#header-inner img {margin: 0 auto !important; #header-inner {text-align: Center ;} Fiji Coupfourpointfive: Vakatora Holdings owed massive amount to collapsed NBF

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Tuesday, June 15, 2010

Vakatora Holdings owed massive amount to collapsed NBF

Tomasi Vakatora Jnr and Vakatora Holdings owed collapsed National Bank of Fiji $1.4million.
Bainimarama to FIA Congress: ‘Would the debacle of NBF have been picked up earlier if the auditors and accountants rather simply highlighting matters, brought it to the fore? Brought it into the public domain?’

 
Part Nine of Special Report by VICTOR LAL

 
Tomasi Vakatora, the CEO of Amalgamated Telecom Holdings Limited (ATHL), owed $72,992.98 to NBF.
The family’s Vakatora Holdings Limited owed $1,350,000 to NBF. Vakatora was listed as the company’s accountant.

 
In his opening address to the Fiji Institute of Accountants Congress at the Sharinga-La Fiji Resort Frank Bainimarama, the self-styled Prime Minister and Minister for Finance, National Planning, Public Service, Sugar, Peoples Charter for Change and Progress, Information, Sugar, Indigenous Affairs and Multi-Ethnic Affairs and Provincial Development, told his listening accountants that, ‘Frankly speaking, the accountants in public practice have whether calculatingly or otherwise, escaped the ire of the public’.

  
He began by commenting on the Fiji National Provident Fund: ‘After all, is it only the fault of the then directors and management of FNPF Board that FNPF has had to write off in excess of three hundred million dollars from its books? When the excesses pertaining to Natadola and Momi were taking place, weren’t accountants involved? Didn’t they have responsibility to bring it to the public’s attention, for example, that some parties were paid monies which were not commensurate with the services and expertise that were allegedly provided?'
  
Bainimarama also commented on the National Bank of Fiji loans scam, the first time he has spoken on the subject since seizing power in the December 2006 coup: ‘Would the debacle of NBF have been picked up earlier if the auditors and accountants rather simply highlighting matters, brought it to the fore? Brought it into the public domain?’
 

Bainimarama continued: ‘Professional privilege is always cited as a reason for silence. But surely when the then FNPF Board and Management continued to misrepresent its books to the people of Fiji, didn’t the auditors rather than simply drawing it to the attention of their clients, have at the very least a moral obligation to disclose such matters to the media, public officials and the public?’
 

Ironically, hypocrisy was on show here – how could the media have published anything on the FNPF (I have a wealth of highly confidential documents and reports etc on the FNFP saga) when the obnoxious media censorship exists in the country? The proposed draconian media decree will bury the truth about the FNFP saga, and a sanitised version will be allowed by the regime, pointing the fingers away from the junta who appointed the FNFP Board in the first instance. 
 
Remember Deloitte! How can the team investigate without fear or favour when, in fact, as Coup Fourpointfive has found out, that Deloitte (Fiji) was  auditors for APRIL, NLH, NBRL and YBRL (All companies involved in Natadola) at the commencement of the project? Deloitte was part of the APRIL team that sold the idea to FNPF to invest in Natadola. In 2007, when the new FNFP Board came onto the scene, Deloitte for some reason handed over all accounts and documents in their custody to APRIL. 


The Board had to institute legal action to recover the documents which was partly recovered when the appointees themselves were removed from the Board. As a result, the 2007, 2008 FNPF accounts were qualified. The mess took place when Deloitte were in charge. Now they are supposed to tell us what is wrong.
  
Meanwhile, Bainimarama continued his righteous sermon to the assembled accountants: ‘Conversely, I know that some accounting firms while claiming to stick to the rules such as professional privilege have breached your very own code of ethics. Your manual on code of ethics states that firms should not audit companies in which the firm’s employees or partners have relatives employed. 

Yet this has happened in the recent past by supposedly reputable firms. Furthermore there was no disciplinary action taken by the Fiji Institute of Accountants. Perhaps such lapses demonstrate that there may be a need to set up an independent disciplinary body. You need to ask yourselves, should I continue to overlook certain irregularities by my clients and/or fellow practitioners? – irregularities, perhaps not illegal but which constitute dubious actions, gross negligence, and misrepresentation to the public.’
  
In making appointments to public institutions, one wonders whether Bainimarama and his team ever took pains (very good at inflicting pain on their opponents) to carry out a check on the history of individuals they have appointed to strategic public and financial positions. In April 2007, five months after the December 2006 coup, Amalgamated Telecom Holdings Limited (ATHL) statement said its company secretary Tomasi Vakatora (Jnr) had been appointed as acting chief secretary by its board of directors. 


Group chairman Kanti Tappoo said Vakatora deserved the opportunity to serve at the helm of the company, having played key roles in the acquisition of ATHL by the FNFP in late 1998, developed the company into fully operational mode in early 1999 through to the public offer of ATHL shares and the company’s public listing in early 2002 and addressed numerous issues and challenges that ATHL faced to date.
  
Vakatora said ATHL had yet to realise its full potential. “I am pleased with the confidence that the ATH board has shown in me with this appointment even though it is on an acting basis. We have a lot of challenges ahead of us like deregulation, but I am of the view that ATH is still to realise its full potential,” he said. 

He said he was fortunate to have a good board to work with to move the company forward. The ATHL statement said Vakatora was the company secretary and corporate affairs executive, serving in the positions since April 4, 2004. It said he would continue in the position in addition to his new appointment, adding that Vakatora represented ATHL's interests as a director for Fiji Directories Limited, Vodafone ATH Foundation Limited and FINTEL. In January 2008 Vakatora was appointed CEO of ATHL.
 

From his new position he has made many pronouncements, and most recently was quoted as saying that ATHL will have zero tolerance on approach on staff involved in money laundering and corruption. This is after it adopted a revised version of its Code of Corporate Governance Principles. Vakatora said further revision of its code later in the year was likely, depending on the outcome of Government's review of the Companies Act.
 
Vakatora’s profile read as follows: ‘He is an accountant by profession, and is a Chartered Accountant member of the Fiji Institute of Accountants (‘FIA’), and Certified Practising Accountant (‘CPA’) member of CPA Australia…He has served on the FIA’s Surveillance Panel, and is currently a member of the Disciplinary Committee. Mr. Vakatora has served as a Director of a number of companies in Fiji. 
  
One position that has not been included or mentioned in any press announcements is that Vakatora was accountant to his family’s Vakatora Holdings Ltd, one of the many companies that defaulted on their loans from the collapsed NBF. 
  
The governor of the Reserve Bank of Fiji, Sada Reddy, revealed to his listening accountants at the Fijian Resort that the taxpayers paid out a total $372million for the collapse of the NBF, and not $220 million, as it was originally stated when the bad loans were written off. In other words, $152million was left out of the figures revealed to the public in 1996.

Vakatora Holdings Limited


A search of the Vakatora Holdings Ltd’s company file in the Office of the Registrar of Companies (ROC) in Fiji reveal that the above company was formed by the late Tomasi Vakatora, a political allay of Ratu Mara and Alliance Party nominated Speaker of the House of Representatives before the 1987 coups.


He had also held various ministerial positions in the late 1970s and early 1980s. In 1995 he was the Government’s representative on the Constitutional Review Commission which culminated in the now abrogated 1997 Constitution of Fiji.
  
A year before the 2006 general elections, he began advocating the merger of i-taukei led political parties but Fijian political infightings saw the collapse of his ‘Fijian coalition’ dream. He also drew sharp political flak from Indo-Fijian and other minorities when he called on them to accept population changes which favoured indigenous Fijians.

He wanted the changes to be reflected in the composition of Parliament, meaning a reduction in seats for Indo-Fijians and other minority groups. Mahendra Chaudhry, Kenneth Zinck and Mick Beddoes rejected Vakatora’s suggestion. He was also involved in the establishment of the Noco Development Bus Company. 
  
According to the Particulars of Directors and Secretaries of Vakatora Holdings Ltd (No of Company 7891), as presented by chartered accountants Ernst and Young, to ROC, the following persons were stated as follows: Tomasi Rayalu Vakatora, company director; his wife Wainiqolo Rarawa Vakatora, company director; Tomasi Wainiqolo Vakatora, accountant; Selai Wainiqolo Tonganivalu, company director; Lenaitasi Rayalu Vakatora, company director (appointed 23/9/93); Suliasi Rayalu Vakatora, company director, appointed 23/9/93. The secretaries to the company were as follows: Selai Wainiqolo Toganivalu, resigned 23/9/93 and Lenaitasi Rayalu Vakatora, appointed 23/9/93. 
  
Selai, daughter of Tomasi and Wainiqolo, married Emosi Pita Toganivalu, whose son Deve Toganivalu was appointed CEO of Fiji Development Bank after the 2006 coup. In October 2008 the chairman of the FDB, John Prasad announced on behalf of the Board of Directors Toganivalu’s new appointment. Prasad himself has a controversial past, and arrived with John Samy from New Zealand after the 2006 coup to take up position as Permanent Secretary in the Finance Ministry. 
  
On 10 December 1991 Tomasi and Wainiqolo Vakatora exchanged loan documents with the NBF, affixing the common seal of Vakatora Holdings Ltd, a limited liability company, having its registered office in Suva. On 4 June 1993, the Vakatora Holdings gave notice pursuant to Section 67 of the Companies Act that ‘the nominal capital of the Company has been increased by the addition thereto of the sum of $100,000 beyond the Registered Capital of $100,000’. The additional capital was divided as follows:
Number of shares: 100,000
Class of Shares: Ordinary
Nominal amount of each share: $1.00
Signed: Tomasi Vakatora, Director.


On 16 October 1995, the NBF notified ROC that the Collateral Debenture dated 30 April 1992 was ‘now being upstamped’. The amount secured by the mortgage or charge in the Particulars of Mortgage or Charge created by NBF now read: ‘Upstamp by $300,000 (three hundred thousand dollars) to secure total of $2.1million (two million one hundred dollars). Short particulars of the property mortgaged or charged: ‘All its undertakings and all its assets whatsoever both present and future, including its uncalled and unpaid capital’. 
  
On the same day another document reads: (1) Collateral Bill of Sale dated 14 February 1994 (now being upstamped); (2) Amount secured by the mortgage or charge: ‘To secure sum of $2.1million (two million one hundred thousand dollars) and further advances; (3) Short particulars of the property mortgaged or charged – Mitsubishi Bus, Registration Number CQ632 and Mitsubishi Bus, Registration Number CQ710.
  
But on 10 June 1997 the chief manager of NBF’s management bank notified the Registrar of Companies that it had appointed Brian John Murphy of Messers KPMG, chartered accountants, Suva, to act as Receiver of Vakatora Holdings Ltd in pursuance of the powers contained in a Debenture dated 30 April 1992. The Notice of Appointment of Receiver was made under the Companies Act 1983.
  
Between 10 June 1997 and 11 May 1998, the official receiver provided to ROC receipts and payments with a total balance of $523,477.23.
  
On 16 November 1999, Justice Devendra Pathik of the Fiji High Court ordered that ‘the said Vakatora Holdings Limited be wound up by this court under the provisions of the Companies Act and that Official receiver be constituted Liquidator of the affairs of the company’. 

On 17 October 1997, in a separate civil action against Vakatora Holdings and two others, Pathik had awarded judgment of $37,560 against them, to be paid to one Anjula Wati, widow of a self-employed peanut seller Suruj Prasad who had died at the CWM Hospital on 8 October 1992 after being hit by one of the buses belonging to the Company, which admitted liability.
 
Analysis

 
It appears that Vakatora Holdings originally borrowed (in 1991) an unknown sum from the NBF, secured against the assets of the company over which the bank took a mortgage, giving it first claim on those assets in the event of a default. There's nothing unusual in that.

  
Then, on June 4, 1993 VHL increased its nominal capital by $100,000. Note that doesn’t mean they put in $100,000 cash. There’s a difference between nominal shares and paid up shares. We don’t know how many shares were actually paid up but it seems unlikely to be 100,000. 
  
We couldn’t find how many shares had been fully paid up. If, as we suspect, it’s two, then VKL becomes the classic $2 company whose unpaid shares were worthless as far as a bank mortgage was concerned. However, they may have increased the nominal capital just to make the loan look good on paper. Two years later the NBF “upstamped” the mortgage meaning it had lent more money with consequent security (the worthless shares?). Since the “upstamping” was in the amount of $300,000, it may be (but is by no means certain) that the original loan was $1.8 million with the “upstamping” lifting it to $2.1 million. 
  
Note that the bank states its right to “all uncalled and unpaid” capital, suggesting that there were unpaid shares of unknown amount.  Basically, though, it seems the bank had two buses of unknown condition as security against $2.1 million (“and further advances”). That would appear to be hopelessly insufficient as borne out by the receiver's payment to the bank of only some $500,000. Under normal circumstances the bank would have pursued the directors for the balance. However, did this happen? And what was the $2.1 million (or more) used for? 
 
In his address to the chartered accountants Bainmarama had ended his speech by noting as follows: ‘ I contend that as a public practitioner and as a citizen of this country, one has a fiduciary duty to all Fijians and the Fijian State - not just your clients. After all, it is paradoxical and simply wrong to avoid contributing to or undermining the State on one hand but on the other expect high levels of State services. That is not ‘getting together’. Indeed it is an untenable proposition. 


"I urge you to think about good governance, ethics, morals, accountability, transparency, common and equal citizenry not as mere clich├ęd terms, as amorphous concepts, but actual and tangible precepts to be put into practice by all of us, if we are indeed genuine and honest with ourselves and our country. By addressing these issues in a very fundamental way you will in practice ‘get together’ and truly ‘move ahead’.’
  
The former High Court judge Nazhat Shameem had said that what was supposed to be an affirmative action program to advance soft loans by the NBF to the disadvantaged indigenous population was in fact a slush fund for the privileged, and some of whom were cronies of people in authority.
  
The so-called ‘Anti-Corruption Czar’ Bainimara told the accountants: ‘Your manual on code of ethics states that firms should not audit companies in which the firm’s employees or partners have relatives employed. Yet this has happened in the recent past by supposedly reputable firms. Furthermore there was no disciplinary action taken by the Fiji Institute of Accountants. Perhaps such lapses demonstrate that there may be a need to set up an independent disciplinary body.’
  
Perhaps he should begin by asking the CEO of ATHL, Tomasi Vakatora, what role he (Vakatora) played as the accountant to Vakatora Holdings Limited which owed $1.4million, according to the NBF Debtors List of 1996.
  
To quote a judge in another case between the NBF and one of the Bank’s defaulters: ‘Furthermore no timeframe was fixed for the Plaintiff to dispose off the liabilities and assets of the former National Bank of Fiji. It continued its operation for an uninterrupted period of over 11 years. As a consequence of persistent delay, perhaps many of the defaulting borrowers have escaped the wrath of the justice system.’
  
And whether Vakatora Jnr ever re-paid his own personal loan? He was listed as owing $72,992.98 to the collapsed National Bank of Fiji in 1996. 
  
It is time Bainimarama practised what he was preaching to the accountants, and set up an independent commission to hunt down and punish all those in the NBF loans scam, supposedly earmarked for the ‘downtrodden i-taukei’ after the 1987 Rabuka coups. 
 
He should begin by taking to the military barracks the NBF defaulters ensconced in his own regime. For as I noted in the first instalment on Nazhat Shameem’s uphill fight against the ‘Corruptodiles’, police investigations into the NBF scandal revealed fraud, corruption, and gross abuse of office, obtaining money by false pretences and obtaining credit by fraud.
 
Editor’s Note: We will continue to reveal debtors names, which includes those of high chiefs, politicians, Indo-Fijians, business houses, including individual supporters of the present illegal junta in Fiji. If you or your family have paid back the NBF loans, please provide Victor Lal with evidence. He can be reached at vloxford@gmail.com

15 comments:

Anonymous said...

Te guy entrusted to review the Constitution. He should review his debt.

Anonymous said...

On Twitter:

@FijiGovernment

The Fiji Government will default shortly on US$150 m bond. Do not be concerned; it as part of our economic strategy to get World Bank help.

Anonymous said...

Anon 8:06.
Navigating Stormy Financial Waters.

Anybody employing this strategy is definately off course (in grave trouble).

Heard the term 'good money after bad?'.

Anonymous said...

Shame to see Tonganivalu name dragged thru mud.

Anonymous said...

Yeah the name is crap anyway. What have they done? Just like everyone else, they filled their own pockets.

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