In the aftermath of an eye-opening exchange in Parliament between deputy Prime Minister Joe Natuman and Agriculture Minister Matai Seremaiah, people are left asking if their life savings are secure.
Mr Natuman described how auditors from the department of cooperatives were ‘chased away’ from the Freswota premises of the Vanuatu People’s Investment and Equity Fund. The VPIEF, as it’s known, was originally registered as a savings and loan cooperative, but subsequently changed its status to that of a private company registered with the Financial Services Commission rather than the Cooperatives Department.
The company record was added to the registry in March 2013. In June of 2016, it was struck from the companies list. The reason for removal was “Failure to file annual renewal”.
Before the VPIEF was de-listed, it had eight commercial subsidiaries: Four were commercial centres in Luganville, Lenakel, Lakatoro and Port Vila respectively. In addition to these operations, the VFSC also listed an export services company, a trading services company, and a transport association.
All of these companies appear to be defunct. But what about the facilities themselves?
In a lengthy discussion on social media stretching across several threads and discussion groups, co-owner Louis Kalnpel was asked repeatedly by the Daily Post to state what the status of the VPIEF is today. He replied, in part, “The first phase of VPIEF is completed and now the second phase for forty-two finance centres and creation of financial council across the nation with transfer of power and savings will be directed to every financial council.”
But what is the status of the company today? What has happened to the life savings of thousands of people who put their trust in the organisation? Asked again and again to come clean, Mr Kalnpel was unwilling or unable to do so.
People’s livelihoods are at stake, and court documents show that scammers are at work everywhere in this country, preying on the ignorance and frustrations of Ni Vanuatu nationwide. The onus is on the VPIEF and other financial scheme operators to prove that they’re not making promises they can’t keep.
The nation’s indigenous people face institutional barriers to finance. The situation today is vastly better than it was, especially where micro-finance is concerned. But it’s still far from ideal.
This makes people susceptible to promises of easy terms and quick returns. VPIEF has made countless promises that it has yet to fulfil, and they have never made a clear accounting to the public of how their money is being handled—or even whether it still exists.
During the debate on the Cooperatives Act amendments, Agriculture Minister Matai Seremaiah turned the spotlight onto another operation, the Apma Financial Investment Centre:
“Lately, complaints have surfaced over an organisation operating as a cooperative or bank,” he said. “I believe other members are aware of this and have people who are part of this organisation. On a couple of occasions, it was raised with the cabinet and it went as far as the Director of Cooperatives, who came back to assure us that everything is okay.
“Just recently, complaints from members indicated that attempts to withdraw their savings in full, could not do so. The Director of Cooperatives verbally told me that based on the audits, the institution was financially sound. But the complaints indicated that there is an issue with the liquidity.
“Can the DPM give an assurance that the assurance given by the director still stands?”
He could not.
Mr Natuman responded: “While [AFIC] has offices throughout the country, the Department has only managed to audit its office here (in Port Vila) and probably in Luganville but not on Malekula, Tanna, Pentecost and elsewhere.”
Mr Natuman said, “according to the Registrar, AFIC’s situation is not an issue of liquidity as they have money.
“Their problem is no banks accept AFIC to bank with them.”
Minister Seremaiah’s reports of people being unable to withdraw their funds from AFIC are disturbing. They give weight to anecdotal reports emerging from Pentecost that branches have been shutting down, with customers being told that there is no cash available.
The Daily Post sent the following list of questions to government authorities:
1) How many members did VPIEF have?
2) What are the organisation’s assets?
3) How will these assets be administered/protected/returned?
4) Will depositors lose money? Who should they contact for information?
5) How is it that VPIEF was deregistered, but no earlier action was taken to safeguard member funds?
6) Are there other savings and loan operations that are exhibiting similar problems to those of VPIEF?
7) What steps is the government taking to protect people’s life savings from being used/abused in this way?
The Governor of the Reserve Bank, which acts as financial regulator in Vanuatu, responded Friday morning, stating, “We perused the questions and felt that Cooperatives Department is best positioned to provide responses”.
Pressed to respond to question 6 and 7 above, RBV Governor Simeon Athy referenced correspondence with the Daily Post from July which stated that the RBV, in its role as regulator, was concerned that AFIC might be purporting to be carrying on a banking business, or leading people to believe it was.
The letter continues, “the RBV commenced its discussions with AFIC in early 2012 and conducted an investigation on AFIC’s operations during the same year.” It describes a series of instructions and Ministerial orders issued to place the operation under additional scrutiny, and to allow the RBV to intervene in its operations if necessary.
Earlier this week, AFIC founder Barnabas Tabi was interviewed on a local FM radio station. In contrast to the Deputy Prime Minister’s statement, he claimed that his operation was facing a cash flow shortfall after a drop in confidence due to criticism and questions in social media following a Daily Post report on the ministerial orders.
If the government has the power to intervene, and if AFIC’s own founder admits it’s facing a drop in public confidence, will it step in? The Reserve Bank’s statement that “the financial and banking system in Vanuatu remains prudent and sound” would carry more weight if the public could see more action.
The government’s unwillingness or inability to reassure the public that it’s protecting the investments of the most vulnerable people in the financial sector is troubling.
Lands Minister Ralph Regenvanu took the Daily Post to task Thursday, writing, “Do some research on the issue: The Department was investigating VPIEF 2 years ago already and deregistration was the last measure taken, not the first”.
If the government has been investigating for two years, then where are the results? Why is it so hard to get straight answers to simple questions?
Where is the money?
Tens of thousands of people have invested in financial operations that have proven opaque, even evasive when answering even the simplest questions.
If they lose their life savings, who will be held responsible?