SOLOMONS PENSION FUND REPORTS $6.8 MILLION LOSS

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By Robert L. Iroga

HONIARA, Solomon Islands (Solomon Star, Mar. 14) – The Solomon Islands National Provident Fund (NPF) is in a critical financial situation and its members may lose their entire life savings if it collapses, respected businessman and Member of Parliament Yukio Sato has warned.

Mr Sato, who represents West Honiara, raised the alarm after the pension fund released its financial report for 2004 on Friday, showing a SB$50 million (US$6.8 million) loss. The fund recorded a SB$3.4 million (US$461,000) surplus in 2003.

"I can’t believe this," Sato said. "It is impossible for the fund to make a $3,476,000 profit in 2003 and to record a $50,075,000 loss a year later. Common sense tells us that this can’t be."

However, Mr Sato said this is a very, very serious matter and all NPF members must understand that the future of their hard earned savings does not look good.

"The fund is collapsing because what the report implies is there is more than $50 million of members’ money being totally wiped out," Mr Sato, who operates a chain of trade stores in the country, said. "I as a national leader can’t shut my mouth when seeing peoples’ money going down the drain."

NPF’s financial report released on Friday showed that in 2003 its net assets totaled $44,906,000 while in 2004 it fell to $13,934,000. In 2003, the fund made $3,476,000 in net surplus while 2004 it recorded a $50,075,000 deficit.

Mr Sato said the figures were not just mere numbers but it represented the hard earned cash belonging to the members – both employees and the employers.

"I question this type of auditing and I want whoever audited the 2003 Report to be questioned," Mr Sato said.

He believed that the fund might have made losses some time ago.

Mr Sato said his fear is that the fund would make further loss if the 2005 report comes out.

"If it happens then, I am afraid that what happened in Vanuatu will happen here when NPF members rioted in Port Vila," Mr Sato said, referring to a similar situation in Vanuatu. "This is not public money through tax but it comes direct from the pockets of the employees. It is their hard-earned savings.".

He said because of the uncertainty of the fund he is contemplating stopping paying his employees’ contribution to NPF.

"My fear now is that they might not get what their contributions are when they reach retirement age," said Mr Sato.

The MP has called on the NPF directors to explain the loss.

The Solomon Star was unable to talk to chairman of the board David Quan because he was still overseas.

An NPF member told the Solomon Star that it is now time for all members to question the fund on how their money was used or invested.

"We should make a peaceful demonstration to the fund to seek an explanation," said the member.

A Malaitan man returned home empty handed last week without withdrawing about $3,000 of his contributions from the fund after waiting for weeks.

The man claimed he was told to go there several times a week but none of those times he was given his promised payment.

Mr Sato said the board of directors must explain the loss because the public need to know.

"What I can say about the board is there are many people who have conflict of interest. You can see there are people who involve in SMI and Soltai," he said.

Mr Sato said both companies owed the fund a lot of money from NPF because their representatives are in the board.

Leader of Opposition Francis Billy Hilly in a letter to the chairman of NPF board strongly calls on the board to explain to members the reason for the huge deficit of $50 million.

"I am overwhelmingly surprised that a Financial Institution such as the NPF should be record such a huge deficit.

"Institutions such as the NPF normally should be recording surplus instead of deficits.

"NPF members and Solomon Islanders at large have a right to be properly informed of the reasons for this financial calamity experienced by an institution which they owned," Mr Hilly said on Friday.

He also called on the chairman of NPF to investigate the performance of SMI as majority shareholder of the company.

He said recently, its licence has been withheld for non-compliance with the law.

Public suspicions surrounding NPF’s $50 million loss started last Wednesday when a notice was pinned up outside the NPF office, asking NPF board members to explain how $16.5 million disappeared from NPF funds.

The notice, which was later pulled down by security officers, reads: "For the last 15 months, an average of $1.1 million per month has disappeared, a total of $16.5 million of people’s fund disappeared!

"Where is it?"

On Friday, the same notice was seen pinned up at various locations in Honiara. It was not known who was behind the notice.

Since Wednesday, a number of NPF members have been demanding explanation from the NPF management but to no avail.

March 14, 2005

Solomon Star: http://www.solomonstarnews.com/

 

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