Labour MPs highlight corruption in FSC

[Posted 30 April 2003,1600]

Labour MPs have called for an inquiry into FSC's financial affairs alleging corruption in the awarding of contracts.

Ba parliamentarian Satendra Singh highlighted several cases of corruption and financial mismanagement in FSC during debate on a government guarantee for a $75 million bank loan to keep the financially stricken company afloat.

The ailing sugar company registered a $20 million loss for the financial year ending 30 March 2003 bringing accumulated losses to $74 million.

Mr. Singh asked why a company which had been profitable for the past 22 years started makinf losses six years ago. He said much of FSC's financial crisis was due to incompetent expatriate management pointing the finger squarely at managing director John McFadden.

"From the time he (McFadden) took over leadership, I have seen things go from bad to worse," he said.

Citing cases of financial mismanagement, Singh referred to the awarding of a contract to redesign an FSC office at the Lautoka Mill to a company named Sinclair Knight.

He said a budget of $130,000 was allocated for the restructure. FSC then made its own workers redundant paying them a redundancy package of $10,000 to $15,000 each. These workers were absorbed by the engineering company Sinclair Knight.

Sinclair Knight was then given the contract for the design office at a fee of $300,000 for only three phases of the job. "Is this not mismanagement?" Singh asked, adding that had FSC retained its skilled workers, it could have done the job itself.

He also asked why Lautoka Mill's crushing capacity had dropped almost 50% from a normal of 65,000 tonnes a week to 35,000 tonnes a week after FSC bought a new C² mill at a cost of $8 million.

He alleged that heavy machinery was being hired at all mills to do routine jobs when almost all mills are equipped with their own heavy machinery. "If you visit the FSC compound, you will see old machines rotting in garages, while FSC keeps on paying contractors to do jobs they can do themselves," Singh said.

In another instance, one tonne of steel chunk went missing from a mill. "Stealing such a big chunk of steel from right under the noses of a heavily secured facility is simply incredible and unpalatable," Singh said.

"The performance of the chairman and the managing director has been pathetic. It is time they quit," Singh said.

He called for the removal of the entire FSC board and executive management if FSC was to survive as a company. FSC needed to be cleaned from the top to the bottom, he said.

Fellow MP Krishna Prasad made similar intervention, blaming FSC's financial disaster on its expatriate management.

"The corporation has been operating without any direction. There seems to be a serious lack of planning which has caused the industry millions of dollars," Prasad said.

"No amount of funding will improve the sugar industry unless we get rid of the board and the management and fill these positions with people who have a thorough knowledge of the sugar industry."

Prasad said the expatriate management were bringing in costly changes which had not addressed the real problems of inefficiency and mismanagement.