KUALA LUMPUR: Seven of 14 problematic investments identified by the Royal Commission of Inquiry (RCI) into Tabung Haji suffered total losses, with the institution and government forced to absorb billions of ringgit in losses, the Dewan Rakyat was told today.

Finance Minister II Datuk Seri Amir Hamzah Azizan said the 14 investments identified by the RCI had resulted in estimated losses of nearly RM13 billion.

Of this, RM10.2 billion represented the government’s 2018 bailout through Urusharta Jamaah Sdn Bhd (UJSB), while a further RM2.6 billion in impairments or net losses was borne by Tabung Haji between 2018 and 2025 for problematic investments that remained under its management.

“Seven out of the 14 investments suffered 100 per cent losses. Not part of them, but total losses,” he said when winding up the special debate on the RCI report on Tabung Haji today.

Amir said the losses could not simply be attributed to fluctuations in the stock market.

He said the RCI had found irregular investment processes, manipulation of investment suitability reports, misleading representations, concealment of information and creative accounting practices.

“These are not merely accounting issues because the financial statements only show the symptoms. The root cause is financial and investment misconduct.”

Among the investments highlighted by Amir was Al-Raudhah, a Saudi Arabian hotel leasing arrangement that resulted in Tabung Haji paying RM1.55 billion upfront to an intermediary to secure four hotels in Makkah and Madinah for pilgrims.

The intermediary was supposed to operate the hotels and pay RM2.49 billion in rental returns to Tabung Haji. However, the payments were not made.

Amir said the risk management department had requested a bank guarantee, but Al-Raudhah failed to provide one.

“The due diligence report was also incomplete, yet the transaction proceeded based largely on a personal promissory note. The investment was eventually fully impaired at RM1.86 billion in 2024.”

Another investment highlighted was Putrajaya Perdana, in which Tabung Haji paid RM193.3 million in December 2014 for a 30 per cent stake in the company.

“The investment was based on expectations that the company would be relisted within a year and record RM86 million in profit in 2015. Neither target was achieved.”

Amir said the RCI found that the then Tabung Haji chairman also served as chairman of Putrajaya Perdana.

He said Tabung Haji’s research division had initially valued the 30 per cent stake at between RM124 million and RM155 million, but the investment was ultimately approved at around RM193.5 million without written justification for the higher valuation.

The investment was fully impaired at RM193.5 million by the 2024 financial year.

Amir also highlighted the offshore patrol vessel project involving Tabung Haji Heavy Engineering (THHE).

The project was awarded by the government in 2017 at RM738.9 million.

A forensic audit identified RM48.1 million in irregularities and a further RM195 million in potential irregularities that remained under investigation.

Only one of the three vessels was completed, with the first vessel delivered in January 2024 — about three-and-a-half years later than scheduled.

“The remaining two vessels were terminated by mutual agreement in December 2024.

“The cost of completing the vessels was estimated to require an additional RM310 million, about 40 per cent above the original cost.”

Another case involved the sale of 95 per cent of PT TH Indo Plantations in Indonesia for about US$910 million, or RM2.8 billion.

Amir said the terms of the transaction were subsequently relaxed in favour of the buyer, including a US$100 million reduction in the sale price.

“The shares were transferred before full payment was received, while Tabung Haji subsequently advanced US$178.6 million, or about RM540 million, which should have been borne by the buyer.”

He said the funds were understood to have been used to repay the company’s debt.

Tabung Haji subsequently lodged a police report and initiated disciplinary proceedings against four officers in connection with the transaction.

Amir also highlighted True Rich Resources, a palm oil plantation joint venture in Kalimantan.

Tabung Haji’s RM364.31 million investment was fully impaired.

“The joint venture had originally aimed to acquire up to 200,000 hectares of plantations but ultimately obtained only 4,880 hectares.

The RCI reported allegations that a land suitability report had been manipulated to justify the land’s potential.

Amir said a police report concerning irregularities in the acquisition was made by a board member on Dec 13, 2018.

He said the disposal of True Rich’s subsidiaries had been approved in December 2020 and the company was currently undergoing disposal.

Amir said the examples demonstrated a repeated pattern in Tabung Haji’s investment failures.

“Upfront payments without collateral, companies failing without guarantees, shares being transferred before payment was received and project funds being diverted — this cannot be regarded as simply bad investment luck.”

He said the RCI also found that four investments had not undergone the required due diligence and that recommendations from the risk management department had not been properly addressed.