KUALA LUMPUR, Aug 30 — The Royal Commission of Inquiry (RCI) was crucial to determine whether Lembaga Tabung Haji’s (TH) investment losses stemmed from weaknesses in investment decision-making or other factors, said Senator Muhammad Hasbi Muda.

He said while losses were a normal part of investment activities and did not necessarily indicate criminal wrongdoing, the issues involving TH warranted a comprehensive examination given the number of troubled investments highlighted.

Speaking on a recent talk show produced by a local television station, alongside economist Professor Emeritus Dr Barjoyai Bardai, the senator said half of the 14 investments proposed for forensic audits had suffered 100 per cent losses, while TH’s financial position between 2014 and 2018 had also seen its liabilities exceed assets.

“We can determine from the findings whether the losses were due to weaknesses in the investment panel or whether something else was wrong.

“If the wrongdoing was straightforward, like someone stealing from a mosque collection box, we do not need an RCI. But in the case of Tabung Haji, it was systemic. The misconduct or misappropriation was difficult to determine through the usual methods. That was why we need the RCI,” he said.

Muhammad Hasbi said the term “sakau”, which refers to the unauthorised taking of money or property for personal gain, should not be viewed solely in that context.

He said it could also include improperly obtained benefits such as appointments, promotions or other gains, as well as offences including false claims and abuse of power.

Meanwhile, Barjoyai said weaknesses in procedures, governance and internal controls were among the issues that needed scrutiny when assessing TH’s past problems.

He said one area of concern was the way investments were valued, which he claimed was carried out by TH’s management and board of directors rather than through objective assessments by independent professionals.

The Malaysia University of Science and Technology (MUST) lecturer said investment impairment issues had occurred since 2014 and were flagged by auditor PricewaterhouseCoopers (PwC), but were not reported, even after warnings had been issued.

“Every valuation involved discretion because there was no absolutely precise value. But if they were conducted objectively by an independent team, it could have been better. This reflects institutional weaknesses in procedures, governance and internal controls,” he said.

Barjoyai said TH should therefore reassess its investment management capabilities as part of reforms to prevent similar weaknesses from recurring.

He said if TH wanted to focus on managing pilgrims and haj affairs, its investment management function could be entrusted to other investment institutions such as the Employees Provident Fund (EPF) or Permodalan Nasional Bhd (PNB).

However, he said if TH chose to continue managing its investments itself, major changes would be needed to ensure it had robust governance, procedures and professional valuation methods.

The 252-page RCI report was made public on July 29 and debated during a special sitting of the Dewan Rakyat on Aug 11. — Bernama