☕️ Special Edition: Tabung Haji’s Royal Commission of Inquiry (RCI)

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

60,698 – That’s the number of births involving Myanmar nationals in Malaysia since 2000, including holders of UN High Commissioner for Refugees (UNHCR) cards. This comes from the National Registration Department (NRD), with NRD director-general Badrul Hisham saying that, while not all of them are Rohingya, the majority are ethnic Rohingya. He also noted that being born in Malaysia does not automatically entitle one to citizenship, adding that it is determined by the status and circumstances of the parents in accordance with legal provisions.

More than 230 mil – OpenAI says that many people use the tool for health and wellness advice each week, leading to the firm pushing further into its health research. The goal, according to researcher Karan Singhal, is to make ChatGPT so good on health that it changes people’s lives for the better. This has led to OpenAI’s GPT-5 model family being the company’s first to be trained specifically at every stage of development to provide better health advice. Singhal helped launch HealthBench, a series of evaluations to measure AI systems’ health capabilities, about a year after he joined OpenAI.

1 in 5 – According to a survey by Pew Research Center, 20% of adults aged between 18 and 29 said they used AI chatbots for emotional support or advice. A follow-up YouGov survey found that 13% of US adults, along with 23% of those under 30, said they had shared a secret or problem with a chatbot that they had not told a human. While experts in psychology, relationships, and AI agree that chatbots can help people reflect, organise their thoughts, and prepare for difficult conversations, problems can arise when people start relying on AI instead of talking to their partner. One cyberpsychology researcher believes the impact of AI chatbots on human relationships will be even greater than the impact on jobs and the workplace. Another licensed clinical psychologist suggested that couples may want to establish their own rules for using AI, including whether it is acceptable to vent about the relationship and whether concerns processed with a chatbot should eventually be brought back to the other person. Check out the Pew Research Center survey here and the YouGov survey here.

3. IN MALAYSIA 🇲🇾

Special Edition: Tabung Haji’s Royal Commission of Inquiry (RCI)
Why is the RCI being initiated in the first place? To investigate severe financial deficits, questionable profit payouts, and governance lapses that occurred between 2014 and 2017. The RCI was formally established and structured on Jan 21, 2022, after securing the necessary formal consent from the King of Malaysia, Sultan Abdullah Sultan Ahmad Shah, under the leadership of PM Ismail Sabri Yaakob.

Coming back to the outcome of the RCI, it did not (deliberately?) name a single person to be accountable (so good of them). But the report exposed three layers that led to the unbundling of Tabung Haji’s house of cards

1. Failure of the management team
   Between the years 2014 and 2017, Lembaga Tabung Haji (TH) used ‘creative accounting’ to justify the distribution of profits, better known as ‘hibah’. TH adopted realisable asset value (RAV), rather than the asset values reported in its audited financial statements. By using RAV, TH was able to comply with Section 22 of the Tabung Haji Act 1995, but, in return, TH exceeded its financial capacity and depleted its reserves. But for the 99% of the population who are non-finance bros and may not have heard the term RAV, so what is RAV? Realisable asset value is the net amount of cash a company expects to get by selling an asset. The key point here is ‘expects’ and not ‘actual’. So, by using RAV rather than net assets accounting, it is basically hoping that your old Proton Saga can be sold for more or less the same price as when you bought it. Having thought your car is still valuable and can be sold for huge money, you then confidently apply for a loan for a Honda City, hoping that the bank accepts the same logic as yours. For 2017 alone, TH had failed to recognise RM227.81 mil in impairment losses on investments in three subsidiaries and three associate companies, including RM164.58 mil related to TH Heavy Engineering Bhd. RAV method does not take into account impairment adjustments for investments that had declined below their acquisition cost.

2. Politicians were part of the Board and Investment Panel
   Act 535 (Tabung Haji Act) sets no fit-and-proper criteria beyond being Muslim and Malaysian for board members. The result was the appointment of a chairman and several board members from among active politicians between 2014 and 2018. Having politicians on the board influenced the decisions over hibah payments and financial assistance, as they may decide based on voters’ sentiment. Additionally, TH’s board members wore many, many hats back then, which made them lose focus. For example, former board member Johan Abdullah held positions in 19 subsidiary companies. Another example: senior general manager (finance) and group chief financial officer from Aug 2004 to Apr 2021, Rozaida Omar acted as its proxy representative in 21 subsidiaries.

3. The Auditor-General's (AG) questionable decision
   The RCI questioned the Auditor-General's decision to issue an unqualified audit opinion on the fund's 2017 financial statements. RCI found that TH's accounts should not have received a clean audit opinion as they contained significant accounting issues, including the use of RAV as stated above. If the appropriate adjustments had been properly reflected in accordance with Malaysian Financial Reporting Standards (MFRS), TH would have recorded a RM1.4 bil net loss for the 2017 financial year instead of the RM3.4 bil profit reported. While we are talking about figures, we want to highlight a few numbers that will shock you:

   • RM404.2 mil — the amount of bonuses paid to TH employees from the year 2010 until 2020. Not only is the figure extremely high, but it also lacked justification. The bonuses were paid to executive and non-executive employees. However, the RCI did not provide a breakdown of the bonuses received by executives, including UMNO leader and then Baling MP Abdul Azeez Abdul Rahim, who served as Tabung Haji chairperson from 2013 to 2018.

   • RM1.06 bil — the unrealised loss recorded for TH’s investment into FGV. TH avoided recording the losses on its books after TH transferred its FGV shares to Urusharta Jamaah Sdn Bhd, owned by the Minister of Finance (Incorporated). The table of key findings on 14 troubled investments by TH here. So many kind terms, so good to have TH as an investor back then. Anyways, on a serious note, with such terms and frequent failures to repay the investment, something fishy is going on.

At the end of the report, RCI provided 25 recommendations, where the key ones are -

• The Tabung Haji Act needs to be amended to include specific requirements for the appointment of the Chairman and the Board Members, and to exclude active politicians in the board composition;

• To separate the governing authority of TH, where the Religious Minister will govern the haj management while the Finance Minister will handle the financial and investment management. The appointment of the Chairman and the Board Members needs to be done by the PM, based on the advice of an independent committee;

• RAV cannot be used as the basis for hibah disbursement and needs to be based on the audited financial statement;

• Forensic audit needs to be done towards 14 companies that TH invested (so looking forward to this, but hopefully faster than it takes Odysseus to get home);

• The minimum deposit amount for a depositor to be eligible to enter the haj queue should be raised from RM1,300 to RM12,980. By doing this, the average waiting time for someone to perform haj will drop from 130 years to 33 years. Plus, financial support to perform haj should only be given to the ones that need it;

• The Securities Commission needs to oversee the investment function of TH.

View the full report here.

So, how did the Religious Minister and TH react to the release of the RCI report? Minister in the PM’s Department (Religious Affairs) Dr Zulkifli Hasan said that TH already implemented 75% of the recommendations and Putrajaya will expedite the implementation of the remaining 25%. TH, on the other hand, welcomed the report but stated that they have moved on and reiterated the Religious Minister’s remarks that they already implemented three-quarters of the recommendations. As for the 10 mil depositors of TH, moving on is not the answer - they could have lost the chance to perform haj. 

4. AROUND THE WORLD 🌎

The FIFA Aftermath
FIFA to sell World Cup stakes to private investors
Is this FIFA’s decision or its president’s? That is unclear, but Gianni Infantino, president of FIFA, has proposed to sell stakes in the World Cup and other events through a USD20 bil (RM81.80 bil) subsidiary, FIFA Forward Enterprise. It will look to raise up to USD4.2 bil in funds from private investors from an investor group expected to be led by Joshua Kushner, the brother of Trump’s son-in-law, Jared Kushner. FIFA will still maintain a majority stake and retain authority over football governance, competitions, match calendars and regulatory and sporting decisions. Gianni has written to all 211 member associations to say that they will receive USD40 mil if they back his plan. He has also set a Sept 19 deadline for them to accept if they want to access an initial USD20 mil.

This did not go down well in the footballing world. UEFA basically condemns the decision and has said that this ‘crosses the line that football’s governing institutions should never cross’, and ‘The soul and governance of football are not assets to trade - especially with zero transparency as to who gains financially’. UEFA basically called FIFA corrupt. And it is holding an emergency meeting with all 55 members this week to work on a plan of action.

Concacaf, which covers North and Central America, said, ‘We are deeply concerned by the lack of due process’. La Liga president Javier Tebas said, ‘It doesn’t seem like a reform. It seems like an electoral campaign financed with the future of football.’ The Asian Football Confederation said, ‘Initiatives of this scale and consequence must be founded upon the principles of good governance, transparency, and meaningful consultation.’

Argentina charged by FIFA for several offences
Well, it looks like Argentina has fallen from grace. FIFA is lodging disciplinary charges against two Argentina players for hitting Spain players after the World Cup final, and is also charging Argentina’s football federation for players showing a political banner that read ‘Las Malvinas son Argentinas (The Malvinas are Argentine)’ referring to the Falkland Islands which erupted into a war with the UK in 1982. It also includes ‘discriminatory chants and gestures’ by fans, alleged assault by an assistant coach, and ‘throwing of objects by spectators in relation to several matches’ at the World Cup. Here is the list of Argentine players facing assault charges.

• Leandro Paredes: 3 charges

• Nahuel Molina: 2 charges

• Roberto Ayala (assistant coach): 1 charge

• Molina and Thiago Almada also face unsporting behaviour charges

• Spain player Gavi is also charged.

• Meanwhile, the British government is calling for FIFA to investigate the banner, and it said the charge was ‘using a sports event for demonstrations of a non-sporting nature’.

Are you entertained?
BTS is snubbing the Grammys
Can you imagine that you are a South Korean boy group and you are not eligible for the Grammys’ New Best Asian Pop Music Performance prize due to the song being sung in English? That’s what’s happening to BTS, the world’s biggest K-pop band. Under its rule, songs nominated for the category must contain ‘meaningful use’ of an Asian language. Its lead single, Swim, which became a US number one, will not qualify. BTS responded by saying they will not submit their music for consideration at the 2027 Grammy Awards.

Here’s what was translated from their message: ‘We have decided not to enter the Grammys this year. I hope that music can be heard and loved for what it is, rather than being divided by region or language.’ The kicker? BTS’s album Arirang was one of the year’s biggest sellers, and its single Swim is probably in contention for song of the year.

South Korea’s Coachella, ‘Fanomenon’
Many K-pop groups view Coachella and other international festivals as the next step in expanding their brand and fandom out of South Korea. Blackpink headlined Coachella, Stray Kids for Lollapalooza, Seventeen for Glastonbury, Le Sserafim for Summer Sonic. But curiously, South Korea does not have one.

So, South Korea’s Presidential Committee on Popular Cultural Exchange is unveiling Fanomenon, a K-culture mega-event. Why let your best talents leave for international shores when you can get them to stay in South Korea? The festival will run from Dec 2 to 12, 2027, at the Seoul Arena, which is currently under construction. It will be anchored by concerts featuring artists from SM, YG, Hybe, and JYP. But an important question remains - will it be profitable enough? A slot at Fanomenon is likely to pay less than an arena date on a world tour, and artists would probably ‘sacrifice schedules and part of their revenue’ to participate.

Peppa Pig wins copyright lawsuit against Wolfoo
Remember the three little pigs story when a big bad wolf tried to blow some pigs’ houses down? Well, we might have found the wolf and it’s Vietnamese! It’s called Wolfoo and it has been a bad wolf apparently for using short audio clips of Peppa and her family saying words like “hooray!” without permission. A UK judge has sided with Peppa Pig’s creators, Astley Baker Davies, and ordered all videos featuring Wolfoo to be removed from all platforms, including YouTube, before next Monday.

Clips from Peppa Pig were found in all 92 English-language Wolfoo videos and 75% of the foreign-language videos. Wolfoo makers SConnect hit back by saying that the ruling should only apply to the videos examined in the sample, and that the ruling that applies to the UK, the European Union, and all 166 World Trade Organisation member states is ‘too broad’.

Others:

1. What if you can eat Labubu-shaped desserts and pastries?
   Pop Mart, the maker of the hyper-famous Labubus and the ‘blind box’ toys, is going into the bakery business. It is creating 45 toy-inspired pastries and edible treats and shaping them into Labubu, Molly, and others in a two-storey bakery, opposite Universal Studios Singapore. Prices range from SGD5 to SGD32 (RM15.86-RM101.48). Singapore will be its first expansion, as it is also looking at Europe, US, Thailand, Indonesia and Malaysia. Pop Mart opened its first bakery in Qinhuangdao in Apr, as it tested the concept through more than 30 dessert truck pop-ups in China. This move could be seen as an alternative revenue stream, as investors start to question how sustainable its business model is, considering that it has missed expectations recently due to Labubu losing steam. Meanwhile, it is also teaming up with Sony Pictures to develop a Labubu movie and open an expansion of its Beijing theme park, Pop Land.

2. Fauci’s Fifth Amendment tactic
   “I plead the fifth.” That’s Dr Anthony Fauci’s tactic to a Senate Committee hearing on the origins of Covid-19. The Fifth Amendment protects individuals against self-incrimination, allowing them to refuse to answer questions that could be used against them in criminal proceedings. It seems like he is fed up, as he accused the Republican senator, Rand Paul, of having an ‘unhinged obsession’ with him and that Paul’s goal was to ‘embarrass and intimidate me’, and land him ‘behind bars’. After Fauci kept saying he pleads the Fifth, Paul got agitated and threatened the scientist with ‘repercussions’ and tossed one of Fauci’s attorneys out of the hearing room. Paul later said that he would hold a vote to hold Fauci in contempt of US Congress next week. Republicans argue that the Fifth Amendment does not protect Fauci if he has been pardoned by the President. Fauci was pardoned by Democratic President Joe Biden previously. Trump and the Republicans have been relentless in their pursuit of Fauci as they think he lied about the origins of the COVID-19 pandemic and that the National Institutes of Health (NIH) funded the lab in Wuhan through a sub-grant. Fauci was the Director of the National Institute of Allergy and Infectious Diseases (NIAID) under NIH. The ‘lab leak’ theory is prevalent in Republican circles but ultimately is unproven.

5. FOR YOUR EYES 📺

Aging beautifully - for your parent, for your future self

1. How to sit safely. After watching this video, I realise many of us are sitting down dangerously. Especially for our parents, teach them to sit down safely.

2. From wheelchair-bound to walking using a robotic exoskeleton. Product of TransitX - check out the products here.

3. Inventor and influencer Jake Laser upgraded his dad’s wheelchair to level 99. Remember the Unitree robotic dog we featured a few days ago? Well, it’s exactly that, plus a seat, minus the killer instinct. Full video here. And he brought his dad for hiking too - probably first person to do so.

4. The above is for old ones like us, the below is for your little kids. Next level parenting to get them to quit junk food. Perhaps a good use of AI to generate this ultrasound image.