The Natadola scam has finally surfaced.
We posted a story on the subject on our website on 2 March titled “Is our Provident Fund (FNPF) in safe hands?” At the time, the FNPF annual reports for the years 2008 and 2009 were long overdue for publication.
In that story we pointed out that there was reportedly a huge discrepancy ($200 million) in the development costs of the Natadola Bay Resorts where FNPF books showed approximately $400 million in equity and grants to the Natadola Resorts Ltd (NRL) whereas NRL’s books showed the value of the property and development costs at around $200 million.
It is now revealed that the discrepancy of $200 million, plus the cost over-run of around $101 million has resulted in a write-off of $301 million on the Natadola project alone. Write-offs on the other projects come to $26 million with Momi Bay heading the list at $18 million.
The smaller write-offs – Malthouse Brewery, GPH, Savusavu Marina, Bayview Hospital, Fiji Hardwood Corporation – amount to a further $8 million but this figure may balloon to a much larger sum in the next couple of years as final loss adjustments are made.
It could well be that the total write-off at this stage has been managed to keep the overall asset value above the total liability of the Fund, including the members’ contribution account.
THE QUESTION now is whether members of the fund must remain satisfied with the assurances given by the FNPF CEO Aisake Taito and chairman Ajith Kodagoda that their contributions are safe and secure and that the Fund has sufficient assets to meets its liabilities despite the huge write-off.
The answer clearly is a big NO!
It is clear that some $200 million has gone missing. It is not just simply a case of wrote-down of assets. The members are entitled to know who got away with approximately $200 million of their savings. Is it a clear case of theft or what?
The Natadola Resort project is not a paying proposition. It has a huge debt to service and it is unlikely to give a return to the Fund for many years, if ever. Hope is now being pinned on the development and sale of residential lots to mitigate the loss. Could this not be a case of spending good money chasing after bad!
The Momi Bay adventure and the GPH fiasco in real estate development have proved to be monumental failures, costing the members over $100 million – not a penny in return!
We had said earlier that at least $500,000,000 or $0.5billion of the Fund’s investments in these ‘assets’ were performing negatively. That translates into a loss of earnings of around $40 million a year, based on a rate of return of 8%pa.
Is it little wonder then, that interest paid to members on their contributions, has been sliding over the years – it being rumoured that interest rate of only 5% is likely for the 2009/2010 financial year which is well below the current inflation rate of 9.4% (March figure as per the RBF Economic Review).
Blaming the Rabuka and Qarase governments for the present calamity may be justified, but it is hardly the ointment that will heal the serious financial injury caused to members of the Fund.
Pension funds are supposed to be protected by the State. Under the FNPF Act, members’ savings have the protection of the State. So, it is really only logical that the present government make good the loss to the Fund from State coffers as was the case with the NBF bailout in 1995/96.
But we have not heard a word on that from anyone in authority.