There has been a recent Press editorial and articles regarding a sovereign community infrastructure Treasury bill issue (“SCITB1”) which raised funds for essential infrastructure development in PNG.
Much of the reporting has been based on incorrect information. The conclusions which might be drawn from this with regard to National Superannuation Fund Limited’s (“NASFUND”) position are simply wrong.
Here are the facts:
There was no secrecy regarding SCITB1:
|•||NASFUND emailed the details of its investment in SCITB1 to 25,000 members in March 2010, in its monthly newsletter.|
|•||The details of SCITB1 were circulated to 65 journalists in Papua New Guinea and abroad in March 2010.|
|•||Both The National and Post Courier newspapers in their March 24th and 25th, 2010 editions (over 12 months ago) contained articles which made specific reference to the details and structure of the funding.|
|•||The Hon. Treasurer and Minister for Finance, Mr P. Pruaitch, was noted correctly in those articles as having instructed the State’s appointed Agent to issue the SCITB1 Treasury Bill on behalf of the State.|
|•||The Press Release signed by the three authorising Ministers was in the Post Courier in March 2010 and included the following statement:“The Minister for Treasury Patrick Pruaitch and the National Planning Minister Paul Tiensten as well as Member for Kokopo and Minister for Communication and Information Patrick Tammur announced yesterday that the Government had met its promise to provide basic services to the people of Kokopo. Both Mr Tiensten and Mr Tammur endorsed, approved and have taken the responsibility for Mr Pruaitch instructing the appointed agent to issue the treasury bills on behalf of the state” – Post Courier, Wednesday March 24, 2010.|
|•||A full set of the SCITB Documents was provided to the Central Bank in April, 2010.|
The SCITB1 Treasury Bill was issued under the Treasury Bill Act [2002 (as Amended)] by signature and authority of the Treasurer and Minister for Finance, the Hon P.Pruaitch, co-signed by the Minister for National Planning and Development, the Hon. P. Tiensten with the sponsorship of the Minister for Communication, Hon. P. Tammur.
The amount of the issue was K125M and the proceeds of the issue were designated for a specific purpose. NASFUND does not decide where the money is spent. That is a decision of the Government.
NASFUND is simply an investor in the SCITB1 Treasury Bill and has accepted a Government guaranteed return on its investment. It has no role whatsoever in determining how the funds are spent because the Treasury Bill was issued for and on behalf of the State.
NASFUND invested in the SCITB1 Treasury Bill but otherwise does not administer the Bill or any of the infrastructure works financed by the Bill nor does NASFUND have any responsibility other than as investor. Investor’s funds are guaranteed by the State.
NASFUND’s investment in the SCITB1 Treasury Bills will yield 7.05% if rolled annually. The current Treasurer Hon. P. O’Neill confirmed in February, 2011 that NASFUND’s investment in the Treasury Bills is safe. In particular the Minister wrote that:
“Like all Treasury Note issues there is no risk of default. To suggest otherwise brings the reputation of the country into question. I would also like to state this is not a NASFUND programme. These are works conducted by financing arrangements through the Independent State of Papua New Guinea”.
The SCITB1 Treasury Bills is a security created under the Treasury Bills Act. It is not a loan by NASFUND to anyone.
The SCITB1 Treasury Bills was issued on terms that provide for a specific principal amount, a designated maturity date, a rate of return and other terms that are ordinary conditions of most treasury bills.
The SCITB1 structure was reviewed by:
|•||Three Treasurers. One was the signing Treasurer and two subsequent office holders reviewed the structure and approved it in correspondence.|
|•||The former Attorney General Hon. Ano Pala, CMG who advised that the Treasury Note was lawful|
|•||Two respected law firms.|
All indications from the State are that the Treasury Note will be rolled over through the Central Bank which is normal for such instruments. This has been confirmed in recent NEC deliberations.
While the Board respects a vibrant press it asks for caution in news statements made that may sensationalise or lack accuracy.
NASFUND BOARD OF DIRECTORS
Mr John Jeffery CBE
Mr Melchior Togolo CBE
Mr William Lamur
Mr Reginald McAlister
Dr John Nonggorr
Lady Wilhemina Siaguru SM
Mr Hulala Tokome
Mr Graham Ainiu MBE
Mr Murray Woo