Mismanagement
leaves workers in despair
By Patrick Matbob
 |
| People suffer when funds are mismanaged |
However, for the last few months he has been a worried man. His employer has told him that the National Provident Fund has been mismanaged resulting in the Fund incurring a massive debt of K154m. Funds have been frozen and members risked losing 10 per cent of their savings.
Komis is worried about his
money.
“I am not happy at all,”
Komis said, shaking his head as he sipped a can of Coke during his lunch break.
“It’s not their money . .
. It is my hard work to look after my
family.”
With little formal
education, Komis does not understand the operations of NPF, nor how it has
incurred the debt.
All he knows is that he gets
regular statements from the Fund telling him how much his savings has grown
each year. His last statement in 1998 said he had saved K14,000.
“It’s not good. I have a
large family,” he said. He has eight children.
The Prime Minister, Sir
Mekere has ordered an inquiry into NPF early this year which is currently in
progress. Headed by a former judge, Toss Barnett, the inquiry has revealed
gross mismanagement and abuse by former fund managers and directors since 1997.
“Officers have failed to
fulfil their statutory responsibility and moral duties. There has been an
almost total breakdown in operational procedures,” said Sir Mekere in a letter
to all NPF members. “Checks and balances that ensure accountability have been
ignored.”
Sir Mekere said the new
managers of the Fund have sought legal advice to bring to justice those
responsible.
The debt problem happened
when the previous NPF board and management borrowed to fund the organisation’s
growth. Many of the assets bought with borrowed capital were in the resource
sector which did not generate dividends to meet interest costs. In 1998 and
early 1999 resource markets came under strong downward pressure, with rising
interest rates and a falling kina. This resulted in NPF being forced to sell
these assets to retire debt. The other major asset built solely on borrowed
money was the NPF Tower (known as the Deloitte Tower) to the amount of K60
million with an interest bill of approximately K12m per annum.
Camilus Dambui, from East
Sepik believes he will never see his money.
“We have no faith in NPF. We
will not get our money,” he said.
Camilus also works for
British American Tobacco in Madang and has contributed K14 each fortnight
towards NPF for the last six years.
He said his last statement which he received in 1996 showed he had over K1000 in his savings. He has no other savings.
He said his last statement which he received in 1996 showed he had over K1000 in his savings. He has no other savings.
He wants to go back to his
village and use his NPF money to build a home and educate his children.
“How can the government
treat us like this?,” he asked. “We are grassroot people.”
Contributors in Madang were
furious when they first learnt about the plight of NPF. Employees of major
companies such as B.A.T, James Barnes, and R.D. Cannery held urgent meetings
with their employers and demanded that they withdraw their money from NPF and
set up separate savings schemes.
“We have been meeting with
the company four or five times already,” said Camillus. “We want them to set up
our own fund.”
However, their employers
have told them to await the outcome of the inquiry.
A new management has taken
over NPF and since last year began the arduous task of restoring proper
management of the Fund and retiring the massive K154m debt. As of December last
year, the debt has been reduced to K38m and the new managers are confident that
by December 2000 the Fund will be debt free. They have reported that their
program is ahead of schedule.
The new managers have also
drafted legislative changes to strengthen accountability and transparency in
the NPF Act. The legislative changes recommended removal of government
appointees from the NPF Board, to decide the appointment of both the chairman
and managing director, enshrining the newly formed Audit and Remuneration
committee within the Act, reducing the retirement age for entitlement from 55
to 50 years of age, and removal of the forfeiture rule on employer
contributions.
Seated in his comfortable
air-conditioned office in Madang, Francis Kasi is confident he will get all his
savings from NPF.
“I know my money is safe. If
they touch it, I take them to court,” Mr Kasi said confidently.
Mr Kasi is the branch
manager of Ela Motors in Madang and another long time contributor to NPF.
Employers of Ela Motors and
other companies have contributed K5 each and hired a lawyer to ensure that they
contributions will be safe.
Mr Kasi has contributed for
more than 15 years which, under the NPF laws, entitles him to all his savings.
“I’ve been in the system
longer and I know how it works . . . The system is still operating,” he said.
He has suggested that a
solution to preventing such mismanagement is to let the Bank of Papua New
Guinea manage the Fund.
“That’s the best solution,”
he said.
The prime minister has also
made similar suggestions in Parliament recently.
Sir Mekere has promised
action over the NPF crisis.
He said the government will
prepare legislation to regulate the superannuation sector in PNG.
“The funds performance and
the failings that caused it are unacceptable to the Government.
“This legislation will
ensure that fund trustees, management and boards in every part of the industry
are subject to the most rigorous monitoring possible and that fund processes and
decisions are fully accountable and transparent.”
Thousands of Papua New
Guineans like Komis and Camillus have been told by the employers to wait
patiently.
They wait but anxiously.
They will know their money is safe only when they have it in their hands. In
the meantime, their dreams for retirement will have to wait . . .
ends
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