Politics
Togan questions about the lost millions Huge blow, says the peoples' rep
Tonga has taken a bad hit on the United States stock market. It lost about US$24.5 million it made selling its passports to foreigners, mainly Asian buyers. Some losses are said to have been caused by the collapse of the once trendy dot-com companies. These, after soaring in value to sometimes billions of dollars, have since the beginning of this year been slumping to next-to-nothing values.
Finance Minister Siosiua Utoikamanu, in reply to questions from one of Tonga's nine elected members of parliament, admitted that investments worth US$24.5 million had been lost.
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The loss - for a country run on a budget of around US$55 million a year and dependent mainly on pumpkin exports and money sent home by Tongans abroad - is a huge blow, according to Fred Sevele. He is an elected member of parliament and one of Tonga's most successful businessmen.
"It is an embarrassment and shows the incompetence of the former finance minister in giving advice to the government," he told Pacific Magazine. "The money was originally in term accounts with the Bank of America."
The present finance minister first admitted the loss in mid-August in response to questions from elected MP Teisina Fuko.
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Early in September more questions came from Akilisi Pohiva, a leader of Tonga's pro-democracy movement.
Utoikamanu, who is the Governor of the National Reserve Bank and who took over as finance minister at the beginning of this year, said the investments were "possibly adversely affected" due to the sinking of dot- com shares and the United States market generally, Sevele said.
The loss was still being assessed, but it appeared to be beyond salvage. Investments were made on the advice of a former Bank of America employee hired by the government as a consultant. Utoikamunu said $20 million had been invested with Millennium Asset Company, a United States life insurance company, $4 million in Trinity Flywheel, and $500,000 in Film Access.
He expressed alarm about the extent of Tonga's investment exposure in the wilting United States market. The investment money came from Tonga's Foreign Reserves Account. This was built up with sales of Tongan passports to mainly Chinese buyers and deposited in a United States bank account. The account reportedly reached a peak of more than US$30 million.
Lopeti Senituli, secretary of Tonga¹s Pro Democracy Movement, which agitates for constitutional reforms to give a fully elected parliament, described the Trust Fund losses as a "financial catastrophe" for the small country. Tonga depends mainly on exports of pumpkins to Japan, some fishing and tourism, foreign aid and more than 60 million pa¹anga (about US$29 million) annually remitted by Tongans living in the United States, Australia and New Zealand.
The fund is controlled by the country's monarch, King Taufa¹ahau Tupou, and operated by three trustees: the current prime minister, finance minister and justice minister.
Details of the account's contents have been published only occasionally. Passport sales were said to have earned more than US$20 million before being halted because of what critics said was the diminishing international credibility of the passports. Tongan-born citizens began encountering difficulty at passport controls in countries that became suspicious of Asians travelling on them.
In 1988 the government put passport revenue into a trust fund to be used for national emergencies or big development schemes.
In recent years about 16 million pa'anga (about US$7.5 million) has been withdrawn to buy land in Hawaii, for the King in San Franciso and recently as capital for the financially troubled national airline, Royal Tongan Airlines.
