Who to blame as loan repayments kick-in: the burners or the rebuilders? [1]
Monday, February 11, 2013 - 21:51. Updated on Monday, September 9, 2013 - 18:40.
Editor's Comment by Pesi Fonua
When the crunch of Tonga's huge debt to China becomes critical in the new financial year 2013-14, the government, naturally, will be looking for someone to blame.
They started by looking at the people who took out a loan for the rebuilding of Nuku'alofa after the riots of 16 November 2006 had left the business district in ruins.
But whichever way they turn, the attempts to point fingers remain centered on the unanswered question of who was to blame for the destruction in the first place?
The failure of the government and parliament to present a transparent, accountable and comprehensive report on the destruction and the reconstruction of the Nuku'alofa CBD remains the most controversial issue for the government of Lord Tu'ivakano, since he came into office on December 2010.
On April 29 it will be two years since Lord Tu'ivakano's government made its first attempt to expose to the public how the former government of Lord Dr Feleti Sevele had administered Tonga's 440 million RMB loan from EXIM Bank of China in 2007, for the reconstruction of the Nuku'alofa CBD.
Two years on, and after spending an estimated T$3million or more, the government is still not satisfied with the findings of two separate research groups and an Australian accountancy firm that they authorized to gather information on how the Chinese loan was spent.
Meanwhile, the final drawn-down on the loan has been made and the construction has been completed. Under the loan agreement Tonga was supposed to repay only the 2% interest during the first five years from 2009 to 2014, and then from September 2013 onward for the next fifteen years the balance must be repaid.
Some 90% of Tonga's total external debt is in Yuan, according to recent IMF and World Bank figures. Tonga's gross external debt currently forms 41.5% of GDP, and 18% of total expenditure for 2013 will go toward paying the loan to China.
While the government's initiative for a group of researchers to investigate and present a comprehensive report on how the former government administered the 440 million RMB loan from China, may appear straight forward, with a set terms of reference, some preconceived ideas of what the report should be were different from what the researchers discovered.
Not accidental
The issue of insurance also came into focus, and one of the main insurers of properties in the Nuku'alofa CBD that were destroyed during the 16/11 riots, has refused to repay the property owners because they accepted that the destruction was not accidental but was man-made.
Given that decision, it is not too far-fetched to expect the people who were responsible for the destruction should be held responsible for repaying the reconstruction loan.
A motion in the House for a parliamentary committee to investigate and identify those who were responsible for the destruction of the Nuku'alofa CBD on 16 November 2006, was later withdrawn by Lord Tu'ivakano himself.
The first group of researchers into the loan questions, led by Dr Teena Brown Pulu, was commissioned by Cabinet on 29 April 2011 to research and present a report on how the 440 million RMB loan was administered by the former government of Lord Dr Felei Sevele. It took Teena Brown's Group about six weeks to produce a report, and they found that loan agreements and construction contracts were well documented and in-order. They also specifically pointed out that they believed that the Prime Minister had been misled by his advisors to embark on an unnecessary investigation.
The Prime Minister terminated the working contract with Teena Brown's Group and rejected their report as being incomplete and not in accordance with their Terms of Reference.
Over T$2 million
The report of the second group, a Parliamentary Select Committee led by a member of parliament 'Akilisi Pohiva, took about a year to produce its report. During the process the committee changed its name and its membership. Originally, it was an Independent Committee, and then it became a Parliamentary Select Committee with the Speaker and the Deputy Speaker of the House as members.
The services of an Australian accountancy firm, and an independent lawyer were also recruited to assist with the investigation. Their professional fees amounted to $2 million for the accountant, and about $80,000 for the lawyer. In addition to that were the fees of committee members: 'Akilisi Pohiva, $12,160.00; Dr Sitiveni Halapua, $12,080.00; Pohiva Tu'i'onetoa, $12,120.00; Lord Lasike, $5,320.00; Lord Tu'i'afitu, $5,320.00. The House also spent one month debating the report.
When the report of the Parliamentary Select Committee was debated in November, it was an amazing parliamentary presentation, which was broadcast live on radio. The chairman of the committee, 'Akilisi Pohiva and his deputy, Dr Sitiveni Halapua, claimed that the Chinese loan was illegal. These two MPs, who were protected under their special parliamentary privileges, went on to name people, and alluded to possible illegal practices, and suggested for criminal investigations and prosecutions.
Another committee
The goings-on in parliament about the report were considered by some Cabinet members as utter waste of time and money, and at the end the House did not accept the report. Instead, they formed another Independent Parliamentary Committee to look at the report.
This committee was considered independent because both 'Akilisi Pohiva and Dr Sitiveni Halapua were not members of the committee.
The decision by government to authorize a committee to research into how the Chinese Loan was spent was odd in the first place, because it was a government loan from China, and the government should have had all the relevant information in its fingertips.
If government was really convinced that there were illegal handlings of the Chinese loan, then the Anti-Corruption Commission that was established in 2007 should have been activated to carry out an investigation. But this was not a job to be carried out by a group of parliamentarians, particularly since most of them were heavily involved in the protest marches and gatherings, leading up to the 16/11 fiasco in Nuku'alofa.
Judicial review
Where Tonga has got to now with this exercise is that Lord Sevele and the former Minister of Transport, Paul Karalus have applied for a Judicial Review, of the report. A hearing date has been set for April, when the judge will decide if he has the constitutional right to make a decision on parliamentary matters.
Lord Sevele and Paul Karalus appeared ready to challenge the report of the Parliamentary Committee.
If they are successful, then just maybe the door will be opened up for a push to find out who was responsible for the destruction of the Nuku'alofa CBD on 16 November 2006.