$60 million pa'anga for Royal Power: overture to a tsunami [1]
Monday, May 15, 2006 - 12:15. Updated on Sunday, December 15, 2013 - 23:24.
Editor,
While Tonga is still struggling with tension to rebuild herself from an economic earthquake, the $60M loan to buy back Shoreline is the overture to a tsunami. Prime Minister, Feleti Sevele equating religion to economy in his news release last week was a hopeful attempt to shape the people's frame of reference and soften the blow.
My arguments have always been less biblical and more rational and technical. I have no intention of going public with my spiritual faith nor do I feel secure in my knowledge of religion to debate religious issues. I always believe that biblical references are not substitution for human judgment and action or a man's obligation to do what needs to be done to remedy human errors and greed. However, with Sevele's recent biblical reference combines with the severity of the issue, I am compelled to respond in moral terms by referencing biblical history.
When Moses led the Jews out of Egypt across the Red Sea, they wandered in the desert for 40 years but there was hope and optimism in the Jews' newfound freedom. With this multi-million dollar loan (speculated to be TOP$100M), we must challenge the royal family, Sevele and the Privy Council on whether they are leading the nation across the Pacific Ocean to China towards salvation or 40 plus years of bondage.
This multi-million dollar loan is not a scheme concocted yesterday nor by Sevele. Some say Crown Prince Tupouto'a knocked on the Chinese door when he was in China some time last year. So, the door possibly was already opened when Sevele met with the Chinese in Fiji in April but this is all a speculation on my part. Shoreline still has two years to go in the lease and it indicates some serious financial trouble for them to terminate the lease early.
Prince Lavaka (as PM) was likely given the option by Tupouto'a to sign the loan or be sacked, thus Lavaka resigned. Tupouto'a needed someone compliant hence Sevele. Sevele is now faced with the difficult task and responsibility (and no real power) to proceed with the loan that would lead to Tonga's self-destruction. In cases of putting the country at such great risk, the people have a right to know relevant facts to justify government's action.
With such absolute power of the royal family, graft and corruption are bound to exist in the system. It does present a question of how much of Sevele's rapid promotion can potentially jeopardize his long-term political future if he succeeds or fails to execute Tupouto'a's grand scheme. Will he be sacked and replaced just like the other ministers before him? Time will tell.
The lack of transparency and predictability in the administration leaves a lot of uncertainties, restlessness, doubt, speculations, and assumptions. With every effort to debate the issues with clarity and pursue answers to some really hard questions, we are only as good as the information we receive. However, we are still responsible to be fair in our ridicule, be as accurate as possible and correct any errors and/or discrepancies when necessary. We must not forget, as humans, we are susceptible to making mistakes.
The sequence of events concerning the power generation and distribution is an operatic drama in epic proportion. There were two separate lease terms involving the transfer of the power from Tonga Electric Power Board (TEPB) to Shoreline; one was the generation system and the other was the distribution system. These two leases were executed and transferred to Shoreline at different times.
To add more premises to Sailosi Finau's point in his recent attack and provide further clarification to my previous articles, the first lease (generation system) was executed and transferred to Shoreline in March 1998 according to Asian Development Bank's (ADB) report. I am still researching on the actual date of the transfer. If in fact the transfer was in 1998, Topouto'a was still with Board then. Clive Edwards was appointed to the Board in 1996. Tupouto'a was still with the Board at the time of Edwards' appointment. Edwards became Chairman of TEPB when 'Akau'ola (the former Minister of Police) died. Tupouto'a resigned from the Board of TEPB (seller) on his 50th birthday (May 1998) to become chairman of Shoreline Group (buyer).
The second lease (distribution system) followed in 2002 after Tupouto'a sacked the Board of Directors for TEPB in November 2001 due to lack of progress in transferring the distribution to Shoreline. Tupouto'a, as chairman of Shoreline, was still making decision at TEPB; a serious conflict of interest. Cecile Cocker was reinstated to the Board by government but Tupouto'a brought in his own Directors including Ramsey Dalgety, the late Carl Reichelmann and others who were (and are) not experts in power generation and distribution.
When Tupouto'a was with the Board at TEPB, there were some very bad investments and poor decisions on replacing existing engines (installed in the '70) as they were due for replacement (life expectancy is 20 years). There were recommendations from experts on the best design and specifications for Tonga. However, the Board elected to proceed with the implementation of Mirrlee Blackstone engines in 1993-1994. This was a multi-million dollar loan from ADB on the generation system that became a disaster. Legal counselors from Australia and Tonga were engaged by TEPB to file arbitration proceedings against ADB for the failed Mirrlee Blackstone engines that were implemented under Tupouto'a's watch. The legal counselors were successful and TEPB's debt of $9M to ADT was resolved without burdening the tax payers. Tupouto'a on the other hand is not free of blame for the blunders and the bloody mess created by the Mirrlee Blackstone engines.
Topouto'a, members of the Board and members of parliament were well aware of the challenges TEPB was dealing with before Tupouto'a resigned from the Board. He convinced the House that Shoreline will deliver reliable and efficient electricity to the consumers that yet to materialize. The Minutes of Parliament reveal the views of Sevele and people's representatives on this issue. Apparently Sevele was supporting the transference of the power generation and distribution to Shoreline.
When Shoreline took over the power generation system, Tupouto'a and his executives knew exactly what they inherited from TEPB. They signed the lease (my guess) based on "as-is" condition but until we know what the terms of the lease are, we can only speculate. If there was any blame, Tupouto'a should hold himself (at least partly) responsible for making poor decisions while on the Board of TEPB. He wanted TEPB to apply for another loan with ADB in 1998 but this time the loan was manipulated to note "distribution" and not "generation" even though the loan was intended to replace the worthless generation engines implemented in 1993-1994. ADB saw the writing on the wall and denied the loan.
Shoreline upgraded the generation system by implementing another bad design and a definite lack of properly trained service personnel to maintain the engines. When Tupouto'a stated in the Chronicle (April 13, 2006), "Shoreline had made a substantial investment to modernize... the power supply to Tonga, where the previous supplier (TEPB) was... inefficient and under performing... " Tupouto'a must have had a memory lapse or maybe it was one of those rare moments of self criticism because he was in the Board of TEPB and was the cause of those circumstances (inefficient and underperformance).
Since Shoreline has taken the responsibility of the distribution system, they have done the bare minimum maintenance on the existing high voltage (HV) distribution system. The people should be able to tell that it is poorly maintained because on a wet night, you can see the leakage of power from some of the HV lines. Many of the poles are burnt on top showing the insulators and lines. The new poles should be straight. Older poles are at an angle which the case with most of the poles in Tonga. Shoreline has invested very little money on the distribution aspect of the system except minimum maintenance work. They may have increased capacity to supply power to new offices and new cinema or other enterprises which might generate more revenue for Shoreline.
One incident where they installed new poles and lights was the funeral of the late Honorable Ma'atu (the king's son). Shoreline worked around the clock installing at least fifty (50) new power poles and lights on the driveway of Tupouto'a's villa. They took street lights from other villages to facilitate the funeral. All in all, Shoreline did minimal maintenance to the existing infrastructure to keep the wires off the ground and keep consumers' power meters running to generate revenue.
Tupouto'a has succeeded in creating far worse blunders at Shoreline than when he was with TEPB. He is now looking to be rescued at the government's (and the people's) expense. Tupouto'a's propensity towards costly mistakes is now the burden of the government and the people. I do not mean to over simplify the seriousness of the situation, but why is government willing to provide financial support to Tupouto'a's unethical business practices and his surrogates? Government will spend $60M now acquiring the generation system and much more for replacement, major retrofit and on-going maintenance. Perhaps what is very disturbing is no one in government and/or Privy Council has the integrity, moral and common sense to challenge Tupouto'a's business ethics and integrity. Why do people tolerate such irresponsible, reckless, selfish, and unethical conduct?
>From the same comments in the Chronicle, Tupouto'a stated, "... Shoreline Group worked closely with the Government and her advisers on ownership options and regulatory frameworks that will facilitate the identification of an optimal partner, maintain the modern platform achieved, and continue to build on success of Shoreline." Does this mean there is a third party involved and that Shoreline will be part of the decision making with respect to who takes over the power system? If so, the power generation and distribution may not necessarily be going to government which is what everyone thinks. This multi-million dollar loan and purchase is probably not the end to Shoreline costly operation.
If indeed Price Waterhouse Cooper (PWC) is being engaged, under what conditions is PWC is contracted for? Who is their client? Government or Shoreline? The outcome will depend on the scope of work they are given and the information they have as a foundation to work from. As we all know, there is ubiquitous graft and corruption in the administration that it should not be a surprise if the result will be in Shoreline's favor.
There have been some costly mistakes in the administration, but its track record of mismanagement and misappropriation of funds offers a lesson we would do well to recall today.
** TOP$30 million earned from selling passports to Asian buyers. Some of the money was allocated to various projects and most of the money went into the Tonga Trust Funds.
** Tonga Trust Funds: Multi-million dollars had been lost with no trustworthy conclusions despite effort to hire a consulting firm from the US to investigate the case. PWC's auditing of Shoreline's assets &liabilities may arrive at the same conclusion.
**Tonga Communication Corp (TCC) vs. Tonfon (Government vs. Tupouto'a): TonFon owes TCC close to a million pa'anga over the interconnect agreement where traffic passes between the two companies. Tonfon did not pay their dues for an initial period after their startup. It was a heated process and TCC was in a strong position to take the case to court. External resources were brought in for mediation but something happened (sabotage I suspect) and Tonfon agreed to start paying the amounts owing but not the old debt. This settlement left TCC almost a million pa'anga in a hole that it made it difficult to compete with Tonfon. Tonfon got away with not paying their debt to TCC (government). If this was another private company, the royal family and government will not hesitate to force them to pay the debt. This is a classic example of what is good for the goose is apparently not good for the gander.
**Hawaii Property - The government of Tonga incurred approximately $5M every quarter to maintain the place with little or no detectable returns.
**Privatization and restructuring public services - US$10 million were squandered and mismanaged.
**Foreign aid &funds - half of the projects funded by foreign governments are successful and half are highly questionable.
The royal family and Government are in a sense, like very old buildings that are much too costly to rehabilitate, upgrade and maintain. They are unstable, safety &health hazards, non-functional, non feng shui and in a state of disrepair. Both the royal family and government settle on quick fixes, visual tweaking and stop-gap measure, while the basic problems remain essentially undisturbed. The royal family fire and hire ministers and stripping titles of nobles as window dressing without getting to the root of the problems. They fail to recognize that the foundation is becoming weak due to lack of integrity. Perhaps it is time to demand integrity of the royal family and the Privy Council by completely demolishing the existing system, redesign with a new vision that combines the merit of the old and the new, and reconstruct from the ground up. If there is to be a revolution against injustice, selfish and corrupt, it must come from the people who truly love and care about Tonga.
Mele Payne Lynch
Mlpayne222 [at] aol [dot] com