WHILE the write back on the Grand Pacific Hotel was $4.5million, it is understood the Fiji National Provident Fund (FNPF) sold its 75 per cent shareholding in the property at a much higher price.

This week the fund through its chief executive Aisake Taito announced a $33.5m write back on assets for the year ending June 2011.

The write back was also because of the revaluation of the Natadola InterContinental Hotel to $133m, an increase of $29m from the last valuation which had resulted in a $301m write -down on the property.

The FNPF sold 75 per cent of its shares in the Grand Pacific Hotel Limited to its new joint venture partners from Papua New Guinea – the National Superannuation Fund and Lamana Development Group.

“FNPF has recovered $4.5m from what was written down earlier in 2009 and the value of our 25 per cent shareholding in the new project should increase in future,” said Mr. Taito.

Mr Taito said the rehabilitation work for GPH was a two-staged process. The first, was the partial sale of the shares to the joint venture partners and the second was the redevelopment work for the new hotel which would commence soon.

He said that the outcome of the investment achievements was in addition to the other major reforms currently undertaken by the fund.

Ross McDonalds Response:

An article in the Fiji Sun of 15 September 2011 “$44.5m write back on FNPF assets”  following an announcement by FNPF CEO Mr Aisake Taito deserves comment. 

According to the article FNPF have written back $29m on the Natadola Intercontinental Hotel following their previous write down by $301m.  The write down was in line with a “valuation” of the property that had valued it at significantly under the FNPF book value. 

This raises questions about the “valuation” FNPF obtained.  Presumably FNPF are using fair market value.

The question may be asked  what value are we talking about.  There is fair market value, that is a an arms length transaction between a willing buyer and a willing seller,  insurance value, written down value, estimated value, book value, historical value, unimproved capital value, second hand value, realisable value, mortgage value etc etc ……………..and so the list goes on and these are all different values for different purposes.  Valuations may be a crafty calculation, one based on statistics, or purely an estimate, or best guess at the time. There are many, many  ways to value, the list is endless,   These values are all different because they are used for a variety of different purposes, consequently the long list of values for this, or value for that.  

A good example is  market value which most of us think we understand.  Whist you may get a market valuation from a valuer for your property which is his best estimate based on statistical evidence of what is happening in the market,  many will say the real market  value is what you can actually sell the property for, that is what someone will pay you for the property, which may be very different from the valuation you have been given. It can be more, it can be less, it may depend on who wants to buy, or it may depend on how hard you bargain, it will depend on market forces at the time,  it also depends very much on whether you are buying or selling and a myriad of other reasons.. 

In the case of FNPF it seems they are saying the “valuation” of Natadola, and which ever valuation they are using has increased.  In other words they have recovered some value, so they can now write up the “value” of Natadola in their books which makes  them look good, as they have “recovered” some of the loss they previously incurred by writing down the value of the investment. 

We  need to go back to my original letter of 9 June 2011 to FNPF when I challenged the FNPF  write down at Natadola saying that it was excessive, and at the time we the pensioners were going to be made  to bare that loss by way of reduced pension is future years. My letter went on to say  given time the value would be recovered.  In essence at the time FNPF were using this write down as another reason/excuse for reducing pensions, which was nonsense. 

The FNPF comment by Mr Taito simply vindicates the point I made that some value would come back (and more value will be recovered in the future) and this will benefit members by way of higher interest payments in the future, and we the pensioners will get nothing from the increased valuation. 

It is just another hole in the sorry  FNPF saga  that they have exaggerated the position in order to justify their stance on reducing pensions for the  Unlucky 1,209 pensioners. 

Ross McDonald