In three years, FSC executive chairman Abdul Khan and his deputy have picked up a massive $2.4 million in salary – ie $800,000 per year between them.
Assuming a 60/40 sharing formula: Mr Khan would have collected $1.44m and his Deputy, Marika Gaunavou $800,000 over the three years from 2012-2014, NFU general secretary Mahendra Chaudhry told the Parliamentary Standing Committee on Economic Affairs over consultations on the Sugar Bills.
“I am simply flabbergasted. How can the FSC Board justify such massive salaries at a time when the Corporation is, to all intents and purposes, bankrupt and there exists “material uncertainty” about its ability to continue as a going concern?” he asked.
Mr Chaudhry questioned the utter lack of accountability and transparency in the payment of such Directors’ Remuneration and called for a thorough investigation into the scam.
Questions sent to Abdul Khan to provide details of the remuneration and other queries regarding conflict of interest between his private company and his FSC responsibilities, have received no response.
He also revealed that at the time Khan took over appointment as Executive Chairman in January 2011, his salary was paid TAX FREE in NZD. Benefits included housing, medical insurance, motor vehicle and paid annual leave.
“It is believed that the remuneration package was subsequently revised to include a performance bonus,” Mr Chaudhry said, but admitted that this needed to be established. It also needs to be established whether Khan who is a New Zealand citizen, is still being paid tax free in NZD.
To justify his massive pay, Khan has been cooking FSC accounts to show a profit when in actual fact FSC has been making losses over the 3 years.
Mr Chaudhry said after Khan’s appointment in 2011, 2 significant developments found their way into FSC’s financial statements:
- The FIRST was reversal of substantial amounts in impairment losses which had been recorded in its books
- SECOND was the allocation for Directors’ Remuneration which appeared for the first time in FSC accounts for 1June 2011 – 31 May 2012.
The two developments were obviously connected. The write back of impairment losses were to show (paper) profits to justify the huge remuneration paid to him.
Of the $173m impairment loss showed in FSC books, $120m was written back in the years 2012-2014 (the last FSC Annual Report available) : $40m in 2012, $45.5m in 2013 and $35m in 2014.
Thereby, showing paper profits of $1.8m in 2012, $6.3m in 2013 and $6.9m in 2014.
When in fact, for these years, FSC had incurred heavy operating losses amounting to $38m in 2012, $39m in 2013 and $28m in 2014.
Despite all this juggling of books, FSC Auditors in their 2014 report point out: “There exists material uncertainty that cast significant doubt about the Corporation’s and the Group’s ability to continue as a going concern.”
Mr Chaudhry pointed out: The write back of impairment losses without any material improvement in the financial performance of the Corporation remains, therefore, a highly controversial issue”.