IN the Bainimarama Government’s campaign to “spread democracy in Fiji”, the Fijian Elections Office has also been required to supervise elections of union officials.
The justification has been that some trade union officials have not been fully transparent and accountable to the union members, whose fees paid for their allegedly high salaries.
But why is the Bainimarama Government not democratising the most important “legally enforced union”, the Fiji National Provident Fund (FNPF)?
In contrast to unions with a few hundred or thousand members at the most, FNPF has more than 200,000 members, with accumulated funds amounting to more than the assets of all the banks combined.
With not a single one of whose board members are elected by the members, this is the most important institution that should be democratised, next to Parliament.
Given that it is unlikely to happen through parliament, there has to be a movement for democratising FNPF (MFDF) outside of parliament.
and true democracy
In the run-up to the September 2014 elections, the Bainimarama Government often announced voters were about to enjoy the “most democratic” elections ever, for the government of their choice, rigorously supervised by the Fijian Elections Office.
Indeed, the more discerning citizen has already seen the real “power of democracy” at work under the Bainimarama Government, which two years before the elections, realised they had better serve the voters, if they wanted to return as government.
The Fiji Bureau of Statistics data on Gross Domestic Product, employment and incomes all indicate the economy largely stagnated from the 2006 coup until 2011.
With elections around the corner, the Bainimarama Government went on a spending spree on infrastructure, free education, and civil service salaries, resulting in three years of solid economic growth, even if funded by increases in public debt.
Then in their election campaign, the FijiFirst party made grand promises of free water, electricity, medicines, land development grants, etc, all appreciated by the voters who elected them into government. The voters will also now have an opportunity to vote them out at the next election if they do not perform.
Which is why the FNPF must also be democratised.
Current employees, by law, are required to pay some 8 per cent of their annual incomes into the FNPF which is easily bigger than the commercial banks combined, and the largest lender to the Fiji Government.
FNPF’s loans have a profound impact on interest rates and sectorial allocations in the financial sector, the cost of government borrowing, and the debt burden on future generations.
The Bainimarama Government has claimed that previous governments had used the FNPF as their “piggy bank”.
Yet, so also has the Bainimarama Government itself, and despite being in control for eight years, it has done nothing to ensure that future governments will not be able to control and use the FNPF as their “piggy bank”.
There is not a single board member elected by, and accountable to the owners of the FNPF.
Mismanagement of FNPF?
FNPF members will remember that after the military coup in 2006, the changed FNPF board brought about changes in FNPF investment policies, as well as changes in project design and implementation at the massive Natadola and Momi investments. The government-controlled board also made some extremely unwise loans such as $100 millions to the financially troubled Fiji Sugar Corporation (and elsewhere).
To this day, the FNPF members have no idea what took place, that led to a write down of FNPF assets by $300m. Was it negligence by the board members or the FNPF management staff forced by government, or wily contractors? Or simply factors beyond human control?
No FNPF board member is revealing the truth, some of which may be in the suppressed Ernst and Young report to FNPF members, or calling for an inquiry.
The Bainimarama Government appointed another board, some non-citizens and with permanent residency in other countries.
By decree the Bainimarama Government and the FNPF board, forced through a massive decrease in pension rates of pensioners, breaking existing obligations, while also reducing future pension rates from 15 to 9 per cent.
They also threw out the pensioners’ legal challenge which was awaiting hearing in the High Court,thereby denying them their basic human right to go to court with their perceived grievances.
The unelected FNPF board has displayed a total lack of transparency and accountability to the FNPF members.
employees or bosses?
The role of the FNPF board and management since 2006 would make an great PhD thesis topic for an economics or MBA student, especially as an example of the “principal/agent” problem in economics and business studies.
The “principal ” is the owner of the enterprise who is normally totally in control of the “agent” who is the employee.
But in some corporations where there are a very large numbers of shareholders (“principals”) with none having effective control, the board and management (agents) can begin to run the corporation as the effective “bosses” without paying any attention to the real owners.
In recent years, the FNPF management, possibly under orders from the Bainimarama controlled board, has frequently tried to justify FNPF policy changes, which should properly be the domain of a lawfully appointed board, acting in the interests of the FNPF members.
But both the FNPF management and board have refused to release any of the reports of inquiries into the mismanagement of the investments, a prime example of lack of transparency and accountability by a public enterprise.
This must change.
We should remember that there may well be many principled FNPF management staff, who desperately need the support of board members elected by the FNPF members themselves, if they are to have any hope of resisting unreasonable demands from powerful government people in the allocation of FNPF funds.
democratisation of FNPF
The only way that FNPF members (pensioners and contributors) can obtain greater transparency and accountability from the board is to ensure that, like the Fiji Parliament, they are elected by the members themselves, who can change them at the next elections, if necessary.
Such elections, given the national membership, could even take place simultaneously with the national parliamentary elections, using the same polling stations, thereby also ensuring FNPF issues are placed before the national electorate.
I would strongly advise there must be minimum financial expertise requirements for candidates, even more rigorous than that for the Fiji Parliament, given the FNPF board and its sub-committees are required to make major decisions on the allocations of billions of dollars of members’ assets.
With the FNPF members belonging to all the political parties, a non-partisan approach in Parliament would be the best way to go, but is highly unlikely given that the current lack of co-operation between the Bainimarama Government and Opposition parties.
If FNPF is to be truly democratised, a popular movement needs to be started outside of Parliament, drawing on unions, employers’ federation, private sector organisations, NGOs and capable individual FNPF members.
The proactive FNPF pensioners and contributors need to come out of the woodwork where they disappeared to, after the September 2014 Election.
Professor Wadan Narsey