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Saturday, March 10, 2007

Debate continues on FNPF : The Role of the Board in alleged abuse

The debate continued today with Sir James Ah Koy, former Minister for Finance and businessman, questioning the role played by the Board of Directors when the alleged loans were granted to a former senior manager at the Fiji National Provident Fund (FNPF).

In addition to the Board of Directors, I had suggested earlier that the Reserve Bank of Fiji as prudential supervisor of the FNPF should be asked as well as to what they did, to protect the interests of pension fund members for which it is entasked, in the whole affair. Fiji TV, had picked up the story that I blogged three days ago that Reserve Bank may have been "sleeping on its watch" when supervising the FNPF. Below is the coverage of it in last night's Fiji TV's One National News.

"Reserve Bank accused of sleeping on its watch
9 Mar 2007 17:42:21

The country's central bank, Reserve Bank of Fiji has been accused of sleeping on its watch.

Former advisor to the R-B-F - Gilbert Veisamasama claims the bank has failed to detect early warning signals of alleged mismanagement at Fiji National Provident Fund.

Gilbert Veisamasama runs a consultancy business in banking, finance and related legal issues.
He has worked at the Reserve Bank as a manager and advisor...

And today he questions the in-action of the cental bank for not keeping close tabs on the Fiji National Provident Fund.

The FNPF is now being investigated for alledged mismanagement..

He says the RBF recieves periodical returns from financial institutes like the FNPF - on how its functioning and whether there are any early warning signs on mis-management.

He questions why the bank failed to act.

We have sought comments from the Reserve Bank."

Let me add that the Reserve Bank of Fiji's responsibilities also extends to the Home Finance Company Limited, indirectly through the FNPF as it has an interest to ascertain the extent of and quality and safety of intra group exposures between a supervised entity (FNPF) and its subsidiaries (Home Finance).

I had covered the role played by the Board of Directors and external auditors with regard to the large loans being granted/approved in my blog entry yesterday.

You can read the story from today's Fiji Sun on questions being posed by Sir James Ah Koy, a former Minister for Finance and businessman.

"FNPF directors under fire

The Fiji National Provident Fund Investments Limited was an initiative to circumvent initial investment conditions outlined in the FNPF Act and theTrustee Act, says former Finance Minister, Sir James Ah Koy.

Mr Ah Koy said the investment requirements under the Trustee Act were quite strict and among other things required was the trust fund to invest in companies with a record of five-year profits and return at lest five per cent on the investment.

“The FIL was declared a trustee investment, which received funds from the FNPF and was able to invest in high-risk projects whereas the FNPF was prevented from doing so directly. Natadola and Momi fall into this category,” he said.

Sir James questioned the directors and auditors at the time several loans were requested and approved to suspended deputy general manager Foana Nemani.

“I am wondering with all these transactions how do they approve the loans themselves?” said Sir James. “Does it go before the board? These are huge sums of money.

Where were the external auditors and internal auditors of the FNPF fund? What were they doing?

“They can’t do all this in isolation, with nobody knowing what is going on. And how is it that there were no whistle blowers inside the FNPF? The directors of the FNPF at the time should be investigated.”

Sir James said if a change in government did not take place, funds that belonged to the people of Fiji would continue to be abused. “How can these people get away with this without anybody knowing?” he said.

“And if there were no change in government, this could have continued, they could have hidden all this. So this change brought about by Frank Bainimarama is a blessing, especially for young working people, this is their money.

“If there wasn’t a change of directors, this could have continued. The rot could have continued. I understand that Natadola will be investigated but all this corruption has come to the fore.

“It’s a good move that new directors are there like Felix Anthony and Daniel Urai because they are like bloodhounds and will look after the workers’ money.

The internal audit would have made this surface. Who clamped that down? This thing did not just happen this year, this type of thing was happening over a period of time and this should have surfaced.”

Former FNPF chairman Anare Jale said the board dealt with the governance of the fund. “Its daily affairs rest with the chief executive officer,” said Mr Jale. “It is the CEO that implements the policies put together by the board. “I understand that the 14 days given to the two have not expired and it is most unfair when investigations are still ongoing and the audit is printed in the media.”

He said it would be improper to make comments when an audit was still under way."

There will be more on this definitely over the next few days.

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