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Friday, February 21, 2014
Narsey: powerful FNPF voting block up for grabs
Issue for voters: Fiji National Provident Fund
by Professor Wadan Narsey
The Fiji National Provident Fund, (FNPF), is
the largest financial institution in Fiji in terms of assets, bigger than the
commercial banks combined, and the largest lender to the Fiji Government.
The members of the FNPF (current contributors and
pensioners) number around two hundred thousands, or roughly 40% of all the
voters for the coming elections in Fiji. They represent an extremely powerful
The Bainimarama Government recently defended their
extra-legal policy changes at FNPF.
They claimed that previous governments had used the
FNPF as their “piggy bank” (Fiji Sun, 7 Feb. 2014).
This last statement is certainly correct, but that
criticism can equally be leveled at the Bainimarama Government itself, with
more serious criticisms, including their massive reduction of pension rates
from 15% to 9%.
Further, despite being in control for seven years,
this Bainimarama Government has done nothing to ensure that future
governments will not be able to control and use the FNPF as their “piggy bank”.
Mismanagement of FNPF
Pensioners fund being sucked dry
This Bainimarama Government is an unelected
government which seized power through a military coup in 2006.
Marginalizing both unions and employers who used to
nominate their representatives to the FNPF Board, the Bainimarama Government
appointed all the FNPF board members, some of whom have been
non-citizens, and some who have Permanent Residency in other countries.
By military decree the Bainimarama Government and
the FNPF Board, forced through a massive decrease in pension rates of all
The FNPF propaganda has focused only on those who
used to enjoy admittedly over-generous rates above 15% (to as much as 25%)- but
even these were voluntarily offered by FNPF as legal contracts and accepted by
But the official propaganda ignores the more
significant reduction of future pension rates from 15% to 9%, with grave public
doubts about the fairness of the 9% rate.
Existing pensioners who chose not to accept the 9%
pension rates were forced to withdraw their original sums, despite a clear legal
contract being in place between them and FNPF.
These reductions were forced through, despite the
fact that the pensioners’ had mounted legal challenge, which had been
accepted for hearing by Fiji’s High Court.
The FNPF management, against all rules of good
corporate practice, have arrogantly assumed the right to state and justify
major changes in FNPF policies, which should properly be the domain of a
lawfully appointed Board.
Even private expatriate consultants from Australia
and NZ, have justified the policy changes through the media, implicitly
supporting the unlawful military decrees.
The FNPF Board has mismanaged a number of major
investments, in particular those at Natadola, Momi and the GPH, resulting in
the writing down of hundreds of millions of dollars in assets. Undesirable
loans have also been made, such as to Fiji Sugar Corporation.
The FNPF Board and Management have refused to
release any of the reports of inquiries into the mismanagement of the
investments, making a mockery of the frequent claims of transparency and
accountability made by the FNPF Board and the Bainimarama Government.
Voters in the coming elections must make
the governance of FNPF an important election issue.
Voters must ask all political parties,
including any party that Commodore Bainimarama might set up, what their
policies will be on a thorough reform of the management of FNPF, including the
Two thirds of the Board of the FNPF (and the Chairman) must be elected
for five year terms by the members of the FNPF.
The legal case that pensioners had in the courts must be
reactivated, with the judiciary requested to hand down a lawful solution to the
case, which could include (c) below.
The FNPF Board commission a thorough independent review that recommends a fair
pension rate that is consistent with the long-term sustainability of FNPF.
(d) To strengthen
accountability and transparency of the FNPF Board, all reports into the
mismanagement of FNPF funds as well as the reports that have justified the
recent changes in pensions, be made public.
Readers may wish to refer to some of my
previous posts on FNPF and its activities in the Fiji economy here: