For millions of Malaysian Muslims, Tabung Haji is not an ordinary financial institution. It holds money carefully saved over many years for one of Islam’s most important journeys, the Haj pilgrimage.
That is why the findings of the Royal Commission of Inquiry (RCI) into Lembaga Tabung Haji have caused such concern.
The inquiry found that weak governance, questionable investment decisions, political influence and profit distributions that the institution could not sustainably afford had placed Tabung Haji in a serious financial position.
Fourteen troubled investments examined by the RCI reportedly resulted in nearly RM13 billion in losses and financial impact. Of this amount, approximately RM10.2 billion was ultimately absorbed by the government, while Tabung Haji recorded another RM2.6 billion in impairments on legacy investments between 2018 and 2025.
In simpler terms, the cost was eventually carried by taxpayers, the institution and, indirectly, its depositors.
The findings were highlighted by Minister in the Prime Minister’s Department (Religious Affairs) Dr Zulkifli Hasan during a special sitting of the Dewan Rakyat on 11 August 2026. The sitting was held to explain the 211-page RCI report and the measures taken to restore Tabung Haji’s financial position.
The report was released after being classified for almost four years. It provides one of the clearest accounts yet of how one of Malaysia’s most trusted institutions came close to a major financial crisis.
What Is Tabung Haji Supposed To Do?
Tabung Haji was created to help Malaysian Muslims save gradually and in a syariah-compliant manner for the Haj pilgrimage.
The idea was proposed by Royal Professor Ungku Abdul Aziz in 1959. It led to the establishment of the Pilgrims Savings Corporation in 1963, which later merged with the Pilgrims Affairs Office in 1969 to form the institution known today as Tabung Haji.
Over time, Tabung Haji grew beyond managing savings and pilgrimage arrangements. It developed a large investment portfolio involving shares, plantations, property and businesses in Malaysia and overseas.
Today, it manages the savings of approximately 9.7 million depositors and holds close to RM100 billion in assets.
The purpose of its investments is relatively simple. Tabung Haji invests depositors’ money to generate sustainable returns, cover its operating needs and support Haj-related services.
The problem arose when the institution allegedly began taking on greater risks and paying distributions that were not fully supported by its actual financial position.
The Main Problem with Tabung Haji: Paying More Than It Could Afford
The RCI examined Tabung Haji’s management, operations and financial activities between 2014 and 2020.
One of its most important findings concerned the profit distributions, previously called hibah, paid between 2014 and 2017.
Under the Tabung Haji Act 1995, distributions should only be paid when two basic conditions are met:
- Tabung Haji has distributable profits.
- The value of its assets is higher than its liabilities.
Assets refer to what the institution owns, including cash, investments and property. Liabilities are what it owes, mainly the money belonging to depositors.
The RCI found that Tabung Haji continued declaring distributions even though its financial condition reportedly did not meet these safeguards.
This gradually reduced its reserves and weakened the institution’s ability to absorb investment losses or unexpected withdrawals.
How RM3.4 Billion In Profit Could Become A RM1.4 Billion Loss
The most striking example occurred in 2017.
Tabung Haji reported a net profit of RM3.4 billion, which was used to support its profit distribution for that year.
However, the RCI found that if the applicable Malaysian Financial Reporting Standards had been properly applied, Tabung Haji would have reported a net loss of RM1.4 billion.
That represents a difference of RM4.8 billion between the reported profit and the financial result under the relevant accounting standards.
How could there be such a large difference?
According to the inquiry, management relied on a method known as Realisable Asset Value, or RAV, instead of depending fully on audited financial figures prepared under the established accounting standards.
In simple language, the calculation was based partly on what certain assets were estimated to be worth if they could be sold, rather than relying only on their recognised value in the audited accounts.
This allowed Tabung Haji to present a stronger financial position and justify distributions. But the RCI concluded that the approach did not reflect the institution’s actual financial condition under the applicable standards.
By the end of 2017, Tabung Haji reportedly had RM70.3 billion in assets but RM74.4 billion in liabilities. This meant that its liabilities exceeded its assets by approximately RM4.1 billion.
High And Unauthorised Bonuses Paid Despite Financial Problems
The RCI also raised concerns about the bonuses paid by Tabung Haji and its subsidiary, TH Properties Sdn Bhd.
Between 2010 and 2017, Tabung Haji employees reportedly received annual and special bonuses ranging from two to 13 months’ salary. In 2014 alone, the bonus allocation reached approximately RM74 million, even though Tabung Haji was facing financial difficulties and its liabilities were higher than its assets.
The RCI considered these high bonuses unjustified and recommended that the practice be stopped. Tabung Haji reportedly began controlling bonus payments more carefully from 2018, based on its financial capacity.
The inquiry also found that TH Properties paid more than RM2.19 million in unauthorised bonuses. This included RM1,148,400 paid to 14 individuals in 2017 and RM1.045 million paid to 10 individuals in 2018.
According to the RCI, the bonuses were approved without following the required procedures, including obtaining the necessary shareholders’ approval. The commission recommended recovering the money from the directors and officers involved.
Warning Signs Had Appeared Years Earlier
The financial difficulties did not appear overnight.
Bank Negara Malaysia reportedly issued five warning letters beginning in 2014, raising concerns about Tabung Haji’s financial position, reserves and liquidity.
Liquidity refers to how much cash, or how many assets that can quickly be converted into cash, an institution has available to meet withdrawals and other immediate obligations.
However, the warnings were said to have gone largely unaddressed.
A later review by PricewaterhouseCoopers found that Tabung Haji had been operating with an asset-liability deficit since 2014.
By 2018, the deficit had reportedly reached RM10.9 billion.
The RCI also concluded that some major decisions involving profit distributions and Haj subsidies were influenced by political considerations instead of being based solely on the institution’s long-term financial capacity.
Generous distributions may have helped maintain public confidence in the short term. However, paying out more than an institution can sustainably afford can damage its reserves and create bigger problems later.
A RM6 Billion Withdrawal Shock
The situation became critical after the 14th General Election in 2018, when information about Tabung Haji’s financial position became public.
Conflicting political claims and growing uncertainty caused fear among depositors. Approximately RM6 billion was withdrawn within a short period.
This created the risk of a deposit run, a situation in which many depositors try to withdraw their money at the same time.
A recovery assessment found that just 1.3% of depositors held around half of all Tabung Haji savings. If a relatively small number of large depositors withdrew their funds together, the institution could face significant pressure to produce enough cash.
Because Tabung Haji deposits were guaranteed by the government, a collapse could have exposed the government to approximately RM74.5 billion in liabilities.
The situation therefore posed a risk not only to Tabung Haji, but also to public finances and confidence in Malaysia’s financial system.
The RM19.9 Billion Government Rescue
In December 2018, the government introduced a major restructuring plan to repair Tabung Haji’s balance sheet.
Underperforming and problematic assets were transferred to Urusharta Jamaah Sdn Bhd, a special-purpose company wholly owned by the Minister of Finance Incorporated.
The assets had a market value of approximately RM9.7 billion at the time of the transfer.
In return, Urusharta Jamaah provided Tabung Haji with RM19.6 billion in sukuk and RM300 million in cash, bringing the total consideration to RM19.9 billion.
This left an estimated RM10.2 billion difference between the assets’ market value and the amount paid to Tabung Haji.
The arrangement effectively moved the burden of the troubled assets away from Tabung Haji and onto a government-owned entity.
The RCI considered the Urusharta Jamaah mechanism the least disruptive option available at the time because it allowed Tabung Haji to stabilise its accounts without being forced to sell assets quickly at heavily reduced prices.
However, the rescue repaired the immediate balance-sheet problem. It did not automatically correct the governance failures, weak risk controls and investment practices that had contributed to the crisis.
Fourteen Investments And Nearly RM13 Billion In Losses
During a special Dewan Rakyat debate on the RCI report, Finance Minister II Datuk Seri Amir Hamzah Azizan said the 14 investments highlighted by the inquiry caused nearly RM13 billion in losses and financial impact.
Seven of the investments reportedly suffered a complete loss in value.
According to the parliamentary explanation, the amount consisted of:
- RM10.2 billion absorbed by the government through the 2018 rescue and restructuring exercise.
- RM2.6 billion in impairments absorbed by Tabung Haji on legacy investments between 2018 and 2025.
An impairment is an accounting recognition that an investment is now worth less than the amount originally recorded. It does not always mean the entire amount disappeared in one transaction. It means the institution has accepted that it may not recover the investment’s full value.
The RCI reportedly identified problems including information being concealed, investment reports being manipulated, money being paid without sufficient security, transactions proceeding without adequate guarantees, shares being transferred before payment was received and project funds allegedly being diverted.
Amir Hamzah described the issue as more than an accounting failure, saying financial statements merely revealed the symptoms while the underlying problems involved financial and investment misconduct.
Investigations are continuing, and any individuals implicated remain subject to the legal process. The findings of an inquiry or an arrest do not by themselves amount to a criminal conviction.
The Al-Rawda Hotel Deal Shows How The Risks Developed
One of the most closely watched investments involved Al-Rawda Real Estates Development & Project Management Co Ltd in Saudi Arabia.
Between 2015 and 2017, Tabung Haji entered into agreements to lease four hotels in Makkah and Madinah. It reportedly made upfront payments totalling approximately RM1.55 billion for lease periods ranging from 10 to 18 years.
Al-Rawda was later appointed to manage and operate the hotels under separate agreements.
Tabung Haji eventually obtained an arbitration award of 899 million Saudi riyal against the company. However, only 14.9 million Saudi riyal, or about 1.7% of the award, had reportedly been paid.
That leaves approximately 884.1 million Saudi riyal outstanding.
UiTM senior lecturer Dr Mohd Iqbal Mohd Noor explained that winning an arbitration case does not guarantee that the money will be recovered. Tabung Haji must still identify assets belonging to the company or its guarantors and successfully enforce the award against those assets.
The financial protection used in the transaction reportedly included a promissory note and a personal guarantee. However, for a deal of this size, stronger protection would ordinarily include valuable asset collateral or guarantees from financially sound banks.
Tabung Haji recognised a full RM1 billion impairment related to the investment in 2024, indicating that it was no longer treating the amount as certain to be recovered. Nevertheless, it continues to pursue the outstanding money through asset-tracing and enforcement efforts.
The Al-Rawda case illustrates a wider lesson from the RCI. A profitable-looking opportunity is not enough. Before committing large sums, an institution must complete proper legal, financial and commercial checks, secure reliable guarantees and release money in stages based on performance.
RCI: Established to Examine Tabung Haji
On 14 July 2021, the Cabinet approved the establishment of a Royal Commission of Inquiry under the Commissions of Enquiry Act 1950. Its terms of reference were finalised on 8 October 2021.
The commission was instructed to examine Tabung Haji’s operations and financial transactions between 2014 and 2020. It also reviewed forensic work conducted by PwC, Ernst & Young and Roland Berger.
Former chief justice Tun Md Raus Sharif headed the six-member panel.
Over six months, the commission reviewed thousands of records, obtained statutory declarations from 45 witnesses and conducted closed hearings involving 16 main witnesses, including former ministers and former Tabung Haji chief executives.
The commission completed its work in July 2022 and submitted a 211-page report to the Yang di-Pertuan Agong.
Why Was The Report Kept Classified For Nearly Four Years?
Although the RCI completed its work in 2022, the report was not immediately made public.
Prime Minister Datuk Seri Anwar Ibrahim later said the government delayed its release because Tabung Haji was still recovering. Publishing the findings too early could have frightened depositors and caused another wave of withdrawals.
The Cabinet eventually approved the report’s declassification on 29 July 2026. Its findings were later examined during a special Dewan Rakyat sitting on 11 August 2026.
While the government said the delay helped protect depositor confidence, it also attracted criticism from those who believed the public should have been informed earlier.
Has Tabung Haji Recovered?
Financially, Tabung Haji is now in a much stronger position than it was in 2018.
For the 2025 financial year, it recorded:
- RM98.58 billion in total assets
- RM95.63 billion in total liabilities
- RM4.64 billion in investment income
- A 3.5% profit distribution, its highest rate in eight years
- A total distribution of RM3.22 billion to 9.7 million depositors
Unlike in 2017, the institution’s assets now exceed its liabilities. Tabung Haji also says its profit distributions have been based on audited annual financial statements since 2022.
It has reportedly implemented 75% of the RCI’s 25 recommendations.
These figures indicate that the immediate financial crisis has been addressed. However, financial recovery does not necessarily mean every governance weakness has been fixed.
What Reforms Are Still Needed for Tabung Haji?
The RCI recommended several structural changes to prevent the same problems from happening again.
These include amendments to the Tabung Haji Act 1995, a clearer separation between Haj operations and financial management, stronger professional requirements for board members and restrictions on active politicians serving on Tabung Haji and subsidiary boards.
There are also calls for greater transparency over the recommendations that have not yet been implemented and a clear timeline for completing them.
Large overseas investments may require stronger independent assessments involving specialists in finance, international law and the relevant industry. Funds should also be released in stages, with clear performance conditions and proper documentation for any exemption from investment rules.
The central question is no longer simply whether Tabung Haji has enough assets to cover its liabilities. It is whether its decision-making system is strong enough to stop questionable transactions before depositors’ money is placed at risk.
What Happens Next?
Tabung Haji has survived the immediate crisis, restored its balance sheet and returned to paying stronger profit distributions.
But the real measure of recovery will go beyond annual profits.
Authorities must determine whether laws were broken, pursue recoverable assets and take appropriate action against anyone found responsible. Tabung Haji must also complete the remaining RCI recommendations and strengthen the safeguards governing future investments.
Most importantly, the institution must continue rebuilding the confidence of its 9.7 million depositors.
For Malaysians who save for years to perform the Haj, the issue is deeply personal. The money held by Tabung Haji represents more than deposits on a financial statement. It represents sacrifice, religious responsibility and a lifelong hope of reaching Makkah.
The institution’s improved financial position is an important achievement. The next challenge is ensuring that the failures uncovered by the RCI can never happen again.
Sources: 1 | 2 | 3 | 4 | 5 | 6
Related articles:
How Astronomer Turned a Viral Scandal Into a Branding Turning Point
Did You Know RHB Stands for Rashid Hussain Bank?
Discussion about this post