Malaysian pilgrim fund to divest under-performing assets via SPV: Report

Visual from Tabung Haji website

Malaysian pilgrim fund Lembaga Tabung Haji may look to divest its under-performing assets at book value to a special purpose vehicle (SPV), according to a report by The Edge.

The SPV will issue sukuk to raise cash to take over the assets from the pilgrim fund. Subsequently, it will look at ways to recover the value of those assets.

The report said, the move will enable Tabung Haji to close the gap between its assets and liabilities. It also added that the fund’s deposit-taking operations may be moved under the supervision of Bank Negara Malaysia.

Tabung Haji has been in the news for reportedly inflating profits in the last few years to justify paying dividends to contributors.

In July, the pilgrim fund announced the exits of several leaders and appointed former CEO of Islamic financial holding company BIMB Holdings Zukri Samat as the fund’s CEO and former Securities Commission Malaysia executive chairman Mohammed Nor Md Yusof as the its chairman.

Former treasury secretary-general Irwan Serigar Abdullah had also stepped down as Tabung Haji’s board member in May. He is now being charged for criminal breach of trust involving government funds.

Tabung Haji has been said to be invovled in the 1Malaysia Development Bhd (1MDB) corruption scandal, when it bought a plot of land in Tun Razak Exchange, which was viewed as a bailout for 1MDB.

Several police reports have been lodged by the fund since last week against its former chairman Abdul Azzez Abdul Rahim and then CEOs Ismee Ismail and Johan Abdullah as well as four senior management staff over misuse of funds and wrongful conduct in a corporate deal.

Established in 1963, Tabung Haji is a state-owned fund formed to manage Muslim pilgrimages to Mecca and Madinah. As at 2017, a total of RM73 billion ($18.05 billion) deposits from 9 million depositors are under its management.

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