Natadola Bay Resorts Ltd (NBRL) has not paid a single cent to the FNPF, to reduce its massive loan of $303 million.
The Fund’s annual report for 2012, just released, shows that the loan balance remains unchanged from the previous year.
NBRL had, over the years, borrowed $303m to develop the Intercontinental Hotel and Golf Course and a residential sub division at Natadola Bay, about 16 kilometers from Sigatoka on the Coral Coast.
The loan was restructured in August 2011 into three segments as follows:
|Loan 1||$60m||26 yrs||8%|
|Loan 2||$40m||26.5 yrs||8%|
|Loan 3||$203m||indefinite||interest free|
Members of the Fund are incurring huge losses running into tens of millions of dollars annually as a result of the above arrangements, reportedly pushed by the regime, despite advice to the contrary from well-known investment experts.
It is absolutely absurd that the FNPF should give out huge interest-free, unsecured loans to NBRL without a definite repayment period.
Interest alone at 8% on this massive loan of $203m would fetch the Fund an annual income of $16m, let alone the principal repayment. Over 10 years this will mean a loss of $160m, $320m over 20 years and so on.
The Fund management had been warned against making large investments in the tourism sector. It should have realized this, drawing on its past experience of failed hotel projects.
The Intercontinental Hotel is reportedly not performing to expectations while the golf course is running at a loss. The residential subdivision is yet to take off!
The NBRL loan is a non-performing loan. Yet the Fund’s external auditors – PriceWaterhouseCoopers – have made no adverse comment or report on this serious matter. The Reserve Bank of Fiji, as the Fund’s oversight agency, has not acted either and appears to be in breach of its fiduciary responsibilities.
NBRL’s liabilities far exceed its assets. As such, it should not be allowed to continue in operation in violation of the relevant provisions of the Companies Act.
Loan not secured
It is alarming that the loan agreements and securities for the massive $303m loan have not been executed even some 30 months since the resort opened its doors.
More alarmingly, the FNPF does not have legal ownership of the hotel, the golf course, the residential land, notwithstanding the promulgation of the Natadola Decree by the regime.
And now we are told that the Fund will pour another $150 million of Members’ Funds into the failed Momi Bay resort in a bid to complete the project.
This is how our pension funds are being frittered away while pensioners and members have their annuity rates cut by 50%.
The Fund gloats about a $115.6m profit for the 2012 financial year. It should be told that a pension fund does not exist to make profits – whatever return there is should be ploughed back into benefits for members.