This article first appeared in The Edge Malaysia Weekly on August 17, 2026 - August 23, 2026

On May 9, 2012, Lembaga Tabung Haji (TH) obtained approval to subscribe for up to 276 million units of shares in FGV Holdings Bhd (formerly Felda Global Ventures Holdings Bhd) at the initial public offering (IPO) price of RM4.65 per unit, representing 7.5% interest. On June 26, 2012, it subscribed for 273,579,700 units of FGV shares at RM4.55 per unit. TH’s total investment, including transaction costs in the IPO, amounted to RM1,253,742,809, at a cost of RM4.58 per unit.

After the IPO, TH held 7.5% interest in FGV. On the same date, it received 1,629,000 units of FGV shares upon termination of the contract of its external fund manager, MIDF-AAM, at a cost value of RM4.60 per unit. From June 28 to July 19, 2012, TH sold 14,709,400 units of FGV shares on the open market at an average share price of RM5.38 per unit. The profit realised from the sale was RM11,739,835. It reinvested in FGV from July 23 to Oct 9, 2012, by purchasing 232,010,800 units of shares at an average cost of RM5.01 per unit. The total additional investment was RM116,202,310.

FGV’s market share price subsequently fell to RM0.885 per unit. TH’s unrealised loss in FGV amounted to RM1,058,937,380. The question is why TH continued to hold the shares until the price had fallen so low. This caused TH to incur a very substantial loss.

TH was fortunate when 283,710,100 units of FGV shares were taken over by Urusharta Jemaah Bhd at the cost value of RM4.62 per unit. The total cost value of the shares in FGV was RM1,310,020,819, while FGV’s market price was about RM0.69 per unit in February 2022.

If these FGV shares had not been taken over by Urusharta Jemaah at cost, TH would have had to bear a loss of about RM1.1 billion.

TH’s transactions with Al-Rawda Real Estates Development & Project Management Co Ltd concerned the investment in and leasing of Al-Rawda hotels in Makkah and Madinah.

On April 3, 2015, Dec 21, 2016, and Sept 4, 2017, TH entered into long-term lease and sublease agreements for periods of 10 to 18 years as lessee/sub-lessee with Al-Rawda in respect of four hotels — Al-Aqiq Hotel, Al-Haram Hotel and Al-Saha Hotel in Madinah, and Rawdat Al-Bait Hotel in Makkah. The purpose was to provide accommodation for haj and umrah pilgrims. The agreements had a value of 1,426 million Saudi riyals (SAR) (RM1.5 billion), which was paid to Al-Rawda.

At the same time, TH appointed Al-Rawda as the hotel operator for all four hotels through a management and operations agreement, with the lease rental income totalling SAR2,490 million. Further to the agreement, Al-Rawda issued a promissory note (PN), personally guaranteed by Dr Mashhoor Ali Omar Almadoodi, the owner of Al-Rawda, to pay the amount promised upon demand by TH.

Since March 2019, Al-Rawda had failed to pay the rental income under the agreements for the four hotels. This caused TH, through its lawyers in Saudi Arabia, to file enforcement proceedings on Al-Rawda’s PNs in the Enforcement Court to recover the amounts due to TH. As at Dec 31, 2021, outstanding rent totalled SAR560.7 million (RM595 million). TH filed nine PN proceedings against Al-Rawda as issuer of the PNs, involving SAR344.0 million (RM365 million) and seven proceedings against Mashhoor as guarantor of the same PNs, involving SAR255.1 million (RM270 million).

Enforcement orders against both parties were obtained from the Saudi Arabian Enforcement Court.

Following the orders, the Enforcement Court imposed restrictions and prohibitions preventing Al-Rawda from conducting its business. Mashhoor’s assets in Saudi Arabia were frozen and a travel ban preventing him from leaving the country was imposed.

As a result of enforcement of the PNs against Al-Rawda and Mashhoor, Al-Rawda held discussions with TH’s management to find a restructuring solution for the outstanding rental payments.

In April 2021, both parties agreed to enter into a settlement agreement concerning the remaining rental payments, with new terms and a new payment schedule amounting to SAR1,748 million (RM1.85 billion) .

However, on June 30, 2021, TH received a letter from Al-Rawda dated June 29, 2021. It contained various settlement options for TH at a lower settlement amount of SAR968.0 million. TH rejected the proposal by letter dated July 14, 2021.

During the settlement negotiations, Al-Rawda served an arbitration notice on TH on the grounds that the management and operations agreement entered into by the parties was contrary to shariah.

TH strongly denied the allegation, and the arbitration process was ongoing at that time. At the same time, the asset liquidation process had begun in the Saudi Arabian Enforcement Court, and TH had identified 20 properties owned by Mashhoor in Jeddah, Madinah and Makkah. It was understood that the liquidation process would take up to two years.

At that point, TH was still seeking the best solution to recover the outstanding rent from Al-Rawda, through various active efforts conducted simultaneously as follows:

a.    Renegotiating with Al-Rawda on the basis of the proposed April 2021 settlement plan amounting to SAR1,748 million;

b.    Enforcing the PNs against Al-Rawda and Mashhoor through liquidation of Mashhoor’s assets located in Saudi Arabia and assets outside Saudi Arabia; and

c.    Continuing the ongoing arbitration process.

TH’s investment transactions with Al-Rawda affected TH, with an estimated credit loss of RM202.8 million as stated in the financial statements as at Dec 31, 2020. Based on a preliminary assessment by the Finance Department, TH was expected to recognise an additional impairment of RM184 million for the financial year ended Dec 31, 2021, excluding rental income for 2021 and subject to further assessment.

TH purchased 15.3% interest in Emrail Sdn Bhd from Lingkaran Hartaniaga Sdn Bhd on June 7, 2016, for a total consideration of RM20.17 million.

On April 26, 2017, TH issued a notice to exercise a put option right against Lingkaran, pursuant to the share sale and purchase agreement dated May 20, 2016, after the proposed public listing of Emrail on Bursa Malaysia was cancelled and Emrail failed to achieve its profit target of RM36.1 million for the financial year ended Dec 31, 2016. Under the put option right, Lingkaran was required to acquire all of the Emrail shares held by TH for RM20.3 million. Lingkaran had paid only RM2 million to TH, and the balance remained unpaid.

This caused TH to recognise an impairment loss provision for the entire outstanding put option balance of RM19.3 million as at Dec 31, 2020.

As a course of action, on Sept 8, 2021, TH through Messrs Zul Rafique & Partners filed a writ and claim in the Kuala Lumpur High Court. The court ruled that the case had to proceed through arbitration.

Lingkaran’s lawyers and Zul Rafique & Partners registered the case with the Asian International Arbitration Centre on April 22, 2022.

According to Companies Commission of Malaysia (SSM) checks by The Edge, the shareholders and directors of Lingkaran at the time were Tun Zaki Tun Azmi and Tan Sri Hari Narayanan, who were also directors of Emrail. Lingkaran originally had 30% in Emrail before selling 15.3% to TH.

TH purchased 10% equity interest in Wellspring Worldwide Ltd, formerly known as Wellspring Worldwide Sdn Bhd, on Sept 21, 2014, for a total consideration of RM18.4 million.

On Sept 19, 2016, TH issued a notice to exercise the put option right under the subscription and shareholders agreement dated Sept 21, 2014, against Mohamed Ridzuan Nor Mohamed and Andy Farouk Muhamad Nasim (the promoters). The notice was issued after the investee company failed to list on Bursa Malaysia. Under the put option right, the promoters were required to repurchase all of the Wellspring Worldwide shares held by TH for RM19.03 million.

Up to that date, the promoters had failed to make any payment to TH. This caused TH to recognise an impairment loss provision of RM19.03 million as at Dec 31, 2019.

As a course of action, TH through Messrs Zul Rafique & Partners filed a claim in the Kuala Lumpur High Court. On Oct 5, 2018, the court ordered the promoters to pay RM20.8 million to TH to settle the exercise of the put option right. However, the promoters failed to make any payment. TH therefore filed bankruptcy notices against them. On Jan 22, 2022, the court allowed TH’s application.

On Oct 21, 2014 and Jan 19, 2015, the minister responsible for religious affairs approved an investment of RM526.16 million by TH in a joint venture (JV) to develop an oil palm estate in Mukim Tembeling, Pahang. The JV involved the acquisition, for RM231 million, of 55% interest belonging to the late Sultan of Pahang, which is now held by the Tengku Muda of Pahang (TMP), in Deru Semangat Sdn Bhd. In addition, TH agreed to provide RM295.16 million in financing to develop the estate. However, as at January 2021, TH had disbursed only RM257 million for the equity acquisition and estate-development financing. All these matters were carried out by THP Agro Management (THPAM) as managing agent.

It was reported that this JV had the following effects on TH:

a.     THP was unable to sell its oil palm produce to its main buyer, Wilmar International, after the estate development involved logging in a forest reserve, causing TH and THP to breach the No Deforestation, No Peat and No Exploitation policy; and

b.     The RM257 million in equity investment and financing disbursed by TH was impaired to RM32 million.

TH also remained obliged to disburse the outstanding RM258 million investment commitment, which was at risk of loss.

It therefore took the following action:

a.     TH unwound its interest in Deru Semangat to TMP;

b.     TMP agreed to waive TH’s obligation to disburse a further RM258 million in investment. 

Read also:
Cover Story: Dissecting the RM19.9 bil bailout of Tabung Haji
Cover Story: Tabung Haji’s link to Putrajaya Perdana, Jho Low, SRC and 1MDB
Cover Story: What shares did Tabung Haji transfer to UJSB for RM16.87 bil?
Cover Story: The 30 biggest stocks sold to UJSB and how they are doing now

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