Special Report: Tabung Haji’s troubled investments

This article first appeared in The Edge Malaysia Weekly on August 3, 2026 - August 9, 2026

A total of 14 controversial investments by Lembaga Tabung Haji (TH) were identified by the Royal Commission of Inquiry (RCI), with its stake in FGV Holdings Bhd suffering the biggest unrealised loss of RM1.059 billion during the period under review. TH had been accumulating FGV shares since its listing on Bursa Malaysia in June 2012 with a market capitalisation of RM16.6 billion.

The pilgrims’ fund subscribed for 276 million initial public offering shares at a cost of RM4.58 apiece and bought another 232 million shares in 2012 at a higher average cost of RM5.01 per share.

However, a prolonged deterioration in FGV’s financial performance eventually led to its privatisation by its parent, the Federal Land Development Authority (Felda), in August 2025 at RM1.30 per share. By the time it was delisted, FGV’s market capitalisation had shrunk to less than RM5 billion.

The RCI questioned why TH continued to hold on to its FGV shares when the share price fell, causing the massive unrealised loss of RM1.059 billion.

Under the restructuring, the FGV shares were transferred to Urusharta Jamaah Sdn Bhd (UJSB) at RM4.62 per share — against its average cost of RM4.58 per share, averting a substantial loss to TH.

TH’s other investment losses in listed companies included its stakes in TH Plantations Bhd (KL:THPLANT) and Alam Maritim Resources Bhd (KL:ALAM), which only exited Practice Note 17 (PN17) status in June this year.

The RCI noted that about RM278 million was impaired on TH’s investments in Alam Maritim and TH Marine group, which were made as an expansion into the offshore support vessel business. A recovery assessment subsequently estimated that only RM70.4 million of the investments’ value could potentially be recovered.

The RCI also identified governance weaknesses in TH Plantations, in which TH holds a controlling 73.84% stake, particularly in its acquisition of plantation estates between 2012 and 2014.

Citing a forensic review by PwC dated April 25, 2019, the commission said TH Plantations financed the acquisitions largely through borrowings, including a RM1.2 billion sukuk, but the investments failed to deliver the expected returns.

Only about 58% of the acquired estates were productive, leaving the company struggling to service its debt. To meet its financing obligations, TH Plantations was forced to dispose of assets and reduce maintenance expenditure, which in turn led to lower palm oil yields. TH subsequently recognised an impairment loss of RM170 million on its investment in the company.

Overall, the RCI estimated that the 14 problematic investments resulted in combined losses and impairment charges exceeding RM3.5 billion, highlighting the significant financial cost of weak governance and poor investment decisions.

The RCI found that the 14 troubled investments were marked by significant governance weaknesses and were a major factor behind the sharp deterioration in the value of TH’s assets.

Despite having what appeared to be a rigorous investment approval process involving multiple layers of review and deliberation, the commission said the framework failed to produce sound investment decisions.

“There were too many layers and deliberations” at every stage of the investment decision-making process, the report noted, adding that this ultimately did not translate into prudent investment outcomes.

In view of the findings, the commission recommended that forensic audits be conducted on all 14 investments.

https://theedgemalaysia.com/node/813501