Skip to content

“The elephant in the Fiji Elections Office room: the FNPF Board” (20/10/2018)

20/10/2018

The elephant in the Elections Office Room: FNPF (ed. in FT 20/10/2018)

Tens of millions of taxpayer funds are being spent on the 2018 Fiji Elections, just as they were for the 2014 Elections, for Fiji’s voters to elect the members of the Fiji Parliament from whom will be formed the Government for the next four years.

This huge expenditure of money on the activities of the Fiji Elections Office is justified because the Fiji Parliament has the power to tax the residents of Fiji, to borrow on their behalf, and to spend that money, which is usually around 25% of the total income in Fiji.

The Fiji Elections Office has even been involved in regulating the election of the officials of unions, which are private entities whose members number perhaps in the hundreds or a few thousands.

It is very strange therefore that there is no public outcry or discussion in the media or at our universities over and an issue of massive importance to more than 200 thousand voters- the membership of the FNPF Board which they supposedly own.

Why is it that the Elections Office has never shown any concern for the election of the members of the Board of the Fiji National Provident Fund which by law collects, invests and distributes a massive 18% of all workers’ annual income, with assets totaling $5 billion in 2017, or about the same as the Total Public Debt of Fiji?

[Thanks Rick for the correction from 16% to 18%.]

Indeed, why are the FNPF issues not a priority in the 2018 Elections as part of the debates concerning workers’ rights?

The FNPF Board Elephant

The Fiji National Provident Fund (FNPF), is the largest financial institution in Fiji in terms of assets, $5 billions, or bigger than the commercial banks combined.  It is also the largest lender to the Fiji Government (more than $2 billions) while owning a string of valuable strategic assets such as controlling shares of ATH (including Vodaphone) and tourism resorts and plant.

The members of the FNPF (current contributors and pensioners) number around two hundred thousands, or roughly 33% of all the voters for the coming elections in Fiji.  Potentially, they represent an extremely powerful “voting block”.

The FNPF Board once upon a time used to have a few representatives of workers’ unions, usually chosen by selected unions.

Even then, these union representatives were a minority on the Board and government and employers’ representatives  usually managed to make the important decisions, although consensus was often practiced.

These workers’ representatives were removed by the Bainimarama Government after the 2006 coup and never reinstated.

Since then, the Fiji Government has totally appointed all the members of the FNPF Board without consulting the true shareholders of FNPF, the current and past workers of Fiji.

FNPF is a private company like the unions

Let us remember that private companies are managed by the owners and if there are management boards than the members are the shareholders.

Despite popular perceptions, the FNPF is not a “public” entity in the sense of belonging to the government but a private company, even if it represents more than two hundred thousand shareholders. There are far more Fiji citizens who are not shareholders in the FNPF and FNPF cannot be called a “public enterprise” in the true sense of the word, to be controlled by Government.

Yet the Fiji Government now totally appoints the FNPF Board with no reference to the workers whose savings are in it.

The results of the lack of accountability

Not having any direct elected members on the FNPF Board also means that there is no incentive for the Board to be accountable to its members and this is obvious from many perspectives.

The largest loans of the FNPF have been to the Government which controls the FNPF Board: would Westpac ever allow its board to be controlled by its major borrower?

Around 2011, the unelected Bainimarama Government brought in numerous changes by decree. They forcibly reduced pension rates of existing pensioners down to 9%, totally ignoring a legal case mounted by David Burness and Shaista Shameem which argued (with my assistance) that the FNPF had signed a legal and binding contract with pensioners.

One effect of this massive reduction of pension rates has been that the “take-up rate” of pensions plummeted from  around 16% it was in 2010, to around 5%. This makes a total mockery of any claim that the FNPF is a “retirement” fund for pensioners.

Another effect has been the virtual halving of “annuity payments” to pensioners from above $40 million annually to around $23 million in 2017, a miniscule amount, considering that FNPF received $546 million in contributions in 2017.

There have been several large investment projects and loans which have not been managed appropriately and the reports have been kept under lock and key and never made public.

The Bainimarama Government which has been privy to all the confidential reports and statistics, refuses to make them public, despite frequent claims of transparency and accountability.

The FNPF Annual Reports are now distinguished by the absence of all the useful statistics and data that used to be the norm prior to 2006. Instead glossy pictures and empty unimportant statistics fill up the Annual Reports.

The 2017 Annual Report even makes the strange claim that the “net profit” of FNPF increased from $332 million in 2016 to $360 million in 2017.

Perhaps some honest accountant can explain to the Fiji public how the FNPF, whose “revenues” are not earned but determined by law as 16% of the wages and salaries bills of employers, can earn a “net profit” and what does it mean, compared to the “net profit of a commercial company”.

What voters can ask political parties

Voters in the coming elections can ask all the political parties (including the Government) what are their policies on

(1) the election of the majority of the FNPF Board by its members (should be easy given that FNPF already knows who the Members are).

(2) ensuring that no board member has any vested interest in the investments and loans of the FNPF.

(3) increase of the pension rate to a level which encourages some financially sustainable target “take-up” rate for pensions

(4) The reactivation of the Burness/Shameem legal case for existing pensioners.

(5) The release of all the reports of consultants and audits into FNPF and its investments.

(6) A full and independent review of the operations of the FNPF by some Commission of Inquiry, including a majority of workers’ representatives.

Post-script

One FNPF Board member works for a firm which has substantial financial interests in FNPF investments, while being a fund raiser for the FFP, and also a member of the Consitutional Services Commission.

 

 

 

Advertisements

Comments are closed.

%d bloggers like this: