Opinion: What does the Finance Minister want with his amendments to the VNPF Act?Posted: August 15, 2012
There are many worrying elements in the amendments to the Vanuatu National Provident Fund Act currently before Parliament.
The Bill was drawn up before the glare of publicity surrounded Finance Minister Moana Carcasses Kalosil through the claims made by the now-defunct website Talemaot. These claims have daily been substantiated by admissions from the Minister or ministry.
It is, for example, quite clear now that a number of managers in the VNPF are receiving salaries of Vt 700,000 a month. It is also clear that the fund made a loss of Vt 152 million in 2011 in spite of the hiring of people of allegedly greater talent than ever before being offered these huge salaries. And it is also clear to everyone that had all funds been deposited with an ordinary savings bank, they would have earned more for members, rather than produced a loss.
Speculation on ‘cattle-under-coconuts’ plantations as subdivisions is the height of lunacy, as is now clear. Bouffa is being kept as a ‘cattle-under-coconuts’ plantation by the Provident Fund. So why was it bought in the first place? One cannot help but think of personal gain to an individual or individuals.
A hasty reading of the amendments to the VNPF Act in the Bill presently before Parliament has the most appalling requirement that the Minister and Governor of the Reserve Bank of Vanuatu will determine the actual investments of the Fund.
Previously, Investment Policy Guidelines provided the only avenue for Ministerial advice regarding investments. With the amendment, however, the Minister and Reserve Bank representative will decide how the funds of the VNPF are to be invested in the future. And there is no elaboration as to who decides whether the guidelines are being followed. There is no provision for any consultative process, between the minister and board — let alone the Minister and members.
Having got rid of Section 16B of the VNPF Act in one amendment, we then go on to a new guideline (let’s call it that) which states: “Subject to the provisions of this Act, the monies belonging to the Fund that are not required immediately to be paid as benefits or expenses of the Fund are to be invested pursuant to section 16A with the approval of the Minister and the Governor of the Reserve Bank of Vanuatu.” There you have it. They will decide.
There are some small (?) worrying things in the amendment like “operational losses within the VNPF.” There should never be any in such an organisation as the VNPF. More importantly, they should certainly not be allowed to create a buffer against operational losses.
There are other bigger, worrying things, especially the many references to fund managers. Fund managers have brought down many investment corporations such as Trio Capital in Australia. Its infamous Canadian fund manager lost $180 million in just two projects whilst making A$1.3 million himself for his part in the theft. Have VNPF fund managers all received the Vt 700,000 salaries?
Wendy Himford was particularly clear on the role played by governmental greed in the Chiefs’ Nakamal public meeting to discuss the Provident Fund’s plight on Tuesday. She accused Ministers of using Chinese aid and the Provident Fund to accomplish their own greedy ends.
It was also quite clear from the Tuesday meeting that no Provident Fund member wants any Minister to have anything to do with their money — nor his expensive employees’ money, nor the Minister’s friends on the VNPF Board.
The Amendment Bill must be withdrawn before Parliament sits.
The alternative is likely the Fiji Momi Bay experience. The Fiji National Provident Fund was hoping to sell its Momi Bay resort for F$ 80 million but the highest bid was $41 million three years ago. The property was passed in at auction. F$106 million had been ploughed into the ‘investment’ before then.
In Fiji 10,836 pensioners are only getting between 11 and 25 percent of their entitlements annually on reaching the age of 55 and this was said to be going to drop to below 10% a year ago. Whether or not windows are smashed at VNPF, we must not have this kind of experience here. And we must not let ministers promote it.
Opinion by Bob Makin