transferred to a special purpose vehicle (SPV), which will be owned by the government.

“The assets to be carved out would be identified using two criteria, for properties would be those with a yield of less than 2% and for equities, the value impaired would have exceeded 20%,” he told reporters at a press conference at TH’s headquarters on Tuesday.

The exercise is to rehabilitate the pilgrimage fund’s underperforming assets and normalise its financial position.

Zukri highlighted among the assets that would be carved out include its 1MDB land it bought for RM195mil and its stakes in oil and gas (O&G) companies.

“The land is not churning any yields…and we are not so good in O&G and hotel businesses,” he said.

The transaction is expected to be completed in three weeks, he added.

The SPV, he said, would be issuing RM10bil sukuk and RM9.9bil in Islamic redeemable convertible preference shares (RCPS-i).

The Sukuk would have seven-year maturity with zero-coupon to be issued at discounts yielding 5% per annum.

Meanwhile, the RCPS do not have maturity date and dividend.

Zukri pointed out that there would be no cash transaction involved between the SPV and TH.

“We believe that seven years should be enough for assets turn around,” he said.

Upon completion, he said TH would have a clean balance sheet with assets equal to liabilities at RM77bil.

Bank Negara first raised alarm about Tabung Haji’s finances in 2015

PETALING JAYA: Bank Negara (BNM) had raised the alarm about the state of Tabung Haji’s finances in late 2015 to then-Minister in the Prime Minister’s Office Datuk Seri Jamil Khir Baharom.

In a Dec 23 letter to Jamil Khir, who was in charge of religious affairs, then-BNM Governor Tan Sri Zeti Akhtar Aziz warned that Lembaga Tabung Haji (TH) was paying out dividends and bonuses using its reserves since 2012.

And as such, the institution’s declining reserves were not enough to manage the poor equities market performance in 2015.

In the letter, Zeti said the value of TH’s reserves had become negative, and this meant at current market values (in 2015), TH’s assets were not sufficient to meet all its financial obligations.

Zeti’s letter also warned that in the event of a mass withdrawal, it could cause Tabung Haji to seek government financial aid in order to fulfil its obligations under Section 24 of the Tabung Haji Act 1995.

The letter said Bank Negara officers had met with Tabung Haji’s management and proposed that the fund formulate a reserve policy to strengthen its risk management.

Meanwhile, Zeti, in the letter, also called on Jamil Khir to consider beefing up the Board of Directors with more members with financial expertise and experience.

Bank Negara sources said the central bank raised the concern to LTH because they were looking into the country’s financial stability and the strength of the banking sector.

Tabung Haji is the major shareholder of Bank Islam, which falls under BNM’s jurisdiction.

THE STAR