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No Details on SOE Operations

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No Details on SOE Operations

In a previous sitting of the Assembly, the Minister of Finance tabled the Budget of Expenditure and Revenue for the various businesses of government or State Owned Enterprises. At the same sitting, there were sharp exchanges between the Minister of Finance and opposition members over the lack of details provided in the Estimates. Member Terry Coe had asked for actual figures for both revenue and expenditure for the previous financial year. The Minister argued that a precedent had already been established in previous years when all that was required was the tabling of the estimates for the information of members. In the end the House agreed for the Budget to be referred to the Public Accounts Committee.

If opposition members were hoping that more details will emerge after the Budget was referred to PAC, they were in for a disappointment. When the Public Accounts Committee had completed their review with senior management of SOEs, the report submitted to the Assembly was a master-piece of generalisation.

For two days in July, according to Chairman Mrs Maureen Melekitama, the Committee had ‘robust and frank discussions…on the merits and demerits’ of the Budget Revenue and Expenditure of SOEs.

And again, the Committee appreciated ‘the opportunity two Directors of the Board [of the Niue Philatelic & Numismatic Corporation, Niue Bond and Liquor Company, Vaiea Farm Limited, Civil and Quarry Limited, Niue Housing, Niue Power Corporation] and General Manager of the Broadcasting Corporation of Niue, to provide in-depth explanation and information in order to clarify some key issues that have surrounded the State-Owned Enterprises Group’.

The two directors who appeared before the Committee were senior public servants Justin Kamupala and Poitogia Kapaga. The other senior manager to appear was Trevor Tiakia, Managing Director of the Broadcasting Corporation of Niue. Regrettably the Report contains no record of the robust and frank discussions that took place and neither were any details provided on the in-depth explanations. The controversial CEO of State-Owned Enterprises Mr Wayne Harris-Daw was not present at the Committee hearing; apparently he was off-shore fulfilling his contractual obligation to go on leave for two weeks.

PAC made no less than 24 recommendations for the SOEs. Two examples should be enough to give some idea of the tone of these recommendations:

For the Niue Philatelic and Numismatic Corporation: Standardise level of assistance and coordinate to compensate and address by criteria for all sports codes and cultural related events.

Civil and Quarry Limited: To ensure the Roading Program is on track.

Niue Bond and Liquor Company: To look into best practices and strategies regarding liquor supply to ensure continuity of stock.

Despite the insistence by opposition politicians that the broad totals, provided by the Minister are meaningless, it is the right of the electorate to know what these were:

For the previous financial year 1 July 2017 to 30 June 2018 it was estimated that all SOEs will earn total revenue of $7, 195, 435. Expenditure was given as $5, 780, 962 giving a total profit of $1,414,473. It is not likely that the actual figures will ever be revealed but it is doubtful if the profit shown was achieved, that figure included a large dollop from the expected sale of bottled water. Vaiea Farm Limited, which includes the water bottling, was expected to earn $1,374,900. In the current financial year 2018-19, farm profit is given as $258,000.

Niue Bottle Store – pic TalaNiue.com.

The operation of Vaiea Farm alone is worthy of special consideration.

For the 2017-18 financial year, the farm was expected to generate revenue totalling $1,374,900. Total expenditure was given as $341,470. But with no sign of the water bottling plant operating any time soon, the expected profit of $1,033,430 was gratuitously over-optimistic.

Far from being discouraged, Vaiea Farm is expected to generate revenue in the current financial year of around $1,443,000. Total expenditure is given as $1,185,000 leaving a profit of $258,000. The make-up of the total expenditure includes a substantial increase in Personnel costs from $126,700 to $365,000 which is an increase of $238,000. In the absence of any details, this could mean that either someone is due for a substantial bonus or that the farm is taking on more staff. If it is the latter, it is likely to mean more staff for the water bottling plant. Under an item called Supplies and Services, the farm is expected to spend $760,000 as compared to $172,600 estimated for the previous year. Again it is not likely that that kind of funds will be expended on Nonu, so expect more expenditure on the bottling of water.

Vaiea Farm is just one of seven SOEs. It is details such as the ones provided for the farm, or the lack of them, that has frustrated members like O’love Jacobsen, Terry Coe, Stan Kalauni, Vaaiga Tukuitoga and Crossley Tatui.

The frustrations of opposition parliamentarians finally reached a tipping point in the sitting of the House on Wednesday last week.

But it wasn’t the Minister of Finance in the firing line but the Speaker.

When Speaker Togiavalu Pihigia – who the opposition says is stifling debate – when he stopped Member O’love Jacobsen from speaking on the issue of SOEs, some members took exception. This sharp exchange did not make it to the air waves – it seems that there are still technical issues with the Assembly’s Chinese-manufactured audio system.

Listeners who were frustrated with the coverage had to wait until after the lunch break when the Member for Tuapa and Associate Minister Mona Ainu’u provided a clue as to what took place. She emphatically demanded an apology from Member Terry Coe for referring in the morning session to the Speaker as animal. Speaker Pihigia, in a rare display of parliamentary largesse, ruled that because he did not hear the remark, the matter need not proceed further. Nevertheless, Member Coe offered his apology; the Speaker ignored the apology and continued with the order of business.

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  1. It sounds like the CEO is repeating his mistakes when he was working for Reef Shipping. The figures appear to be doctored and manipulated to look good to the Board and others. The people of Niue should not be fooled by this trickery. The accounting of “Personnel costs from $126,700 to $365,000 which is an increase of $238,000”, looks to be a bonus. If this report was given to KPMG or PWC independent auditors, the findings will reveal many holes in it. Importantly, it might show lack of competency or oversight on the part of the Board and Cabinet, and or reveal fraud misappropriation of public funds by management of State Owned Enterprises. The parliament MPs should quickly call for a special inquiry to be conducted by independent auditors – not Audit NZ. Spend the $238,000 on correcting the figures by engaging expert accountants. Once corrected those businesses will be in better condition to trade properly and report to parliament in correct and accurate manner. SOEs can attract profitable revenue if properly managed with interest of the State in mind, and not just a cash cow for the CEO and followers. Rewarding managers of incompetence or fraud makes Niue government look like a den of thieves.

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