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KUALA LUMPUR - Lembaga Tabung Haji (TH) must shift from individual accountability to institutionalised accountability to ensure that major decisions no longer depend on the influence or will of specific individuals.
Islamic finance expert Assoc Prof Dr. Rozita @ Uji Mohammed said the core issues raised by the Royal Commission of Inquiry (RCI) demand that TH re-examine the "decision-making trail" behind every investment choice to safeguard the integrity of depositors' funds.
The rector of Universiti Teknologi MARA (UiTM) Sabah Campus recommended that every major decision affecting the fund must be tied to an Investment Decision Accountability Matrix that clearly defines the limits of authority at every level.
"Every significant decision must leave a clear trail of authority and responsibility. Who proposed it, who evaluated it, who approved it, who monitored it, and who is accountable," she told Bernama.
Rozita added that TH cannot merely act as a rubber stamp for management. Instead, it must be capable of demonstrating the information received, alternatives considered, risks discussed, any conflicts of interest identified, and the rationale behind each decision.
Rozita explained that accountability must begin as early as the appointment process, through a transparent fit-and-proper assessment covering competence, integrity, independence, financial literacy, Shariah awareness, and track record.
There must also be clear mechanisms to reassess or terminate appointments if these criteria are no longer met.
"Beyond that, strict conflict-of-interest management is essential, including declarations of interest, the duty to recuse oneself from decision-making, and recording such actions in minutes of meetings. Undisclosed conflicts of interest are a key cause of governance failure," she emphasised.
"TH also needs an independent challenge function that allows major investment proposals to be scrutinised independently, even when those proposals come from high-ranking figures.
"Accountability must also cover bad news through stress testing, scenario analysis, risk limits, early warning indicators and exit triggers," she added.
Rozita said that to ensure every decision can be audited and traced, TH should maintain an Investment Accountability File that records investment proposals, due diligence, Shariah and risk assessments, independent evaluations, conflict-of-interest declarations, investment committee and board decisions, as well as performance monitoring alongside exit or recovery decisions.
She said accountability must operate at three levels: ex-ante (before a decision is made), concurrent (while the investment is active), and ex-post (after the decision is reviewed). This ensures preventive and corrective action can be taken before losses escalate.
Elaborating further, Rozita warned that failure to address governance weaknesses comprehensively will expose TH to the risk of losing the trust of its more than 9 million depositors.
"If depositors feel their money is being managed based on political or personal interests rather than solely for their benefit of preparing for the haj pilgrimage, the damage will extend beyond TH's reputation to the institution's very legitimacy. A lost reputation in a trust-based institution is extremely difficult to restore," she said.
She said TH's objectives must be viewed within the framework of Maqasid al-Shariah, and its success should not be measured solely by return on equity or bonuses.
Instead, it must also consider the Maqasid Development Impact, which assesses how well the institution protects the wealth of the Muslim community and facilitates the performance of haj.
She outlined at least four maqasid directly relevant to TH's existence: Hifz al-Din (preserving religion), Hifz al-Mal (preserving wealth), Hifz al-Nafs (preserving life), and Hifz al-'Aql (preserving intellect), through financial education, haj literacy, and responsible financial decision-making.
She explained that governance weaknesses can escalate into fiduciary and agency problems, investment governance issues, liquidity risks, Shariah risks, moral hazard, and a weak organisational culture if improvements and clear accountability are not in place.
"An independent whistleblowing channel, protection from retaliation, direct access to the audit committee, and independent investigation and escalation mechanisms must be strengthened. TH's accountability must also extend to depositors, as the parties who entrust their funds to the institution.
"TH is not only accountable to ministers, the government, the board, auditors, or regulators. In the context of Islamic finance, accountability must be more inclusive, encompassing accountability to people, institutions, depositors, and ultimately to Allah SWT," she said. - BERNAMA
