Tonga's Retirement Benefits Fund Board faces uncertainties after half of its elected directors have left the board. One resigned after a criminal conviction and now two other directors have been told to leave after their employer opted out of the fund for a year.

Only three of the original six elected directors in Tonga's first and newly established National Retirement Benefits Fund Board remain after they met for the first time on May 2. Only one replacement has been admitted, while there are integrity issues surrounding another candidate who was next in line, following the election for the board.

A legal challenge is also possible over the interpretation of employer registration, because the Act does not say that exemptions result in automatic deregistration, with regard to representation on the board.

Meanwhile, there is a petition from the local business community before the House this week to defer the whole National Retirement Fund Scheme for five years from July 2012.

Directors

The current directors are the chairman Tevita Kolo'ia Havea of the FWC (employees representative); with Peseti Ma'afu of Liku'alofa Resort and Simone Sefanaia of the Tonga Development Bank (employers representatives) and newly admitted Lata Tangimana of the National Reserve Bank of Tonga (employees representative).

'Aisea Taumoepeau is the government's nominee to the board, but he has no voting rights. The legal advisor to the fund is 'Alisi Taumoepeau, but there are no women on the board itself.

Dr Sione Leimoni Taufu'i, the CEO of the national fund said on August 28 that Mosese Manuofetoa's directorship had ceased in June after he accepted legal advice following a conviction in the Nuku'alofa Magistrate's Court. He was replaced by Lata Tangimana, who was next in line following the election.

Exemption granted

Leimoni said Tonga Power Ltd. had submitted an application for exemption from contributions to the fund on May 25, 2012, which was granted by the board on August 3. He believed that this made the two former directors from Tonga Power Ltd. ineligible to sit on the board. William Clive Edwards Jr. a former employers representative and Graham Steven 'Esau a former employee representative were therefore advised to cease their directorship on 21 August 2012.

Leimoni cited the National Retirement Benefits Scheme (Election) Regulations 5(1) and (2) 2012, that the term of office which is three years shall "terminate earlier if a representative ceased to be a registered employer of the fund".

No replacements for Edwards and 'Esau had been appointed, he said.

Runners-up

The Minister of Finance was abroad at the Forum meeting, so the two eligible candidates who had the next highest votes in the last election, should they accept any invitation to become directors, would be appointed by the Minister under the act, before September 3, he said.

They are: Siosaia Maile Moehau of Nuku'alofa Investment Ltd. who had 54 votes in the last Registered Employers election, and Kinitoni Mafi of the Tonga Airports Ltd. who had 917 votes in the Registered Employees election.

The law is clear that no person shall be appointed or remain as a Director; who is an undischarged bankrupt, has been convicted of an offence punishable by two years imprisonment or more; is or to become a member of the Legislative Assembly; or a person having been disqualified or suspended from practicing his profession by any competent authority.

Integrity

Questions of integrity of candidates for election to the board were raised during the board elections because Tonga has no bankruptcy law.

A lawyer representing creditor banks in Tonga, Ralph Stephenson said that, "It is perhaps worth noting that Section 6 (2) (a) of the National Retirement Benefit Schemes Act provides, with respect to the requirements for appointment as a Director of the Fund that: “No person shall be appointed or remain a Director- (a) who is an undischarged bankrupt'.

"Clearly, the quite proper intention of the legislature was to provide protection to the employer and employee members of the fund with regard to the financial ability, integrity and acumen of the Board members who will be the guardians of their money.

"Unfortunately, however, the legislature’s intention is self-defeating by virtue of the simple fact that Tonga has no bankruptcy laws, and as such it is not possible for a person to be an undischarged bankrupt," he said.

"In these circumstances it would perhaps not be inappropriate for the Minister of Finance, as the responsible Minister under the Act, to request some public disclosure from the nominees."

Ralph  believed that candidates should be required by the Minister to make disclosure on any unpaid judgement debts; and whether or not they are parties to any legal proceedings for recovery of debts; and whether or not they had been directors of any company which had been placed into receivership or liquidation.

"Regrettably, the National Retirement Benefit Schemes Act and Regulations do not appear to give the Minister the power to compel the nominees to provide such information, but should a nominee refuse to provide that information upon the Minister’s request, then at least the electorate could form their own opinions based upon that refusal…before casting what will be a very important vote with regard to the trusteeship of their hard earned money."

Opinion

Ralph also pointed out that all companies are required to register for the National Retirement Benefits Fund, "but the act does not say that upon being granted an exemption for one year, like Tonga Power Ltd., that you are automatically deregistered, because Tonga Power has not surrendered that."