by ; published 24 January 2001

FIJIAN HOLDINGS LTD: WHY AN INDEPENDENT INQUIRY IS NEEDED, AND THE ROLE OF THE FIJI DEVELOPMENT BANK IN FINANCING SHARES IN FIJIAN HOLDING?

ON THE 13TH JULY 2000 THE INTERIM PRIME MINISTER MR LAISENIA QARASE PRESENTED TO THE GREAT COUNCIL OF CHIEFS A BLUEPRINT FOR THE PROTECTION AND ADVANCEMENT OF INDIGENOUS FIJIANS AND ROTUMANS.

THE BLUEPRINT INCLUDED A DECISION TO CONVERT THE $20 MILLION INTEREST-FREE LOAN TO THE FIJIAN AFFAIRS BOARD TO A GOVERNMENT GRANT ON THE FOLLOWING CONDITIONS;

1. TRANSFER OF $1 MILLION 'B' CLASS SHARES HELD BY THE FAB IN FIJIAN HOLDINGS LIMITED TO EACH OF THE 14 PROVINCES. 2. BALANCE OF $6 MILLION TO REMAIN WITH FAB [AS EQUITY IN FHL]

FIJIAN HOLDINGS WAS PRIMARILY CREATED TO INCREASE EQUITY PARTICIPATION BY THE PROVINCIAL COUNCILS AND FIJIAN INSTITUTIONS IN SUCCESSFUL COMPANIES. THE $20 MILLION GOVERNMENT LOAN, ANNOUNCED IN THE DEUBA ACCORD IN 1987, WAS INTENDED BY THE COUNCIL OF CHIEFS TO BOOST THE OWNERSHIP OF THE 14 PROVINCES IN FIJIAN HOLDINGS.

IT WAS STATED IN THE SENATE IN 1993 THAT ACCORDING TO THE 1992 ANNUAL REPORT OF FIJIAN HOLDINGS, FIJIAN HOLDINGS WAS DOMINATED BY LIMITED LIABILTY COMPANIES OWNED BY GROUPS OF INDIVIDUALS WHICH HELD BY SIMPLE PROPORTIONING 70 PER CENT OF FIJIAN HOLDINGS WHILE THE 14 LPROVINCIAL COUNCILS AND THE NATIVE LAND TRUST BOARD AND FIJIAN AFFAIRS BOARD HELD 30 PER CENT.

IT WAS ALSO STATED IN THE SENATE IN 1993 THAT WHILE 1 PROVINCIAL COUNCIL'S SHARE IN FIJIAN HOLDINGS WAS $50,100 THREE FAMILY PRIVATE COMPANIES IDENTIFIED WITH THAT PROVINCE HELD A TOTAL OF $450,000 SHARES.

IN 1984 THERE WERE NO PRIVATE COMPANIES IN FIJIAN HOLDINGS BY JUNE 1992 THERE WERE 27 PRIVATE COMPANIES.

IN THE MAJORITY OF CASES THERSE PRIVATE COMPANIES WERE ABLE TO SECURE FINANCE TO BUY THE SHARES FROM THE FIJI DEVELOPMENT BANK. SEVERAL INDIVIDUALS AND FAMILY OWNED COMPANIES WHICH OWNED SHARES IN FIJIAN HOLDINGS WERE NAMED IN THE SENATE IN 1993. THEY INCLUDED MR LAISENIA QARASE WHOSE FAMILY COMPANY Q-TEN INVESTMENTS LIMITED OWNED 200,000 SHARES, AND MR SITIVENI WELEILAKEBA WHOSE FAMILY COMPANY STIKS INVESTMENT LIMITED OWNED 150,000 SHARES. THESE TWO NAMES WERE HIGHLIGHTED BECAUSE AT THE TIME MR QARASE WAS MANAGING DIRECTOR OF THE FIJI DEVELOPMENT BANK A MEMBER OF THE BOARD OF FIJIAN HOLDINGS, AND FINANCIAL ADVISER TO THE FIJIAN AFFAIRS BOARD MR WELEILAKEBA WAS APPOINTED CHIEF EXECUTIVE OFFICER IN 1991.

THE 1998/9 ANNUAL REPORT OF FIJIAN HOLDINGS DISCLOSES THAT MR WELEILAKEBA'S FAMILY COMPANY OWNS 10,000 SHARES AND THAT IN 1998 THE COMPANY HELD 100,000 SHARES. ATTEMPTS TO VERIFY DETAILS OF THE OWNERSHIP OF Q-TEN INVESTMENTS, STIKS INVESTMENTS AND STIKS HOLDINGS AT THE OFFICE OF THE REGISTRAR OF COMPANIES WERE UNSUCCESSFUL. THE OFFICE HAS BEEN INSTRUCTED NOT TO REVEAL THE DETAILS UNLESS A REQUEST IS MADE IN WRITING STATING THE PURPOSE OF THE ENQUIRY. INFORMATION ABOUT REGISTERED COMPANIES IS NORMALLY READILY AVAILABLE TO THE PUBLIC.

QUESTIONS

1. WHY WERE PRIVATE COMPANIES ALLOWED TO BUY SHARES IN EXCESS OF THE SHARES HELD BY THE PROVINCIAL COUNCILS?

2. WHY WAS THE FAMILY COMPANIES OF THE CHIEF EXECUTIVE OFFICER AND THE MANAGING DIRECTOR OF THE FIJI DEVELOPMENT BANK ALLOWED TO BUY SHARES IN EXCESS OF THOSE HELD BY THE PROVINCIAL COUNCILS?

3. WHAT ADVICE DID MR QARASE GIVE THE FIJIAN AFFAIRS BOARD ON THE ALLOCATION OF SHARES TO PRIVATE COMPANIES?

4. WHEN THE COUNCIL OF CHIEFS APPROVE INDIVIDUALS AND FAMILY COMPANIES BUYING SHARES?

THIS PATTERN OF PRIVATE COMPANY OWNERSHIP CONTINUES TODAY. FAMILY COMPANIES OWN MORE THAN 2.2 MILLION SHARES IN FHL. THE PROVINCIAL COUNCILS OWN 1.9 MILLION [MASTER LIST OF SHAREHOLDERS DATED SEPT 1998] IN THE FHL'S TOP TWENTY LIST OF SHAREHOLDERS OF FIJIAN HOLDINGS DATED 31ST JANUARY 2000 ONLY FOUR PROVINCIAL COUNCILS OWN MORE THAN 100,000 CLASS 'A' SHARES.

THE TOP TWENTY SHAREHOLDERS

UNDER STOCK EXCHANGE LISTING RULES FIJIAN HOLDINGS ARE OBLIGED TO PROVIDE TO THE EXCHANGE A LIST OF THE TOP TWENTY SHAREHOLDERS. THERE APPEAR TO BE SOME DISCREPANCIES IN THE LIST PROVIDED BY FHL.

ACCORDING TO THE REGISTRAR OF COMPANIES TWO OF THE COMPANIES ON THE LIST NO LONGER EXIST. THEY ARE CICIA PLANTATION CO-OP SOC. LTD AND VATULELE ISLAND HOLDINGS LIMITED WHICH HAVE BEEN DEREGISTERED.

[IT IS IMPORTANT TO MAKE THE DISTINCTION BETWEEN SHAREHOLDERS HOLDING 'B' CLASS SHARES, AND SHAREHOLDERS HOLDING 'A' CLASS ORDINARY SHARES. 'A' CLASS SHARES ATTRACT A MUCH HIGHER DIVIDEND THAN 'B' CLASS SHARES AND THEY CARRY VOTING RIGHTS WHICH CLASS 'B' SHARES DO NOT. THE DIFFERENCE IS ILLUSTRATED IN FIJIAN HOLDINGS 1999 ANNUAL REPORT. 'A' CLASS SHARES ATTRACTED AN INTERIM DIVIDEND OF 10 PER CENT AND A PROPOSED FINAL DIVIDEND OF 10 PER CENT [TOTAL DOLLAR AMOUNT &2,092,930] THE ORDINARY 'B' CLASS SHARES HELD BY THE FIJIAN AFFAIRS BOARD ATTRACTED A PROPOSED DIVIDEND OF 5 PER CENT [TOTAL DOLLAR AMOUNT $1,000,000]

THE TOP TWENTY SHAREHOLDERS

1. THE MAJORITY SHAREHOLDER IN FIJIAN HOLDINGS IS THE FIJIANS AFFAIRS BOARD WHICH OWN 20,329,855 SHARES OF CLASS 'B' SHARES [66.7 PER CENT OF THE TOTAL SHAREHOLDING]

2. THE SECOND LARGEST SHAREHOLDER IS THE NATIVE LAND TRUST BOARD WITH 893,501 SHARES.

3. THE THIRD LARGEST GROUP OF SHAREHOLDERS WITH MORE THAN 100,000 SHARES EACH ARE AS FOLLOWS;

CICIA PLANTATION CO-OP SOC LT 400,000[finance from FDB] RATU SIR K MARA EDUCATION TRUST FUND 300,000 TAILEVU DAIRY FARMERS CO-OP 300,000 BA PROVINCIAL COUNCIL 206,917[finance from FDB MACUATA PROVINCIAL COUNCIL 203,614 MAVANA INVESTMENTS LIMITED 200,000[finance from FDB] MUALEVU TIKINA HOLDINGS LTD 200,000[finance from FDB] VANUA KO LOVONI INVESTMENT LIMITED 179,805[finance from FDB] DUAVATA HOLDINGS LTD 150,000 BUA PROVINICIAL COUNCIL 137,102[finance from FDB] RARA O NAKELO HOLDINGS LTD 117,616[finance from FGDB] MALOMALO TIKINA HOLDINGS LTD 107,111 MOALA TIKINA COUNCIL 101,005[finance from FDB] VUKICEA INVESTMENT LTD 100,000[finance from FDB] NAQARANI HOLDINGS LIMITED 100,000[finance from FDB] VATULELE ISLAND HOLDINGS LIMITED 100,000[finance from FDB] MUNIA HOLDINGS LIMITED 100,000[finance from FDB] DOGOTUKI TIKINA COUNCIL 100,000[finance from FDB]

ON INFORMATION SUPPLIED BY THE REGISTRAR OF COMPANIES THE BREAKDOWN OF OWNERSHIP OF THE PRIVATE LIMITED LIABILITY COMPANIES IS AS FOLLOWS;

1. MAVANA INVESTMENTS LIMITED - 200,000 SHARES [FHL]

MAVANA INVESTMENTS LIMITED IS OWNED BY A NUMBER OF INDIVIDUALS. THE MAJORITY OF THE SHARES ARE OWNED BY THE MAVANA VILLAGE FUND - 108,500 SHARES. Q-TEN INVESTMENTS IS OWNED BY THE FAMILY OF MR LAISENIA QARASE.

2. KO LOVONI INVESTMENT LTD - 179,805 SHARES [FHL]

THE DIRECTORS OF VANUA KO LOVONI INVESTMENT LTD ARE DESCRIBED AS VILLAGERS FROM VARIOUS VILLAGES IN OVALAU. THE COMPANY WAS REGISTERED ON 6TH MAY 1993. ACCORDING TO DOCUMENTS FROM THE REGISTRAR OF COMPANIES VANUA KO LOVONI INVESTMENT LIMITED OWES THE FIJI DEVELOPMENT BANK A TOTAL OF $199,188.65.

3. VUKICEA INVESTMENTS LIMITED - 100,000 SHARES [FHL]

VUKICEA INVESTMENTS LIMITED WAS REGISTERED ON 16TH OCTOBER 1992. IT IS WHOLLY OWNED BY THE VUKICEA FAMILY OF CICIA, LAU. A DEBENTURE OF $80,000 WAS REGISTERED BY THE FIJI DEVELOPMENT BANK OF 30TH NOVEMBER 1993. THE MEMORANDUM OF ASSOCIATION DETAILING THE PURPOSE OF THE COMPANY WAS WITNESSED BY MR SITIVENI WELEILAKEBA, THE CHIEF EXECUTIVE OFFICER OF FIJIAN HOLDINGS.

4. MUNIA HOLDINGS LIMITED - 100,000 SHARES [FHL]

THE DIRECTORS OF MUNIA HOLDINGS LIMITED ARE KAMELI VOSA AND SOLOMONE VOSAICAKE. THE COMPANY WAS REGISTERED ON 9TH DECEMBER 1989. A DEBENTURE OF $80, 000 WAS REGISTERED BY THE FIJI DEVELOPMENT ON 26TH FEBRUARY 1995.

5. VATULELE ISLAND HOLDINGS LIMITED - 100,000 SHARES [FHL]

THE COMPANY WAS FORMED ON 11TH DECEMBER 1993. ITS DIRECTORS ARE VILLAGERS FROM VALUTLELE. THE REGISTRAR WROTE TO THE COMPANY ON 11TH DECEMBER 2000 STATING THAT HE HAD REASONABLE CAUSE TO BELIEVE THAT THE COMPANY WAS NOT OPERATING FOLLOWING A FURTHER LETTER ON 10TH APRIL 2000 THE COMPANY WAS REMOVED FROM THE COMPANIES REGISTER.

6. MALOMALO TIKINA HOLDINGS LTD - 107,111 SHARES [FHL]

THE DIRECTORS OF THE COMPANY ARE RATU SAMUELA NAULAGO AND RATU MESULAME VOSAILAGI, BOTH FARMERS OF SIGATOKA. THE COMPANY WAS FORMED ON 12TH DECEMBER 1994.

WE WERE ADVISED BY THE OFFICE OF THE REGISTRAR OF OCMPANIES THAT DETAILS OF THE TIKINA HOLDING COMPANIES IN THE TOP TWENTY WERE AVAILABLE THROUGH THE FIJIAN AFFAIRS BOARD BY WRITTEN REQUEST.

THE FAMILY OWNED COMPANIES WITH SUBSTANTIAL SHAREHOLDING IN FIJIAN HOLDINGS AS LISTED BY THE COMPANY IN 1998 ARE;

1. KINGFISHER ENTERPRISES 77,508 [finance from FDB]

2. KJY INVESTMENT LIMITED [KONISI YABAKI] 50,000 [finance form FDB]

3. LANA INVESTMENT LTD [RATU N. LALABALAVU] 95,000 [finance from FDB]

4. MB INVESTMENT LIMITED [M BULANAUCA] 100,000 [finance from FDB]

5. MARKIN INVESTMENT [ISIKELI TAOI] 100,000 [finance from FDB]

6. MEPSAN INVESTMENT [PECELI MATANITOBUA] 67,932 [finance from FDB]

7. NABUABUA HOLDINGS 100,000 [finance from FDB]

8. RABULI INVESTMENT [MEREANI RABULI] 50,000 [finance from FDB]

9. RAFIRE LINVESTMENT [M. RABUKA] 100,000 [finance from FDB]

10. SAKIANA INVESTMENT 50,000

11. TAOI INVESTMENT [J VITUSAGAVULU] 150,000

12. TUKULA HOLDINGS [SIR JOSAIA TAVIQIA] 100,000 [finance from FDB]

13. VENSALISI INVESTMENT 50,000

14. YALIMAIWAI INVESTMENT [ANARE BULA] 100,000 [finance from FDB]

15. 5X INVESTMENTS 100,000 [finance from FDB]

16. BAKANI INVESTMENT 100,000

17. BARAVI ASSOCIATES 50,000

18. FJ JAMNOVIS INVESTMENT 100,000 [finance from FDB]

19. I WAQA & COMPANY 80,000

20. JAY TEE INVESTMENT [S TABAKANACA] 100,000 [finance from FDB]

21. KB INVESTMENT 100,000 [finance from FDB]

THE MAJORITY OF COMPANIES BOUGHT THEIR SHARES BETWEEN DECEMBER 1991 AND MAY 1993.

QUESTIONS

1. WHAT IS THE FULL EXTENT OF LOANS MADE BY THE FIJI DEVELOPMENT BANK TO INDIVIDUALS AND FAMILY COMPANIES TO BUY SHARES IN FIJIAN HOLDINGS?

2. ON WHAT TERMS WERE THESE INDIVIDUALS AND COMPANIES GIVEN LOANS BY THE FIJI DEVELOPMENT BANK?

3. WERE THE PROVINCIAL COUNCILS INFORMED THAT THEY COULD BUY SHARES ON SIMILAR TERMS?

ON 26TH MAY 1995 SUBSANTIAL LOTS OF SHARES WERE ISSUED TO THE PROVINCIAL COUNCILS. ACCORDING TO THE COMPANY'S SHARE REGISTER DATED 30TH SEPT 1998.

BA PROVINCIAL COUNCIL 34,801 SHARES

BUA PROVINCIAL COUNCIL 87,002 SHARES

KADAVU PROVINCIAL COUNCIL 43,501 SHARES

LAU PROVINCIAL COUNCIL 17,401 SHARES

LOMAIVITI HOLDINGS 52,201 SHARES

MACUATA PROVINCIAL COUNCIL 87,002 SHARES

NADROGA/NAVOSA PROVINCIAL COUNCIL 17,400 SHARES

NAMOSI PROVINCIAL COUNCIL 35,671 SHARES

RA PROVINCIAL COUNCIL 8,700 SHARES

REWA PROVINCIAL COUNCIL 43,501 SHARES

SERUA PROVINCIAL COUNCIL 87,002 SHARES

TAILEVU PROVINCIAL COUNCIL 52,201 SHARES

A SUBSTANTIAL NUMBER OF OTHER SHARES WERE ALSO ISSUED ON 26TH MAY 1995 TO MATAQALI, TIKINA AND VILLAGE BASED COMPANIES.

MATAQALI

1. DROVALAU INVESTMENTS 16,743

2. ERENAWAI HOLDINGS 16,743

3. MATAITINI DEVELOPMENT 16,743

4. MATAQALI NATABUTALE 16,743

5. NABAIKPAODI HOLDINGS 16,743

6. NATURUBU TIKINA HOLDINGS 16,743

7. TOKATOKA VUWAI HOLDINGS 16,743

8. TUBANAWAI HOLDINGS 16,743

9. VALELEVU HOLDINGS 16,743

10. DOROKAVU HOLDINGS 16,578

11. RUKURUKU INVEST CO. [RAVUAMA BAISAGALE] 50,000 [finance from FDB]

TIKINA

1. BURETA TIKINA HOLDINGS 26,101 [finance from FDB]

2. CICIA TIKINA HOLDINGS 33,104

3. DREKETI TIKINA INVESTMENTS 17,400

4. MALOMALO TIKINA HOLDINGS 87,000

5. MOALA TIKINA HOLDINGS 34,475 [finance from FDB]

6. MAULEVU TIKINA HOLDINGS 77,508 [finance from FDB]

7. NAMUKA TIKINA COUNCIL 17,400

8. NAWAIDINA INVESTMENTS 17,400

9. RARA O NAKELO 117,616 [finance from FDB]

10. UDU TIKINA COUNCIL 17,400

11. VANUA O SABETO 17,400

12. VATULELE ISLAND HOLDINGS 78,410 [finance from FDB]

VILLAGE

1. AROVUDI VILLAGE DEVEL CO. 16,045

2. DALICONI INVESTMENT 16,142

3. DELADAMANU INVEST HOLDINGS 16.142

4. LOMATI VILLAGE INVESTMENT 44,716

5. MAULEVU KORO INVESTMENT 73,290

6. MUNIA HOLDINGS 16,142

7. NABUKEBUKE HOLDINGS 75,990 [finance from FDB]

8. NAKABEA INVESTMENT 16,142

9. NAMUKA-I-LAU 73,290 [finance from FDB]

10. NAYAVU VILLAGE 16,142

11. TARUKUA VILLAGE 25,516 [finance from FDB]

12. TAWAVA INVESTMENTS 36,645 [finance from FDB]

QUESTIONS

1. ON WHAT BASIS WERE SHARES IN FIJIAN HOLDINGS ALLOCATED TO THE PROVINCIAL AND TIKINA COUNCILS IN 1995?

2. HOW WERE THE SHARES TO THE PROVINCIAL AND TIKINA COUNCILS FUNDED

3. WHAT CRITERIA DID THE FIJI DEVELOPMENT BANK USE IN FUNDING THE PURCHASE OF SHARES?

4. WHAT DIVIDENTS HAVE THE PROVINCIAL AND TIKINA COUNCILS RECEIVED SINCE 1995?

THE NEED FOR AN INQUIRY

WHAT IS CLEAR FROM THE HISTORY OR SHARES OWNERSHIP IN FIJIAN HOLDINGS IS THAT THE $20 MILLION LOAN FROM GOVERNMENT WAS NOT USED TO BENEFIT THE FIJIAN PEOPLE AS THE GREAT COUNCIL OF CHIEFS HAD INTENDED. THE DOMINANCE OF INDIVIDUALS AND PRIVATE FAMILY COMPANIES BENEFITED A FEW WHO HAD ACCESS TO FINANCE FROM THE FIJI DEVELOPMENT. QUESTIONS NEED TO BE ASKED AS TO WHY THIS WAS ALLOWED TO HAPPEN. WHAT ROLE DID MR QARASE PLAY AS MANAGING DIRECTOR OF THE FIJI DEVELOPMENT BANK IN FACILITATING LOANS TO INDIVIDUALS AND PRIVATE COMPANIES TO PURCHASE SHARES IN FIJIAN HOLDINGS OF WHICH HE WAS A BOARD MEMBER? WAS FINANCE FROM THE FIJI DEVELOPMENT BANK MADE AVAILABLE TO THE 14 PROVINCIAL COUNCILS AT THE SAME TIME THAT IT WAS BEING OFFERED TO INDIVIDUALS AND FAMILY COMPANIES? IS THE LIST OF THE TOP TWENTY SHAREHOLDERS A TRUE AND ACCURATE PICTURE OF THE CURRENT OWNERSHIP OF FIJIAN HOLDINGS? THESE AND OTHER QUESTIONS NEED TO BE ANSWERED BY AN INDEPENDENT INQUIRY.

THE DECISION BY THE INTERIM GOVERNMENT TO TRANSFER $I MILLION CLASS "B" SHARES IN FIJIAN HOLDINGS TO EACH OF THE PROVINCE WILL BE OF MINIMUM BENEFIT TO THE MAJORITY OF THE FIJIAN PEOPLE. THE ANNUAL DIVIDEND TO EACH PROVINCE FOR ITS "B" CLASS SHARES WILL BE IN THE VICINITY OF $50,000.