We are yet to see the Ernst and Young Report of 2007 titled "FNFP Special Investigation - Internal Report".
Now, Coupfourpointfive has been informed the Report has not been made public by Aiyaz Sayed Khaiyum because a section of it is highly critical of the Tappoos, to whom Khaiyum, through his private company Latifa Investments Ltd, had sold his Berry Road property at a grossly obscene price. Our regular contributor, VICTOR LAL, has been examining the Report and has filed Part Five of his investigation.
THE CONFIDENTIAL Ernst and Young Report expressed disquiet that FNFP’s former Property Investment manager, Carl Mar, on resigning from his position, had been retained by Tappoos and FNPF subsidiaries to act as a client representative of Penina Ltd and Grand Pacific Holdings Ltd. After all, Mar had negotiated contract terms with Tappoos on behalf on FNPF’s investment arm FIL.
A file note regarding the Tappoocity Project indicated that general agreement regarding the terms of the agreement was reached on 29 July 2003 between Kanti Tappoo and Mar, including that the value attributed to Tappoos land would be its market value sum of $3,250,000 and the lease term to be 25 + 25 with first rent set at 8& of the Project cost fixed for 15 years (Document: Memorandum titled ‘FNPF/Tappoo Project – General Agreement Reached on Tuesday 29th July 2003 between Kanti Tappoo (Tappoo Group of Cos and Carl Mar (FNPF) undated).
Mar resigned from FNPF on 31 October 2006 to open his own consultancy company. He had been retained by Penina Ltd to act as a client representative and/0r project manager and described his position as Client Rep/Project Manager of Penina Ltd (and GPHL).
The negotiation of the terms of Mar’s contract with Penina was delegated to Vinod Tappoo (Document: Penina Ltd Board Minutes dated 20 October 2006). E & Y understood that Mar was paid $10,000 per month for his position. Mar had also allegedly been retained by Tappoos in relation to its Lautoka project with FNPF but E & Y could not confirm it in its Report.
In the circumstances, E & Y concluded that it may have been ill-considered for FNPF to delegate or rely upon Mar to act as Project Manager and negotiate contractual terms for the Tappocity Project with Tappoos. This highlighted the need to have a better spread of commercial skills to be able to consider investment opportunities of this nature.
Appointment of Neo Fiji Ltd as construction contractor
It was stated in Clause 9 of the Joint Venture Agreement that Tappoos or a Joint Venture Company shall be eligible to tender for the construction contract of the Project, notwithstanding its role as a Joint Venture partner.
On 20 August 2003, Kanti Tappoo wrote to FNPF outlining why they should be given the construction contract without it going out to tender, which acknowledged was the normal practice by which FNPF awarded contracts for construction work. In November 2003, Tappoos expressed their interest in their subsidiary company Neo Fiji Ltd undertaking the construction of Tappoocity (Document: FNPF/Tappoo Project – Meeting with Tappoo Directors’ dated 29 &30 November 2003).
In early 2005, Neo Fiji Ltd became a fully-owned subsidiary of Tappoos for the purposes of bidding for the construction contract. Neo was awarded the contract on 25 November 2005 and commenced on site in late March 2006.
There was concern in the marketplace about this appointment, given that Neo was a fully-owned subsidiary of Tappoos. Minutes of the FNPF Investment Committee dated 30 November 2005 noted that: “Committee also was informed of the concern by some contractors in the market who regarded the tender process as a mere formality due to Tappoo Holdings association with NeoCorp, who they believe were earmarked for the project before the tender process was called. Management however assured Committee that all processes with regard to the tender were transparent and that NeoCorp was given the tender on the basis that it was the lowest.”
Tappoos resist tender process to build Tappoocity
It appeared to E & Y that any attempt to keep the process transparent and free of bias was met with resistance by Tappoo, based upon an analysis of the email exchange below.
Mar sent an email to Kanti Tappoo and Vinod Tappoo titled “Tappoos City project” on 3 October 2005 in which he noted: “I just wanted to briefly update you on the project and say that the project consultants meetings are progressing very well…The meetings so far have been held in the absence of a Tappoos rep as we want to show transparency during this stage of tendering process.”
On 5 October 2005 Vinod Tappoo replied to Mar’s e-mail in which he stated: “You will appreciate that Tappoos cannot be left out in these crucial decision making process for “transparency reasons” in view of the fact that the real conflict of interest lies not with Tappoos but with FNPF because, as you well know, the rent paid by Tappoos will be based on final total cost of the project. A cost increase, therefore, means increased rental for Tappoos and direct gain to FNPF through the JV. You may want to refer to the minutes of the last Board Meeting. Under these circumstances we trust that you will jointly make all decisions on the clear appreciation of those issues.”
Mar in turn responded by email on 5 October 2005 to Vinod Tappoo, stating: “Totally agree Vinod. It is just the Tender Phase that requires me to police carefully but I truly respect the importance of the bottom line i.e. project cost and this will naturally require Tappoos input.”
TO BE CONTINUED