THE FNPF SPECIAL Report deals, in part, with Penina Joint Venture, a Tappoo/FNPF joint business venture. In December 2003, Tappoos and Fiji National Provident Fund signed an Memorandum of Understanding to redevelop land owned by FNPF known as the "Harbour Terminal Land" located close to Suva harbour. It was stated in the MOU that upon completion FNPF would lease this development to Tappoos.
The FNPF's investment arm, FIL for short, and Penina Ltd, were examined. According to the Report, the respective contributions of FIL and Tappoos to the Penina joint venture were treated as being similar contributions whereas Ernst & Young (EY) understood that Tappoos received 49 per cent of the equity yet contributed only 27.45 per cent of the land. In 2005, FIL and Tappoos formed a joint venture named Penina Ltd, which was owned 51% by FIL and 49% by Tappoos, for the purpose of constructing a six or seven story retail and office complex named 'TappoCity Suva".
FNFP Board paper No.1707, dated 19 June 2003, indicates that FNFP purchased the Harbour Terminal land for $2,500,000 in November 1998 as a long-term investment. FNFP's tenants were predominatly small retail and food outlets, providing an average net rental to FNPF of approximately 6.78%.
Documents indicate that from as early as 2001, FNFP was in discussions with Tappoos concerning the proposed redevelopment of the FNFP site, or the development of "Tappoos site, or both".
On 23 June 2003, the Board of FNPF approved in principle several of Management's recommendation regarding the Project, including that:
(1) FNFP purchase Tappoos Lot Ct2463, adjacent to the FNPF "Harbour terminal Land for $3,250,000 (subject to confirmation by an independent valuation); (2) FNFP finance the construction of a shopping complex tailor designed and built for Tappoos for up to $14,000,00; (3) Upon completion the redevelopment property would be leased to Tappoos at a rental to be determined but which would earn FNFP a net return of a minimum 8% per annum; (4) Tappoos would be granted the option to buy-back the development at a price and at a time to be determined.
It was noted in the MOU seen by Coupfourpointfive, between FNPF and Tappoos Ltd that this price shall be the market price determined by a registered valuer in Fiji.
Following an assessment by FNPFof the various options available to it to take this project forward, it was noted in FIL Flying Board Minute No 004 titled "TAPPOO CITY PROJECT" and dated 16 December 2004 that a Joint enture arrangement with Tappoos was considered the most beneficial.
The Board of FNPF approved the pursuit of this investment through FIL on October 18, 2004. But the end result tells a very different story.
TO BE CONTINUED