KUALA LUMPUR (Dec 20): Former Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar is slated to be the chairman of Lembaga Tabung Haji (LTH), according to sources.

The previous chairman of the pilgrim's fund, Tan Sri Md Nor Yusof, resigned from the post on Oct 14, about three years after his appointment.

Md Nor's appointment then was seen as a move to institutionalise the appointment of a professional to the chairman's post, which used to be held by politicians.

Prior to Md Nor taking the post, Baling member of parliament Datuk Seri Abdul Azeez Abdul Rahim was the chairman of the fund for five years from July 2013, while Tan Sri Ismee Ismail was the group managing director and chief executive officer (CEO) then. Ismee had been the managing director for more than 10 years until end-June 2016.

LTH declined to comment on the matter.

Azman resigned from Khazanah's board in July 2018 along with other board members, following Pakatan Harapan's win in the 14th general election.

Azman, who is known for his work on institutionalising Khazanah during his stint there, appears to be joining LTH at a challenging time. He is appointed amid a series of changes at the top of LTH.

In May, Lembaga Tabung Angkatan Tentera CEO Datuk Seri Amrin Awaluddin was appointed LTH's group managing director and CEO, taking over from Datuk Nik Mohd Hasyudeen Yusoff.

About three weeks ago, LTH chief financial officer (CFO) Datuk Merina Abu Tahir stepped down. The pilgrim fund then appointed executive director for operations Mustakim Mohamad as the interim CFO.

The government in July announced the set-up of a Royal Commission of Inquiry (RCI) to investigate issues related to LTH, and to ensure that a transparent and trustworthy investigation could be carried out on whether the fund had conducted its mandate professionally in managing its deposits.

The RCI is to review LTH's audit findings by consultants from 2014 to 2018, as well as the recovery measures undertaken by the fund up until 2020.

The fund has been temporarily placed under the regulation of Bank Negara Malaysia (BNM) as an interim solution until the findings of the RCI are presented to the government for further action.

Prior to that, LTH's deposits came under BNM's supervision in January 2019, as it was found to be in breach of Tabung Haji Act 1995, which involved the set-up of special purpose vehicle Urusharta Jamaah Sdn Bhd (UJSB) to take over the fund's underperforming assets by injecting fresh money.

Some RM9.36 billion worth of non-performing assets were transferred to UJSB, in exchange for RM19.9 billion comprising two tranches of sukuk and RM300 million cash.

The troubles faced by the pilgrim fund were unravelled in July 2019 when the new team, led by then chairman Md Nor and CEO Datuk Zukri Samat, found that LTH had inflated its profits to justify paying hibah, or dividends, to depositors.

It had effectively paid out dividends using depositors' savings from 2014 to 2018, instead of investment profit.

LTH's financial year 2017 accounts showed RM70.3 billion in assets and RM74.4 billion in liabilities, or a deficit of RM4.1 billion, as at Dec 31, 2017.

PricewaterhouseCoopers, hired by LTH to conduct an independent review of the fund's financial position as at end-December 2017, found that at times profits generated were based on transactions that did not generate cash.