Government must intervene and cancel financial deal between 1MDB and Tabung Haji!

Datuk Seri Syed Ali Alhabshee

Without a doubt this is a bailout.

What else would anyone call the decision by Tabung Haji to enter into a high risk project and pay between 48 to 65 times more to purchase land from debt-ridden 1Malaysia Development Berhad fund?

Tabung Haji’s internal risk management team has not favored the purchase of the 40-storey serviced apartments and 74-storey office building, taking into account the dull property sector due to weakening demand.

Despite this, Tabung Haji has inked a deal with the sovereign fund, amounting to 772million ringgit. The deals were fast tracked and term of payment is in cash.

We must be careful that government funds and other public institutions not be used to bailout 1MDB.

Tabung Haji is the haj pilgrims fund board. It facilitates savings for the pilgrimage to Mekah through investment in Shariah-compliant vehicles. In short, every Muslim who harbours a dream to fulfill the holy pilgrimage would have deposited money with Tabung Haji. And these are not wealthy people.

As such, it’s outrageous that the pilgrimage fund board has abused its powers and misused its funds. 

The financial transaction also reeks of conflict of interest as many top guns in 1MDB also sit on the Tabung Haji board.

Let’s look at the deal once again – despite forking out a whopping 770million ringgit, Tabung Haji needs a further two billion ringgit or more to develop both the properties.

There is an oversupply of luxury high-rise residences in Klang Valley, which are way cheaper. Condominiums in Jalan Ceylon, for example, are selling for 649.49 ringgit per square foot against the 2266.85 per square foot in adjoining Jalan Changkat Ceylon.

Tabung Haji’s risk assesment has taken into consideration this huge discrepancy in prices as well, in its report.

There is a huge difficulty for buyers to obtain financing and a drop in the purchase of properties following the implementation of the Goods and Srvices Tax (GST). 

Media reports indicate there is a worry that major global investors from Qatar and Abu Dhabi may be reconsidering their investments in the purchased properties.

As such, this deal between 1MDB and Tabung Haji stinks for more reasons than one.

Therefore, the government must intervene and cancel both the financial transactions. Furthermore, shouldn’t 1MDB’s assets be frozen and the company barred from any commercial transactions until the probe by the Attorney-General’s Chambers is completed?