The Fund is a superannuation Trust worth billions in assets and members’ savings. It must be managed to the highest ethical standards, free from political control, interference or influence: Mahendra Chaudhry
FNPF embarked on a $23m retail development complex on the old Nadi Hotel site in mid-2015, but, some five years later, the project is still not complete.
The Fund’s 2017 Annual Report stated that “construction work on the site had progressed well and completion was expected at the end of 2018”.
The 2018 Report said “… Nadi Retail is undergoing re-development and should be available next year”.
Its 2019 Report says: “ Due to design changes the completion date has been revised to December 2019”.
It is a matter of some concern that a project which has been plagued by long delays resulting in substantial cost over-runs to the Fund, has received scant mention in its annual reports except for fake completion dates.
The contractor, PBS (Pacific Building Solutions), abandoned the project midway leaving the Fund holding the bag. The Fund says it terminated the contract in December 2018, citing breach of conditions but the contractor has made a counter claim holding the Fund responsible for the breach.
To complete the works FNPF engaged subcontractors who had worked for the original contractor. However, this may have compromised the quality of construction, warn building industry observers.
Design changes mentioned in the Fund’s 2019 report were really a redo of the structural and fire proofing works which had been found to be seriously defective as initially completed.
The project cost originally put at $23m, had escalated to $30.5m as reported in the Fiji Times of 29 November 2019, which also mentioned a revised completion date of February 2020, now well past.*
Accountability and Transparency
Another issue with this development is whether the FNPF Board had done its due diligence with regard to the tenancy of the complex. It invited expressions of interest in September 2019, citing December as the completion date and received 38 responses from prospective tenants, according to an FNPF newsletter.
However, further delays in the completion of construction works and the onset of rapid economic downturn towards the end of 2019 led to a number of them pulling out.
The final cost of this ill-fated project is likely to be well over $30.5m by the time it is completed.
A major concern now is that in the current depressed economic and business environment, it is extremely difficult to attract commercial tenants. Consequently, income losses from this property will continue to mount for the foreseeable future as the post Covid economic recovery is a long way off.
The FNPF Board and senior management must accept responsibility for the losses that will accrue from this venture – losses that may run into millions in the longer term.
The tragedy is that no one will be held accountable – it will be business as usual.
Because of the Fund’s enormous size, a few millions frittered away here and there would be hardly noticed, more so, if the Fund’s financial disclosures remain lacking in essential detail and its custodians are political appointees.
My written request made a month ago for information on the project engineers and architects and its likely overall cost, has not been answered. I was told by the management that a reply will be given once the necessary clearances and authorization are obtained. Frankly, I don’t think a reply is forthcoming.
Over the years since the Board’s restructure in 2011, the Fund has been used by the Bainimarama government as its de facto bank. Aside from being its principal lender, the Fund has been ‘persuaded’ to invest in questionable projects in the tourism sector to ‘stimulate’ economic growth. These very ventures today pose the greatest risk to its investment returns.
The moneys in the Fund belong to the workers but there is not a single worker representative on the Board to keep a watch on their behalf.
The original tripartite structure of the Board had two representatives each from the workers, the employers and the government, but this provision was removed when the FNPF Act was replaced by Decree 52 of 2011 by the Bainimarama regime. The appointments are now at the sole discretion of the Minister for Economy.
Of the current six Board members, two are employers, three are persons holding high management positions, and one a government nominee ( PS Economy). Again, of the six, five are people of Indian origin and one a Rotuman.
Regrettably, indigenous Fijians who comprise over 60% of the population and 53% of the workforce, are not represented on the Board. I regard this as totally unacceptable from the standpoint of fair community representation in a multiracial society.
Furthermore, one must question the current culture of appointing Board members. FNPF is a trust fund and by far the biggest financial institution in the country. Why then are non-Fiji residents appointed as Board members to an institution of such national importance? I refer to a member who resides in Australia and another who lives and works in Oakland, California, both appointed in January this year. Aren’t they political appointees?
We have a number of very well qualified local men and women with knowledge, experience and impeccable records who would be happy to render their service to Fiji. Why ignore them in preference to those who chose not to live and work here?
We also have foreign residents sitting on the Boards of other statutory bodies and government commercial companies – the Fiji Sugar Corporation, Fiji Water Authority, Energy Fiji Ltd, Fiji Revenue and Customs Service, the Public Service Commission et al.
This practice must be strongly condemned by all who have Fiji at heart.
Questions have also been raised about accommodating Board members with conflict of interest as was demonstrated in a case where a member who resigned in December 2018 was re-appointed in January 2020. I believe his resignation was associated with his company’s bid for a lucrative contract in the refurbishing and remodeling of one of FNPF’s top resorts. The member was back on the Board after the contract was secured.
I regard such practices as unethical and manipulative, particularly the re-entry of the member to the Board after having obtained financial advantage for his company.
The Fund is a superannuation Trust worth billions in assets and members’ savings. It must be managed to the highest ethical standards, free from political control, interference or influence.
*Footnote: Compare this with the iconic 102 storey Empire State Building (NY) which was completed in 14 months between March 1930 and May 1931 – with the technology then available! The building has floor area of 208,879m2 and 73 lifts.