Another $12 million wasted?

What’s the truth behind FNPF’s $12m land deal at Momi Bay?

FLP Website

Fiji Labour Party has written to the Fiji National Provident Fund seeking information on its decision last year to expend a further $12 million on the failed Momi Bay resort development project.

The FNPF Board spent $12m in July 2011 to buy additional land for residential lots for sale at the Momi Bay complex, work on which stopped in October 2006 after the developer defaulted on loan repayments to FNPF and was unable to pay the contractors and suppliers.

FLP wrote to FNPF last October seeking details on the purchase of the $12m residential lots. The Fund sent a perfunctory response without disclosing any details on the purchase of these lots.

One year later, with little visible activity at the resort, we are pushing for answers again. Obviously, something is not quite right here. Why is the FNPF management being so secretive about the $12m land deal? If all is above board, why are the questions not being answered?

Why tell us in November 2011 that a hotel operator will be appointed soon? But almost a year later, there is still no sign of a hotel operator!

FNPF had invested $99.7m in the Momi Bay development. In 2009, as the first mortgagee, it tried to auction the property, but failed to realize anything near its true value. Following this, the Board decided to write off $55m reducing the value of the property to $44.7m.

In its 2011 Annual Report, it disclosed that it had expended $12m in July 2011 to buy additional land at Momi Bay and this was to be part of the Momi Bay Development.

On 27 October 2011, FLP wrote to chief executive FNPF questioning the absurdity of the Board’s decision to “throw good money after bad”: “To put it bluntly, the purchase of the additional land to complete an incomplete development which did not attract any worthwhile offers when put to auction seems not only absurd but highly questionable as to its actual intent.

“It is a well known fact that over the years the Fund has made investments in projects which have resulted in accumulated losses of around $700m. A number of these projects were government/regime driven such as ATH, GPH, Momi Bay, Natadola Bay etc.

“As a consequence of these ego projects the long term sustainability of the Fund is now at risk and the Board has decided that it must bring in “Reforms” which, in short, means a substantial reduction in pension benefits of the existing and future pensioners…”

In the case of the additional $12m being spent on Momi Bay, FLP reminded the Fund that it had a duty to fully disclose to the public, FNPF members in particular, details of this highly questionable deal.

We sought the following information on the matter:

i. the total area of land acquired

ii. the previous owners/lessees of the subject land

iii. the land area and price paid for each allotment if more than one
property or parcel of land was acquired

iv. on whose advice/recommendation was the land acquired

v. was a due diligence report prepared

vi. the agents, if any, through whom the deal was negotiated and the commission/fees paid to them

FNPF replied on 2nd November 2011 to say that after considering various options, the Fund had decided that the best alternative for it was to complete the hotel and “to immediately sell the residential lots to recover investment. Work has commenced in this regard including the appointment of the Hotel Operator soon.”

It did not provide the additional details sought. Members of the Fund are still in the dark as to how much land was purchased with $12m of their money, who was the land bought from and how much was paid for each lot purchased?

Nor do we know the name of the agent, if any, that negotiated the deal and what commission or fees was paid for it.

It is well known that the Bayleys real estate company had been involved with the sale of the initial residential lots. It had also handled the failed auction of the property in 2009 which had realized a mere $41m bid for the partially completed luxury resort valued, at the time, at about $80m but later written down to $44.7m.

It is now more than a year since the additional land was purchased. Our information is that there is no visible sign of any activity at the resort site.

This week we wrote again to FNPF and its auditors, Pricewaterhouse Coopers seeking further information on the $12m expended and details surrounding the purchase of the land.

FNPF’s silence on the deal is highly suspect considering that the Fund has already frittered away massive sums of members’ money, some $700m, in bad investments.

Fund members are paying the price for such imprudence. In March this year, pension annuity rates were virtually halved for existing pensioners, down from 15-25% while a rate of 8.7% was set for future retirees.

It has left more than 90% of existing pensioners with an income of less than $400 a month – sentencing these seniors to a life of poverty in their old age! Nor will future pensioners be able to retire with dignity on an annuity of 8.7% considering that more than 60% of our workers receive below poverty level wages.

Yet the FNPF board and management feel they can continue to whittle away members’ hard earned contributions without being held accountable for their Ill-conceived investment decisions.

But this is not all. December last year, the Fund signed a partnership deal with Tokatoka Tahau, the Momi Bay landowning Unit (Fiji Sun 25/12/2011). The landowners were jubilant to receive $1.2m in premium from FNPF for a 99-year tourism lease for the resort site. They were also promised education and community development funds, training, business and job opportunities at the “new” resort…

Work on the site was to resume at the end of the second quarter this year. All very well … but one wonders whether these promises will ever be fulfilled!

The truth is that FNPF rushed into this exercise without much thought or expertise.

Delays in FNPF pension payments inexcusable

 

The Fiji Labour Party is absolutely appalled at the insensitivity and utter lack of responsibility FNPF has displayed in its handling of pension payouts.

Daily for the past week, scores of seniors have patiently crowded the Pensions office and walkways at the FNPF head office in Suva waiting for their meager pension payment.

As it is their pension payouts have been reduced by half and now they are being forced to fork out scarce funds in bus and taxi fares day after day in the hope of receiving their payments from the Fund.

All we have been getting from the Provident Fund management in response are empty promises that payout will be made today or tomorrow.

The truth is that FNPF rushed into this exercise without much thought or expertise.

It should have known that handling some 12,000 pension re-registration and payments would be a mammoth task. Even then it just gave itself one month after the cut-off date to handle all the paperwork.

What is the big rush? There is no danger of the Fund going bankrupt tomorrow. If it had to impose this illegal exercise (a breach of contract) on the country’s elderly, it should have at least given itself three clear months after the cut-off date to get all its paperwork in order before imposing the new rates.

FLP calls on the FNPF management to show more sensitivity towards the plight of seniors, the majority of whom are dependent on their pension payouts each month to put food on their tables and meet their other pressing commitments.

Mick Beddoes says the delay will do nothing to improve the lack of trust that people have for FNPF.

Delayed payout by FNPF is shameful-Beddoes

 

The delayed payout by Fiji National Provident Fund to pensioners on Friday has been labeled as outrageous and shameful by a Former Opposition Leader.

Mick Beddoes said that this latest delay was not the first that expecting pensioners have had to endure waiting for their payout and that it will do nothing to improve the lack of trust that people have for FNPF.

Meanwhile FNPF Chief Executive Officer Aisake Taito said that they extend their deepest apologies to all pensioners for the delay caused by process problems they encountered and is pleading pensioners for their understanding while at the same time acknowledging them for their patience.

He added that for pensioners who validated and chose an option before 29th February this year will be paid out tomorrow morning and those that chose their options after 29th February will receive their payment on 30th April which is the scheduled payment date.

Story by: William Waqavakatoga

FNPF fails to honour its 4pm promise. Our faith in our superannuation fund is failing further and further…….

FNPF pensioners yet to be paid

08:10 Today

 

 

Taken from/By:
Report by: Dev Narayan

Pensioners are furious that the FNPF has failed to honour its promise to pay out by four o’clock on Friday afternoon.

The first payment was due under a new arrangement on Monday however, dealys have been caused from a computer glitch.

Those who did not receive their payments want answers and late Friday afternoon, they had FNPFIT department in their sights wanting to know what happened.

The pensioners, some without any cash but who travelled to Suva to find out when they’ll get their money just want answers.

FNPF needs an injection of around half a billion Fijian dollars to make it solvent.

http://www.islandsbusiness.com/islands_business/index_dynamic/containerNameToReplace=MiddleMiddle/focusModuleID=19991/overideSkinName=issueArticle-full.tpl

The case of the Fiji National Provident Fund (FNPF) is instructive on this count. FNPF is slipping into insolvency (i.e. where the value of current liabilities exceeds the value of assets). It needs an injection of around half a billion Fijian dollars to make it solvent. Finding this sum in the current uncertain environment will be costly. FNPF is in the process of trimming down pension payments from the prevailing 15 percent of equity to 8.7 percent which is to take effect from  March 1, 2012. This amounts to a drop in income of a retiree dependent on FNPF of 42 percent. It will hurt, particularly in a climate of high inflation and in a situation where there are no other sources of income. The capacity to replenish income falls with age and when medical expenses are likely to rise. So pensioners, beware!

Changes to FNPF only to be announced after Law changed and court action negated by decree.

Legalise and implement

Elenoa Baselala
Saturday, October 15, 2011

Fiji Times

THE Fiji National Provident Fund will legalise its proposed pension reforms by including it in a revised FNPF Act and then announce to members what are the changes.

The Fiji Times Business asked the fund for an update on what part of the reforms would be implemented and when they would be implemented.

In June, the fund had conducted public consultations on the proposed reforms and the implementation date as announced by the FNPF chairman, Ajith Kodagoda was July 1.

The next date announced by FNPF chief executive Aisake Taito was mid-September.

“This is a major decision and there are other issues that need be factored in before the implementation can be effected, and this includes the review of the FNPF Act,” Mr Taito said.

“The proposed changes will need to be incorporated into the Revised Act before the changes are announced.”

The FNPF had previously stated the “urgent” need for reform to remain sustainable. At the current pension rates, FNPF experts predicted its death by 2056.

The fund had suggested a rate reduction to about eight per cent from the current rate of 15 per cent.

When asked on which of the proposed reforms have been removed due to member rejection, Mr Taito said they would review this in due course.

But the reduction of the pension rate is not negotiable.

“We have already stated that this is not negotiable – pension rates will be reduced. This is in line with recommendations that have been received in the last 30 years from the World Bank, International Labour Organisation, Blaxland and other consultants,” Mr Taito said.

He added that the new pension conversion rate would be announced in “due course”.

The fund was also not ready to reveal the cost of its pension review or public awareness exercises. “The cost to the members will be in ensuring the fund remains sustainable in the long term,” Mr Taito said.

FNPF lump-sum withdrawals will remain…………for now.

FNPF drops pension cut proposal

Thursday, October 13, 2011

http://www.radiofiji.com.fj/fullstory.php?id=40491

The Fiji National Provident Fund has confirmed there will be no compulsory pension deductions for all members.

The system had originally been proposed as part of FNPF reforms.

FNPF senior officer Tevita Nagataleka told FBC News the compulsory pension idea was not well received by members – and the proposal has been dropped after consultations.

As a result – the option of lump-sum withdrawals remains and pension deductions is also optional.

Nagataleka says they are encouraging members who have reached the retirement age to make wise decisions about their money.

He says many who opt for lump-sum withdrawals end up living under social welfare assistance.

While the lump-sum withdrawal option is available, the FNPF is urging members to consider pension deductions for a more secure future.

Report by : Apisalome Coka