Once a year, Tabung Haji pays its savers a share of its profits. The payout is called hibah, and almost 10 million people wait for it. Most read it as a sign the fund is healthy. In 2017 it pointed to a RM3.4 billion profit. But the fund had lost RM1.4 billion that year, and paid savers anyway. A royal commission has now found out why. The real problem was not bad investments. It was a number that had to keep looking good.
Two questions run through what follows: how did a losing fund end up paying like a winning one, and why were people in politics deciding its money at all?
A profit that was really a loss
The clearest sign of trouble was 2017. Tabung Haji told everyone it made RM3.4 billion that year. The royal commission checked the books and found the fund had really lost RM1.4 billion. The difference is RM4.8 billion, and it all leaned the same way, turning a real loss into a profit on paper. The fund managed this in two ways. It guessed high on what its investments were worth, instead of using their real value. And when some investments dropped in value, it waited before owning up to the loss. The law here is simple. Tabung Haji can only pay savers when it owns more than it owes. In 2016 and 2017, it owed more than it owned. So the payout that savers saw as good news was really cash leaving a fund that was already in the red.
Warned, but still paying
The people in charge were not in the dark. Bank Negara, the country’s central bank, sent Tabung Haji five warning letters from 2014, telling its chairman and the minister in charge that the fund owed more than it was worth. The auditor-general raised concerns too. In 2017 the fund even paid a consultant to study the problem, then never showed that study to its own board. Nobody acted. The reason comes down to what savers see. The hibah is the one number millions of savers watch, and a general election was coming in 2018. Cutting the dividend, or admitting a loss, would have looked bad at the worst possible time. So the fund kept paying high. The proof came a year later. Once Tabung Haji switched to honest figures in 2018, the payout it could actually afford was just 1.25%, the lowest in years.
Who was allowed to decide
This happened because politicians were allowed too close to the fund. For years, the law let the minister choose Tabung Haji’s chairman and board, and set almost no rules about who those people had to be. They only had to be Malaysian and Muslim. Nothing said they needed to understand banking, accounting, or how to read a company’s accounts. So between 2014 and 2018, serving politicians helped run the fund. The royal commission found that political thinking shaped real decisions, including how much hibah to pay. This is the core problem. A fund holding the savings of nearly 10 million people was being run in part by people whose job is to win elections, using money that was never theirs. The board needed financial skill, and it needed protection from political pressure. It had neither.
The other side of the story
The other side deserves a fair hearing. Tabung Haji is not the fund it was. Since 2022 it has paid savers only from audited figures. It says it has carried out about 75% of the commission’s recommendations, and the payout has recovered to 3.5%. The government now plans to change the law to keep serving politicians off the board. And the commission did not find that any one politician stole money or ordered a bad deal. But all of that is an argument for better rules, not for letting politics near the money in the first place.
Be clear on the limits. No theft has been proven, and no one has been convicted. Neither changes the argument. Politics should never have been close enough to bend the numbers.
The easy fix, and the hard one
Next year the hibah will reach almost 10 million accounts again, and this time it should be honest, because Tabung Haji now pays from audited figures. The harder fix is still waiting: keeping politicians out of the boardroom, here and at every state fund like it. A number can be made true in a year. Keeping politics away from other people’s money takes longer, and it is not done.
