The Chairman of the Fiji National Provident Fund (FNPF) Board of Directors, Peceli Vocea, said that they will be releasing the Ernst & Young special audit report on FNPF gradually for public consumption.
This assurance was made after increasing calls for public accountability to the Fund's members on how their funds had been managed.
A subsidiary of the FNPF said that the decision to invest in the Natadola hotel project was made by the Fund without carrying out proper independent due diligence.
The FNPF Board Chairman said that the release of the Report to the public would facilitate a good debate on its contents and ultimately encourage people to make suggestions on how to deal with the recommendations in the Report.
Showing posts with label FNPF. Show all posts
Showing posts with label FNPF. Show all posts
Tuesday, October 2, 2007
Sunday, July 1, 2007
FNPF pays members 6.3% interest
The Fiji National Provident Fund (FNPF) has paid its members 6.3% interest for the financial year ended 30 June 2007. The total payout is F$128.9 million.
The Fund states that the payout was generous given the current state of the economy.
More on this when we receive a copy of the Fund's annual accounts.
The Fund states that the payout was generous given the current state of the economy.
More on this when we receive a copy of the Fund's annual accounts.
Tuesday, June 19, 2007
FNPF investment at Natadola safe
The Fiji National Provident Fund (FNPF) has said that its investment at Natadola is safe. The comment was made after the cancellation of the foreign investment registration certificate of Natadola Land Holdings by the Fiji Islands Trade and Investment Bureau (FTIB).
The FNPF said that the cancellation of the certificate means that Natadola Land Holdings cannot engage in "development and management of integrated resorts".
The Chairman of the FNPF Board, Peceli Vocea, said that the Fund has had informal discussions on the way forward in terms of replacing Natadola Land Holdings and made the assurance that the cancellation will not impede the completion of the project at Natadola.
FNPF Investments Limited, a subsidiary of FNPF, holds 51% shareholding in Natadola Land Holdings with the remaining 49% owned by Hotels Property Pacific Limited (HPPL) of which APRIL (Hong Kong) is a major shareholder.
APRIL was project manager for the Natadola project before being removed recently.
The FNPF said that the cancellation of the certificate means that Natadola Land Holdings cannot engage in "development and management of integrated resorts".
The Chairman of the FNPF Board, Peceli Vocea, said that the Fund has had informal discussions on the way forward in terms of replacing Natadola Land Holdings and made the assurance that the cancellation will not impede the completion of the project at Natadola.
FNPF Investments Limited, a subsidiary of FNPF, holds 51% shareholding in Natadola Land Holdings with the remaining 49% owned by Hotels Property Pacific Limited (HPPL) of which APRIL (Hong Kong) is a major shareholder.
APRIL was project manager for the Natadola project before being removed recently.
Thursday, April 26, 2007
Board Membership at Home Finance Company Limited
This is to announce that I had been offered and have accepted an appointment by the Fiji National Provident Fund (FNPF) as one of its Independent Directors to the Board of Home Finance Company Limited (HFC Finance).
FNPF, the Fiji pension funds provider, owns 75% shares in HFC Finance (while the remaining 25% is owned by the Unit Trust of Fiji). HFC Finance is a deposit taking institution and is licensed and supervised by the Reserve Bank of Fiji.
I have accepted the appointment as Independent Board Director at Home Finance Company Limited in the interests of seeing how our member funds at FNPF are being invested, and to contribute to HFC Finance and FNPF, as its major shareholder, my banking and financial industry experience and skills.
Being a vocal critique of the responsibilities of Board Directors in local institutions, I undertake to carry out my Board Directorship role to the best of my abilities and in an impartial manner.
To our past clients in the finance industry and to those that may wish to use our services through Gilbert & Samuels Company Limited, I vouch that we will continue to maintain very high standards of professionalism and confidentiality with regard to individual client matters and will not, at any time, compromise our ethics and standards, by providing or sharing information about one client to its competitors in the industry.
To contact us about this appointment or any future consultancy, you can e-mail gilbert@connect.com.fj or call telephones (679) 3396427 or (679) 9921427.
FNPF, the Fiji pension funds provider, owns 75% shares in HFC Finance (while the remaining 25% is owned by the Unit Trust of Fiji). HFC Finance is a deposit taking institution and is licensed and supervised by the Reserve Bank of Fiji.
I have accepted the appointment as Independent Board Director at Home Finance Company Limited in the interests of seeing how our member funds at FNPF are being invested, and to contribute to HFC Finance and FNPF, as its major shareholder, my banking and financial industry experience and skills.
Being a vocal critique of the responsibilities of Board Directors in local institutions, I undertake to carry out my Board Directorship role to the best of my abilities and in an impartial manner.
To our past clients in the finance industry and to those that may wish to use our services through Gilbert & Samuels Company Limited, I vouch that we will continue to maintain very high standards of professionalism and confidentiality with regard to individual client matters and will not, at any time, compromise our ethics and standards, by providing or sharing information about one client to its competitors in the industry.
To contact us about this appointment or any future consultancy, you can e-mail gilbert@connect.com.fj or call telephones (679) 3396427 or (679) 9921427.
Thursday, April 19, 2007
Fiji National Provident Fund Chief Executive and Deputy fired
The Chief Executive Officer of the Fiji National Provident Fund (FNPF), Olota Rokovunisei, and his deputy, Foana Nemani, were fired by the FNPF Board yesterday, Thursday, 19 April 2007. Board Chairman, Peceli Vocea, said that the decision was arrived at after the Board considered all options that were available to it.
More on the story here.
More on the story here.
Tuesday, March 20, 2007
New crisis at Home Finance Company Limited?
The Deputy Governor was seen leading an inspection team from the Reserve Bank of Fiji into Home Finance Company Limited early this week. Home Finance (also known as HFC Finance) is a subsidiary of the Fiji National Provident Fund. Given that it is a deposit taking institution under the Banking Act 1995, it is supervised by the Reserve Bank of Fiji.
During my time at the Reserve Bank of Fiji, never once did the Deputy Governor lead an on-site examination/inspection team that had gone into one of the banks or other deposit taking institutions supervised by the Reserve Bank of Fiji. The teams would go with someone designated as "examiner-in-charge" to lead the team. Rarely would the head of the financial system supervision department even go.
So does the appearance of the Deputy Governor leading the team, a signal of a crisis at that institution? The other signal that things are serious is that he was at Home Finance for the better part of the day.
The other question that arises is : "Has complaints about the Reserve Bank's failure in its supervisory role and its monetary policy settings (which were raised earlier in this blog and covered well locally by Fiji Television) now woken them up?"
More on this should definitely come out over the next few days.
During my time at the Reserve Bank of Fiji, never once did the Deputy Governor lead an on-site examination/inspection team that had gone into one of the banks or other deposit taking institutions supervised by the Reserve Bank of Fiji. The teams would go with someone designated as "examiner-in-charge" to lead the team. Rarely would the head of the financial system supervision department even go.
So does the appearance of the Deputy Governor leading the team, a signal of a crisis at that institution? The other signal that things are serious is that he was at Home Finance for the better part of the day.
The other question that arises is : "Has complaints about the Reserve Bank's failure in its supervisory role and its monetary policy settings (which were raised earlier in this blog and covered well locally by Fiji Television) now woken them up?"
More on this should definitely come out over the next few days.
Friday, March 16, 2007
Procedures for checking the background of foreign investors
Just to add on to the reports on today's Fiji Times, One National News and Fijilive posted earlier about who is responsible for checking the background of foreign investors, let me describe below my understanding of the investment approvals process.
When a new foreign investor first applies to the Fiji Islands Trade & Investment Bureau (FTIB) indicating its intention to invest in Fiji, the FTIB would grant a Foreign Investment Registration Certificate (FIRC) to the foreign investor, within a two to five-day period. The FIRC is a sort of "passport" document allowing the holder (i.e. the foreign investor applicant) to then go and obtain all the necessary approvals, licences and permits that would be required before it sets up business in Fiji.
The FIRC is, therefore, an approval, given by the FTIB which is CONDITIONAL on the holder getting all the necessary permits, licences and approvals from other government and semi-government agencies.
Once all other permits, licences and approvals are in place then the holder of the FIRC (i.e the foreign investor) can then commence business in Fiji.
With regard to checking the background of foreign investor companies and its directors, this task would normally be referred to the Reserve Bank of Fiji's money laundering section (now called the Financial Intelligence Unit) who would then use its established contacts to check the background of the company and its directors. [The Financial Intelligence Unit is under the Reserve Bank of Fiji.]
This was particularly important to ensure and to "sieve out" companies and individuals who have been involved in money laundering and criminal activities.
In the case of the management company of the FNPF's Natadola development project, what would have to be determined was whether the company was actually a foreign investor or simply a project management company.
If the company was an investor (i.e. a foreign investor) then the procedures I referred to above would have had been followed.
On the other hand, if the company was merely a project manager, then assuming that personnel at the local authorities knew the work they had to do as well as what assistance other institutions could offer, the FNPF would have approached RBF, again to use its "established contacts" to check the background of the company and its principals/directors.
So, was the company a foreign investor or simply a project manager?
The answer to that question would then determine who is at fault for not doing what was supposed to have been done.
When a new foreign investor first applies to the Fiji Islands Trade & Investment Bureau (FTIB) indicating its intention to invest in Fiji, the FTIB would grant a Foreign Investment Registration Certificate (FIRC) to the foreign investor, within a two to five-day period. The FIRC is a sort of "passport" document allowing the holder (i.e. the foreign investor applicant) to then go and obtain all the necessary approvals, licences and permits that would be required before it sets up business in Fiji.
The FIRC is, therefore, an approval, given by the FTIB which is CONDITIONAL on the holder getting all the necessary permits, licences and approvals from other government and semi-government agencies.
Once all other permits, licences and approvals are in place then the holder of the FIRC (i.e the foreign investor) can then commence business in Fiji.
With regard to checking the background of foreign investor companies and its directors, this task would normally be referred to the Reserve Bank of Fiji's money laundering section (now called the Financial Intelligence Unit) who would then use its established contacts to check the background of the company and its directors. [The Financial Intelligence Unit is under the Reserve Bank of Fiji.]
This was particularly important to ensure and to "sieve out" companies and individuals who have been involved in money laundering and criminal activities.
In the case of the management company of the FNPF's Natadola development project, what would have to be determined was whether the company was actually a foreign investor or simply a project management company.
If the company was an investor (i.e. a foreign investor) then the procedures I referred to above would have had been followed.
On the other hand, if the company was merely a project manager, then assuming that personnel at the local authorities knew the work they had to do as well as what assistance other institutions could offer, the FNPF would have approached RBF, again to use its "established contacts" to check the background of the company and its principals/directors.
So, was the company a foreign investor or simply a project manager?
The answer to that question would then determine who is at fault for not doing what was supposed to have been done.
Fiji National Provident Fund saga : Who is responsible for checking the background of foreign investors?
The Reserve Bank of Fiji and the Fiji Islands Trade and Investment Bureau have been blamed by the Fiji National Provident Fund (FNPF) for not checking the background of the management company and directors of FNPF's Natadola hotel/resort development project.
Reproduced below are reports contained in today's Fiji Times, Fijilive and One National News.
"Natadola shock Fiji Times, Friday, March 16, 2007
A DIRECTOR of the company developing the $140million Natadola resort project has quit after his criminal past was revealed.
Two project management companies involved in the project, which will ultimately see a world-class integrated tourism resort and golf course built on 638 hectares of beachfront land, have also been replaced.
Louis Gerard Saliot, French-born chief executive officer of Asia Pacific Resort International (APRIL), the Natadola project managers, quit when confronted with details of his previous conviction, said Natadola Bay Resort Limited chairman, Felix Anthony yesterday.
Mr Anthony said the 60-year-old Saliot had been jailed in Monaco in 1992 for two years for breach of trust and had faced the courts again in 1993 when he was given a three-year term for complicity of bankruptcy, breach of trust, forgery and use of forgeries.
Mr Anthony would not reveal yesterday how the details of Mr Saliot's criminal past had come to light, but revealed Interpol had been used to trace Mr Saliot's history.
A copy of an Interpol document, addressed to FNPF manager Viliame Vodonaivalu and countersigned by Senior Superintendent of Police, Ravi Narayan, was made public at a press conference held by Mr Anthony yesterday.
Mr Anthony said Mr Saliot admitted the convictions when confronted by them.
He said the project managers, APRIL, which was hired as project manager in April 2004, and European project management group COTEBA, have been replaced by HLK Jacobs as interim project managers.
The Natadola Resort project is backed by the Fiji National Provident Fund, which has so far invested $60million into it. Natadola Bay Resort Limited is a subsidiary of FNPF.
Mr Anthony said Mr Saliot had not disclosed his criminal background when applying for his foreign investor's licence, a breach of Fiji's investment laws.
"Both the licence and work permit have been obtained by falsifying documents," Mr Anthony said.
"One of the concerns we have is the role of the FTIB (Fiji Trades and Investment Board) and the RBF (Reserve Bank of Fiji), as they are the people who grant licences without a proper scrutiny of people who want to do business."
Mr Anthony said APRIL had been paid $8million in management fees in three years.
APRIL project manager Keni Dakuidreketi said it would be premature to comment as they were still holding talks with the FNPF.
"We will comment at an appropriate time," he said last night.
Mr Anthony said two of the major concerns raised about the project was it was late by 24 weeks
and the lack of accountability.
He said only 10 per cent of the resort construction has been completed so far.
However, Mr Anthony assured FNPF members that their funds were secured.
"The FNFP Board is fully committed to ensuring that members' funds are secured and protected and to see the completion of the project.
"Given this commitment, we will carefully scrutinise all funds that are utilised for investment purposes,'' he said.
Mr Anthony said investigations into the resort project were continuing with Australian chartered accountant firm of Ernst and Young contracted to carry out an audit. "
"It's Reserve Bank, FTIB fault: Anthony Fijilive, Friday March 16, 2007
The Reserve Bank of Fiji and the Fiji Islands Trade and Investment Board have been blamed for failing to properly investigate the people involved in the multi-million dollar Natadola Bay Resort Limited (NBRL) project in Sigatoka, one of whom is alleged to have a criminal record.
NBRL board chairman Felix Anthony claims that Interpol reports show that one of the NBRL directors Louis Gerard Saliot has a criminal record; that he has been jailed for two years for breach of trust, that he was declared bankrupt, and that his bankruptcy proceedings are still continuing before the courts in Monaco.
"And knowing this, we have come to discover that in applying for his foreign investor licence, he (Saliot) did not disclose as is required, his offence or convictions in that and as such obtained his licence without making a full declaration which itself is unlawful.
"We have also come to discover that in also applying for his work permit he did not disclose his convictions and his bankrupt status and again we believe that his work permits were obtained without full disclosure. As such this causes us great concern."
No comments could be obtained from Saliot but another partner Keni Dakuidreketi said they would comment later.
The NBRL is owned 100 per cent by the Fiji National Provident Fund.
In recent weeks, the new NBRL board (appointed in December last year by the new military regime) has been reviewing the Natadola project with two major concerns.
The main concern has been that the project was late by 24 weeks and the lack of accountability in the project.
"As chairman and board of the NBRL, we have has been very concerned with the progress of that project itself. It is a huge project, probably the biggest the FNPF has ever undertaken," Anthony says.
"The total project when completed would be in excess of $340 million but the hotel project itself is worth $140m of which up to date FNPF has already invested about $60m of the workers' money.
"As the board of NBRL we have been very concerned at how the project has progressed so far. There has been a delay of currently the project running 24 weeks late. And when we talk about delays it means costing FNPF much more money."
He said that apart from that the supervision of the project has been of major concern to them.
Anthony says the NBRL in 2004 hired APRIL (Asia Pacific Resort International Ltd) to be project managers for this development while COTEBA was hired as construction managers.
Since then, APRIL was paid $8m in management fees. APRIL's principals are Saliot and Dakuidreketi.
Anthony says that NBRL is not satisfied with the performance of APRIL and COTEBA and as a result have been replaced with HLK Jacobs appointed interim project managers and a quantity surveyor has also been appointed to work on the project.
Anthony said that in issuing the licence, the FTIB has a role to investigate the background of people it issues licences to. "They failed."
He said that the RBF also has a responsibility to do background searches on people before they allow people to come in and do business. "They failed and this is simply not on."
"This only exposes the laxity in our system." No comments could be obtained immediately from the RBF or the FTIB.
Anthony says it is FNPF's own initiative that they have come up with these findings.
"I think both these organizations have a lot to be desired in this area and not only that but because of their laxity organization's like us suffer.
"And it is not cheap, it costs us a lot of money when we have to restructure a project that is already in progress and this causes delays and all sorts of problem. And we are talking about workers' money," he said.
He says Saliot has tendered his resignation as a director with immediate effect. "
"Reserve Bank not to be blamed over Natadola project One National News 16 Mar 2007
The Reserve Bank of Fiji says it shouldn't be blamed for what has transpired in the deal between April Development and Natadola Bay Resorts Limited.
In a statement the bank says it's not the role of the Reserve Bank to check the backgrounds of foreigners who wish to undertake business in Fiji.
The bank says it was never asked by FNPF to undertake a background check on Gerard Saliot (Selio) or his company, adding this responsibility cannot be abdicated to the agencies of Government or the Reserve Bank.
In this case, the bank says this responsibility rests squarely on the FNPF Board.
And the Fiji Islands Trade and Investment Bureau says given the latest findings, they will now go through the process of reviewing the registrations granted to the Natadola Marine Resort Limited and APRIL Development.
Reproduced below are reports contained in today's Fiji Times, Fijilive and One National News.
"Natadola shock Fiji Times, Friday, March 16, 2007
A DIRECTOR of the company developing the $140million Natadola resort project has quit after his criminal past was revealed.
Two project management companies involved in the project, which will ultimately see a world-class integrated tourism resort and golf course built on 638 hectares of beachfront land, have also been replaced.
Louis Gerard Saliot, French-born chief executive officer of Asia Pacific Resort International (APRIL), the Natadola project managers, quit when confronted with details of his previous conviction, said Natadola Bay Resort Limited chairman, Felix Anthony yesterday.
Mr Anthony said the 60-year-old Saliot had been jailed in Monaco in 1992 for two years for breach of trust and had faced the courts again in 1993 when he was given a three-year term for complicity of bankruptcy, breach of trust, forgery and use of forgeries.
Mr Anthony would not reveal yesterday how the details of Mr Saliot's criminal past had come to light, but revealed Interpol had been used to trace Mr Saliot's history.
A copy of an Interpol document, addressed to FNPF manager Viliame Vodonaivalu and countersigned by Senior Superintendent of Police, Ravi Narayan, was made public at a press conference held by Mr Anthony yesterday.
Mr Anthony said Mr Saliot admitted the convictions when confronted by them.
He said the project managers, APRIL, which was hired as project manager in April 2004, and European project management group COTEBA, have been replaced by HLK Jacobs as interim project managers.
The Natadola Resort project is backed by the Fiji National Provident Fund, which has so far invested $60million into it. Natadola Bay Resort Limited is a subsidiary of FNPF.
Mr Anthony said Mr Saliot had not disclosed his criminal background when applying for his foreign investor's licence, a breach of Fiji's investment laws.
"Both the licence and work permit have been obtained by falsifying documents," Mr Anthony said.
"One of the concerns we have is the role of the FTIB (Fiji Trades and Investment Board) and the RBF (Reserve Bank of Fiji), as they are the people who grant licences without a proper scrutiny of people who want to do business."
Mr Anthony said APRIL had been paid $8million in management fees in three years.
APRIL project manager Keni Dakuidreketi said it would be premature to comment as they were still holding talks with the FNPF.
"We will comment at an appropriate time," he said last night.
Mr Anthony said two of the major concerns raised about the project was it was late by 24 weeks
and the lack of accountability.
He said only 10 per cent of the resort construction has been completed so far.
However, Mr Anthony assured FNPF members that their funds were secured.
"The FNFP Board is fully committed to ensuring that members' funds are secured and protected and to see the completion of the project.
"Given this commitment, we will carefully scrutinise all funds that are utilised for investment purposes,'' he said.
Mr Anthony said investigations into the resort project were continuing with Australian chartered accountant firm of Ernst and Young contracted to carry out an audit. "
"It's Reserve Bank, FTIB fault: Anthony Fijilive, Friday March 16, 2007
The Reserve Bank of Fiji and the Fiji Islands Trade and Investment Board have been blamed for failing to properly investigate the people involved in the multi-million dollar Natadola Bay Resort Limited (NBRL) project in Sigatoka, one of whom is alleged to have a criminal record.
NBRL board chairman Felix Anthony claims that Interpol reports show that one of the NBRL directors Louis Gerard Saliot has a criminal record; that he has been jailed for two years for breach of trust, that he was declared bankrupt, and that his bankruptcy proceedings are still continuing before the courts in Monaco.
"And knowing this, we have come to discover that in applying for his foreign investor licence, he (Saliot) did not disclose as is required, his offence or convictions in that and as such obtained his licence without making a full declaration which itself is unlawful.
"We have also come to discover that in also applying for his work permit he did not disclose his convictions and his bankrupt status and again we believe that his work permits were obtained without full disclosure. As such this causes us great concern."
No comments could be obtained from Saliot but another partner Keni Dakuidreketi said they would comment later.
The NBRL is owned 100 per cent by the Fiji National Provident Fund.
In recent weeks, the new NBRL board (appointed in December last year by the new military regime) has been reviewing the Natadola project with two major concerns.
The main concern has been that the project was late by 24 weeks and the lack of accountability in the project.
"As chairman and board of the NBRL, we have has been very concerned with the progress of that project itself. It is a huge project, probably the biggest the FNPF has ever undertaken," Anthony says.
"The total project when completed would be in excess of $340 million but the hotel project itself is worth $140m of which up to date FNPF has already invested about $60m of the workers' money.
"As the board of NBRL we have been very concerned at how the project has progressed so far. There has been a delay of currently the project running 24 weeks late. And when we talk about delays it means costing FNPF much more money."
He said that apart from that the supervision of the project has been of major concern to them.
Anthony says the NBRL in 2004 hired APRIL (Asia Pacific Resort International Ltd) to be project managers for this development while COTEBA was hired as construction managers.
Since then, APRIL was paid $8m in management fees. APRIL's principals are Saliot and Dakuidreketi.
Anthony says that NBRL is not satisfied with the performance of APRIL and COTEBA and as a result have been replaced with HLK Jacobs appointed interim project managers and a quantity surveyor has also been appointed to work on the project.
Anthony said that in issuing the licence, the FTIB has a role to investigate the background of people it issues licences to. "They failed."
He said that the RBF also has a responsibility to do background searches on people before they allow people to come in and do business. "They failed and this is simply not on."
"This only exposes the laxity in our system." No comments could be obtained immediately from the RBF or the FTIB.
Anthony says it is FNPF's own initiative that they have come up with these findings.
"I think both these organizations have a lot to be desired in this area and not only that but because of their laxity organization's like us suffer.
"And it is not cheap, it costs us a lot of money when we have to restructure a project that is already in progress and this causes delays and all sorts of problem. And we are talking about workers' money," he said.
He says Saliot has tendered his resignation as a director with immediate effect. "
"Reserve Bank not to be blamed over Natadola project One National News 16 Mar 2007
The Reserve Bank of Fiji says it shouldn't be blamed for what has transpired in the deal between April Development and Natadola Bay Resorts Limited.
In a statement the bank says it's not the role of the Reserve Bank to check the backgrounds of foreigners who wish to undertake business in Fiji.
The bank says it was never asked by FNPF to undertake a background check on Gerard Saliot (Selio) or his company, adding this responsibility cannot be abdicated to the agencies of Government or the Reserve Bank.
In this case, the bank says this responsibility rests squarely on the FNPF Board.
And the Fiji Islands Trade and Investment Bureau says given the latest findings, they will now go through the process of reviewing the registrations granted to the Natadola Marine Resort Limited and APRIL Development.
Monday, March 12, 2007
Fiji National Provident Fund saga continues
The saga at the Fiji National Provident Fund (FNPF) continues with calls for an investigation into FNPF's staff loans.
While the saga continued, the banks continue with their praises for Reserve Bank of Fiji's (RBF) regulatory abilities and activities.
However, as I have said earlier, the stories/reports that continue to come out of the FNPF provide little assurance as to the RBF's abilities as well as those other "checks and balances" mechanisms that we relied upon such as the Board of Directors of the FNPF and its external auditors.
It is evident that the banks will praise the RBF because it is really RBF's monetary policy settings over the last two years that has contributed to the very high profits being recorded by banks in the same period.
The RBF on the other hand seems to be very happy about the increasing "interest spreads" recorded by the banking system. Here is a quote from the RBF's Quarterly Review for December 2006, page 25,
"After decreasing in the June [2006] quarter, the interest spread appears to be on the recovery path, with the recording of an improved spread of 5.1 percent in September (4.8 % in June)."
Interest spread is the difference between the return on banks' earning assets (including their loans) and their cost of funds (which includes their deposits). As evident from the commentary, in the midst of the interest rates hikes by the RBF, banks have had a good time increasing their interest spreads .... little wonder then that their profits increased astronomically.
It is high time now that the RBF come out and say what actions they have been taking with regard to the FNPF as its prudential supervisor. Was it aware that such things were happening? When was the last time, it had a good look at FNPF's investment portfolio and quality of assets? Has it reviewed the Fund's staff loan portfolio as it does with banks during an on-site inspection?
There is no time for them to hide themselves like an ostrich while members are getting irate about the investment of their retirement dollars.
In the meantime, here are the articles from yesterday's Fiji Sun calling for a probe into FNPF's staff loans followed by one in today's Fiji Times with the outgoing Westpac Chief Manager Fiji, David Evans, praising the Reserve Bank of Fiji's regulatory abilities.
"Call to probe FNPF staff loans
Investigations should be carried out on Fiji National Provident Fund staff who loaned to buy houses and have utilised it for commercial purposes, which is a breach of policy.
Former Fiji Labour Party head of security Posiano Nauku told the Fiji Sun yesterday while investigations are carried out on suspended general manager Olota Rokovunisei and deputy Foana Nemani, other staff that has taken housing loans should also be monitored.
“From the Fiji Sun’s revelations, it seems there is more to it,” he said. “The FNPF has been a closely-knitted unit for years where they keep and bury their dirt together. It is a welcome that such reports have come out publicly for the people to know the truth.”
Mr Nauku also questioned the intergity of the FNPF auditors and its former board members on why they had been quiet over the matter. “It’s like I scratch your back and you scratch mine kind of business.
The assurance by the FNPF management that our money is safe is not enough,” he said."
"Banker sees strength in sector
FIJI'S commercial banking services have become stronger in the last 20 years and are now of international standard, says an industry player.
Westpac Banking Corporation's outgoing general manager Fiji, David Evans guided the Australian giant's local operations for the last four-and-a-half-years.
He said Fiji was fortunate to have a good regulator in the Reserve Bank of Fiji.
Mr Evans, who came to Fiji in 2002, returns to Australia on Friday at the end of his contract.
"I think we are very fortunate in having a very strong banking system here," he said. "You have got banks here that are operating to international standards,"
Mr Evans said the country's central bank, "works continually in improving the process around the regulatory environment which we work in," he said.
"From an economic point of view, Fiji is very fortunate in having a very strong banking sector."
Having spent a quarter of a century in the money world, Mr Evans described his time as general manager Fiji "as very exciting".
"There weren't any surprises as such. There were a team of people who were very focused and committed in working for the business."
Mr Evans said the announcement by the Interim Government to have a local bank was welcome but warned it involved a long process.
"The only thing I say is that any new bank that comes into the banking arena must be able to operate to the same international standards as all the other banks.
"So firstly, it's a level playing field but the new competitor does not dilute the strength that we already have in the banking system.""
While the saga continued, the banks continue with their praises for Reserve Bank of Fiji's (RBF) regulatory abilities and activities.
However, as I have said earlier, the stories/reports that continue to come out of the FNPF provide little assurance as to the RBF's abilities as well as those other "checks and balances" mechanisms that we relied upon such as the Board of Directors of the FNPF and its external auditors.
It is evident that the banks will praise the RBF because it is really RBF's monetary policy settings over the last two years that has contributed to the very high profits being recorded by banks in the same period.
The RBF on the other hand seems to be very happy about the increasing "interest spreads" recorded by the banking system. Here is a quote from the RBF's Quarterly Review for December 2006, page 25,
"After decreasing in the June [2006] quarter, the interest spread appears to be on the recovery path, with the recording of an improved spread of 5.1 percent in September (4.8 % in June)."
Interest spread is the difference between the return on banks' earning assets (including their loans) and their cost of funds (which includes their deposits). As evident from the commentary, in the midst of the interest rates hikes by the RBF, banks have had a good time increasing their interest spreads .... little wonder then that their profits increased astronomically.
It is high time now that the RBF come out and say what actions they have been taking with regard to the FNPF as its prudential supervisor. Was it aware that such things were happening? When was the last time, it had a good look at FNPF's investment portfolio and quality of assets? Has it reviewed the Fund's staff loan portfolio as it does with banks during an on-site inspection?
There is no time for them to hide themselves like an ostrich while members are getting irate about the investment of their retirement dollars.
In the meantime, here are the articles from yesterday's Fiji Sun calling for a probe into FNPF's staff loans followed by one in today's Fiji Times with the outgoing Westpac Chief Manager Fiji, David Evans, praising the Reserve Bank of Fiji's regulatory abilities.
"Call to probe FNPF staff loans
Investigations should be carried out on Fiji National Provident Fund staff who loaned to buy houses and have utilised it for commercial purposes, which is a breach of policy.
Former Fiji Labour Party head of security Posiano Nauku told the Fiji Sun yesterday while investigations are carried out on suspended general manager Olota Rokovunisei and deputy Foana Nemani, other staff that has taken housing loans should also be monitored.
“From the Fiji Sun’s revelations, it seems there is more to it,” he said. “The FNPF has been a closely-knitted unit for years where they keep and bury their dirt together. It is a welcome that such reports have come out publicly for the people to know the truth.”
Mr Nauku also questioned the intergity of the FNPF auditors and its former board members on why they had been quiet over the matter. “It’s like I scratch your back and you scratch mine kind of business.
The assurance by the FNPF management that our money is safe is not enough,” he said."
"Banker sees strength in sector
FIJI'S commercial banking services have become stronger in the last 20 years and are now of international standard, says an industry player.
Westpac Banking Corporation's outgoing general manager Fiji, David Evans guided the Australian giant's local operations for the last four-and-a-half-years.
He said Fiji was fortunate to have a good regulator in the Reserve Bank of Fiji.
Mr Evans, who came to Fiji in 2002, returns to Australia on Friday at the end of his contract.
"I think we are very fortunate in having a very strong banking system here," he said. "You have got banks here that are operating to international standards,"
Mr Evans said the country's central bank, "works continually in improving the process around the regulatory environment which we work in," he said.
"From an economic point of view, Fiji is very fortunate in having a very strong banking sector."
Having spent a quarter of a century in the money world, Mr Evans described his time as general manager Fiji "as very exciting".
"There weren't any surprises as such. There were a team of people who were very focused and committed in working for the business."
Mr Evans said the announcement by the Interim Government to have a local bank was welcome but warned it involved a long process.
"The only thing I say is that any new bank that comes into the banking arena must be able to operate to the same international standards as all the other banks.
"So firstly, it's a level playing field but the new competitor does not dilute the strength that we already have in the banking system.""
Friday, March 9, 2007
Debate continues on FNPF : The Role of the Board in alleged abuse
The debate continued today with Sir James Ah Koy, former Minister for Finance and businessman, questioning the role played by the Board of Directors when the alleged loans were granted to a former senior manager at the Fiji National Provident Fund (FNPF).
In addition to the Board of Directors, I had suggested earlier that the Reserve Bank of Fiji as prudential supervisor of the FNPF should be asked as well as to what they did, to protect the interests of pension fund members for which it is entasked, in the whole affair. Fiji TV, had picked up the story that I blogged three days ago that Reserve Bank may have been "sleeping on its watch" when supervising the FNPF. Below is the coverage of it in last night's Fiji TV's One National News.
"Reserve Bank accused of sleeping on its watch
9 Mar 2007 17:42:21
The country's central bank, Reserve Bank of Fiji has been accused of sleeping on its watch.
Former advisor to the R-B-F - Gilbert Veisamasama claims the bank has failed to detect early warning signals of alleged mismanagement at Fiji National Provident Fund.
Gilbert Veisamasama runs a consultancy business in banking, finance and related legal issues.
He has worked at the Reserve Bank as a manager and advisor...
And today he questions the in-action of the cental bank for not keeping close tabs on the Fiji National Provident Fund.
The FNPF is now being investigated for alledged mismanagement..
He says the RBF recieves periodical returns from financial institutes like the FNPF - on how its functioning and whether there are any early warning signs on mis-management.
He questions why the bank failed to act.
We have sought comments from the Reserve Bank."
Let me add that the Reserve Bank of Fiji's responsibilities also extends to the Home Finance Company Limited, indirectly through the FNPF as it has an interest to ascertain the extent of and quality and safety of intra group exposures between a supervised entity (FNPF) and its subsidiaries (Home Finance).
I had covered the role played by the Board of Directors and external auditors with regard to the large loans being granted/approved in my blog entry yesterday.
You can read the story from today's Fiji Sun on questions being posed by Sir James Ah Koy, a former Minister for Finance and businessman.
"FNPF directors under fire
The Fiji National Provident Fund Investments Limited was an initiative to circumvent initial investment conditions outlined in the FNPF Act and theTrustee Act, says former Finance Minister, Sir James Ah Koy.
Mr Ah Koy said the investment requirements under the Trustee Act were quite strict and among other things required was the trust fund to invest in companies with a record of five-year profits and return at lest five per cent on the investment.
“The FIL was declared a trustee investment, which received funds from the FNPF and was able to invest in high-risk projects whereas the FNPF was prevented from doing so directly. Natadola and Momi fall into this category,” he said.
Sir James questioned the directors and auditors at the time several loans were requested and approved to suspended deputy general manager Foana Nemani.
“I am wondering with all these transactions how do they approve the loans themselves?” said Sir James. “Does it go before the board? These are huge sums of money.
Where were the external auditors and internal auditors of the FNPF fund? What were they doing?
“They can’t do all this in isolation, with nobody knowing what is going on. And how is it that there were no whistle blowers inside the FNPF? The directors of the FNPF at the time should be investigated.”
Sir James said if a change in government did not take place, funds that belonged to the people of Fiji would continue to be abused. “How can these people get away with this without anybody knowing?” he said.
“And if there were no change in government, this could have continued, they could have hidden all this. So this change brought about by Frank Bainimarama is a blessing, especially for young working people, this is their money.
“If there wasn’t a change of directors, this could have continued. The rot could have continued. I understand that Natadola will be investigated but all this corruption has come to the fore.
“It’s a good move that new directors are there like Felix Anthony and Daniel Urai because they are like bloodhounds and will look after the workers’ money.
The internal audit would have made this surface. Who clamped that down? This thing did not just happen this year, this type of thing was happening over a period of time and this should have surfaced.”
Former FNPF chairman Anare Jale said the board dealt with the governance of the fund. “Its daily affairs rest with the chief executive officer,” said Mr Jale. “It is the CEO that implements the policies put together by the board. “I understand that the 14 days given to the two have not expired and it is most unfair when investigations are still ongoing and the audit is printed in the media.”
He said it would be improper to make comments when an audit was still under way."
There will be more on this definitely over the next few days.
In addition to the Board of Directors, I had suggested earlier that the Reserve Bank of Fiji as prudential supervisor of the FNPF should be asked as well as to what they did, to protect the interests of pension fund members for which it is entasked, in the whole affair. Fiji TV, had picked up the story that I blogged three days ago that Reserve Bank may have been "sleeping on its watch" when supervising the FNPF. Below is the coverage of it in last night's Fiji TV's One National News.
"Reserve Bank accused of sleeping on its watch
9 Mar 2007 17:42:21
The country's central bank, Reserve Bank of Fiji has been accused of sleeping on its watch.
Former advisor to the R-B-F - Gilbert Veisamasama claims the bank has failed to detect early warning signals of alleged mismanagement at Fiji National Provident Fund.
Gilbert Veisamasama runs a consultancy business in banking, finance and related legal issues.
He has worked at the Reserve Bank as a manager and advisor...
And today he questions the in-action of the cental bank for not keeping close tabs on the Fiji National Provident Fund.
The FNPF is now being investigated for alledged mismanagement..
He says the RBF recieves periodical returns from financial institutes like the FNPF - on how its functioning and whether there are any early warning signs on mis-management.
He questions why the bank failed to act.
We have sought comments from the Reserve Bank."
Let me add that the Reserve Bank of Fiji's responsibilities also extends to the Home Finance Company Limited, indirectly through the FNPF as it has an interest to ascertain the extent of and quality and safety of intra group exposures between a supervised entity (FNPF) and its subsidiaries (Home Finance).
I had covered the role played by the Board of Directors and external auditors with regard to the large loans being granted/approved in my blog entry yesterday.
You can read the story from today's Fiji Sun on questions being posed by Sir James Ah Koy, a former Minister for Finance and businessman.
"FNPF directors under fire
The Fiji National Provident Fund Investments Limited was an initiative to circumvent initial investment conditions outlined in the FNPF Act and theTrustee Act, says former Finance Minister, Sir James Ah Koy.
Mr Ah Koy said the investment requirements under the Trustee Act were quite strict and among other things required was the trust fund to invest in companies with a record of five-year profits and return at lest five per cent on the investment.
“The FIL was declared a trustee investment, which received funds from the FNPF and was able to invest in high-risk projects whereas the FNPF was prevented from doing so directly. Natadola and Momi fall into this category,” he said.
Sir James questioned the directors and auditors at the time several loans were requested and approved to suspended deputy general manager Foana Nemani.
“I am wondering with all these transactions how do they approve the loans themselves?” said Sir James. “Does it go before the board? These are huge sums of money.
Where were the external auditors and internal auditors of the FNPF fund? What were they doing?
“They can’t do all this in isolation, with nobody knowing what is going on. And how is it that there were no whistle blowers inside the FNPF? The directors of the FNPF at the time should be investigated.”
Sir James said if a change in government did not take place, funds that belonged to the people of Fiji would continue to be abused. “How can these people get away with this without anybody knowing?” he said.
“And if there were no change in government, this could have continued, they could have hidden all this. So this change brought about by Frank Bainimarama is a blessing, especially for young working people, this is their money.
“If there wasn’t a change of directors, this could have continued. The rot could have continued. I understand that Natadola will be investigated but all this corruption has come to the fore.
“It’s a good move that new directors are there like Felix Anthony and Daniel Urai because they are like bloodhounds and will look after the workers’ money.
The internal audit would have made this surface. Who clamped that down? This thing did not just happen this year, this type of thing was happening over a period of time and this should have surfaced.”
Former FNPF chairman Anare Jale said the board dealt with the governance of the fund. “Its daily affairs rest with the chief executive officer,” said Mr Jale. “It is the CEO that implements the policies put together by the board. “I understand that the 14 days given to the two have not expired and it is most unfair when investigations are still ongoing and the audit is printed in the media.”
He said it would be improper to make comments when an audit was still under way."
There will be more on this definitely over the next few days.
Tuesday, March 6, 2007
Reserve Bank of Fiji : Sleeping on its watch?
More and more is coming out now with regard to alleged scams and mismanagement at the Fiji National Provident Fund (FNPF), members' funds invested at sub-optimal projects by the FNPF, high banks' profits resulting out of Reserve Bank of Fiji's monetary policy settings, complaints about high interest rates and fees charged by banks, but who shall we say is responsible for all this? Yes, the Reserve Bank of Fiji!
The Reserve Bank of Fiji is tasked among other things to "promote a sound financial structure". In carrying out that role, it has prudential oversight of the banking system, the insurance industry, foreign exchange dealers and money changers and the superannuation industry. Whilst conducting its function, the Reserve Bank of Fiji receives and analyses returns submitted periodically by these institutions and using an "early warning signal" system, conducts detailed on-site examinations of institutions under its supervision.
With all that is now being reported in the press, everyone is quick to point at the perpetrators of these alleged abuses. What everyone should really be doing is to point to the supervisor - the Reserve Bank of Fiji and ask the Bank what it has been doing, was it aware of what has been happening and what actions did it take to mitigate any damage to the "interests of depositors, insureds and pension fund members" which is its function.
In my opinion, the Reserve Bank of Fiji has failed to live up to its responsibilities. Its monetary policy has failed (now having Government to tell it how to do that by injecting much needed funds into the financial system) and its prudential supervisory policy and activities have also failed. What next?
The Reserve Bank of Fiji is tasked among other things to "promote a sound financial structure". In carrying out that role, it has prudential oversight of the banking system, the insurance industry, foreign exchange dealers and money changers and the superannuation industry. Whilst conducting its function, the Reserve Bank of Fiji receives and analyses returns submitted periodically by these institutions and using an "early warning signal" system, conducts detailed on-site examinations of institutions under its supervision.
With all that is now being reported in the press, everyone is quick to point at the perpetrators of these alleged abuses. What everyone should really be doing is to point to the supervisor - the Reserve Bank of Fiji and ask the Bank what it has been doing, was it aware of what has been happening and what actions did it take to mitigate any damage to the "interests of depositors, insureds and pension fund members" which is its function.
In my opinion, the Reserve Bank of Fiji has failed to live up to its responsibilities. Its monetary policy has failed (now having Government to tell it how to do that by injecting much needed funds into the financial system) and its prudential supervisory policy and activities have also failed. What next?
Thursday, January 25, 2007
FNPF to be reviewed
The Fiji National Provident Fund (FNPF) is to undergo a review by the Interim Government. This has been announced after the Fund's Chief Executive Officer and his deputy were both sent on leave with immediate effect late afternoon, Thursday, 25 January 2007.
The review will cover, among others, concerns about the capabilities of management, their salaries and overheads and the viability of some of the Fund's investments.
FNPF is the sole pension fund provider in Fiji and has been in operation since the mid 1960s. After the failure of some of its counterparts in other Pacific Island countries, e.g. Vanuatu, there have been rising concerns about the continued viability of the FNPF and some criticisms about the investments that it got into.
Some of the difficulties faced by the FNPF includes its restrictions in investing freely offshore with Exchange Control regulations in place by the Reserve Bank of Fiji. This tends to limit its investments to those that are available domestically, which in some cases are not entirely optimal for members' interests.
An assessment done by the ILO of the Fund's pension reserves states that it would run out of Funds in the late 2010s or early 2020s. Extending that timeframe is a challenge for the Fund's own management and for Government and the country as a whole.
We hope that the review by the Interim Government will be able to steer the Fund in a clear direction in future with the ultimate objective of providing for its members in their twilight years.
The review will cover, among others, concerns about the capabilities of management, their salaries and overheads and the viability of some of the Fund's investments.
FNPF is the sole pension fund provider in Fiji and has been in operation since the mid 1960s. After the failure of some of its counterparts in other Pacific Island countries, e.g. Vanuatu, there have been rising concerns about the continued viability of the FNPF and some criticisms about the investments that it got into.
Some of the difficulties faced by the FNPF includes its restrictions in investing freely offshore with Exchange Control regulations in place by the Reserve Bank of Fiji. This tends to limit its investments to those that are available domestically, which in some cases are not entirely optimal for members' interests.
An assessment done by the ILO of the Fund's pension reserves states that it would run out of Funds in the late 2010s or early 2020s. Extending that timeframe is a challenge for the Fund's own management and for Government and the country as a whole.
We hope that the review by the Interim Government will be able to steer the Fund in a clear direction in future with the ultimate objective of providing for its members in their twilight years.
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