Frankly Speaking: How did it get so bad?

This article first appeared in The Edge Malaysia Weekly, on December 17, 2018 - December 23, 2018.
-A +A

Last week, it emerged that an audit carried out by PricewaterhouseCoopers showed that as at end-December 2017, the pilgrim fund had total assets of RM70.3 billion and total liabilities of RM74.4 billion, indicating a deficit of RM4.1 billion.

Section 22(3)(a) of the Tabung Haji Act 1995 states that the pilgrim fund can only issue dividends if it fulfils two criteria, namely, assets cannot be lower than its liabilities, and there must be distributable profits.

The PwC audit also revealed that TH cooked its books to pay out dividends.

Then there was the warning from the then Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz in December 2015 that TH’s assets were less than its liabilities.

In fact, TH had effectively been paying dividends using depositors’ savings since 2014, PwC said in its report.

While some individuals are being investigated, obvious questions have emerged. How is it that the Auditor General who signed off on TH’s annual reports did not catch the problems? Also, what about those along the chain of approval for the dividends?

Section 22 (1) of the Tabung Haji Act says the pilgrim fund “may at its absolute discretion determine at any time whether it is prudent to declare a sum as distributable profit in respect of any particular period or year of the fund and if it determines to so declare, the lembaga shall, with the approval of the minister, declare a sum as distributable profit in respect of any particular period or year of the fund”.

How is it that the audit and approval processes were so lax that the alleged wrongdoings at the pilgrim fund escaped detection for so many years? How could this be allowed for so long?

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.