Where did Tabung Haji go wrong? Inquiry report details governance failures

A 211-page report by a Royal Commission of Inquiry (RCI) has detailed significant shortcomings within Tabung Haji, a Malaysian institution managing haj savings. The report outlines 25 recommendations for improvement, with the government stating that approximately 75% have been implemented. However, ongoing open monitoring of the remaining recommendations and their effectiveness is deemed crucial.

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How can an institution with a board, professional management, an investment panel, auditors, a sharia advisor, control functions, and a controlling ministry reach this stage?

One of the primary concerns identified by the RCI is the excessive power concentrated in the minister's office, particularly regarding board appointments and terminations, as well as decisions with major institutional implications. The issue is not solely about who holds the ministerial position, but rather the lack of equivalent checks and balances when too much authority rests with one office. While ministers have political mandates, they may not possess the deep expertise required for managing funds, investments, accounting, risk, and institutional finance.

The RCI also recommended that active politicians should not be appointed as chairpersons or members of the Tabung Haji board and its subsidiaries. The focus is on the basis and purpose of appointments, emphasizing merit, skills, experience, integrity, independent judgment, and time commitment, as outlined in Malaysia's Corporate Governance Code. For an institution entrusted with the savings and trusts of Muslims, the standards should be exceptionally high.

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The problem is not merely the label 'politician,' but the basis and purpose of the appointment.

Furthermore, the report noted instances where board members and senior officials held numerous positions within Tabung Haji's subsidiaries. Some individuals were recorded as holding seven, eight, or even nine positions. One CEO reportedly sat on 18 boards, while the Group CFO was on 23 subsidiary boards. Even some independent directors were members of seven subsidiary boards, in addition to their other directorships. The report questions the feasibility and effectiveness of such extensive commitments.

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Holding 23 positions does not necessarily mean...