Wednesday 8 June 2011

Be calm, it is not too late yet

IT has happened. Private sector unions are setting themselves up on a collision course with their superfund, Nasfund.
The reason: Nasfund buying Government Treasury Bills as a loan to fund K125 worth of community projects in Kokopo electorate of East New Britain Province.
The unions, according to our story yesterday, are organising a meeting to force action to investigate how their fund was led into being engaged in this deal they allege was outside the law in so far as it was not approved by the National Executive Council, the approving body for such a transaction involving Government Treasury bills to be issued as a loan.
Treasury bills are a short-term debt obligation backed by the National Government with a maturity of less than one year. Treasury bills are sold in denominations up to a maximum purchase bundle and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks). Treasury bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder. 
It is used many times to finance projects.
According to Nasfund, it has done no wrong and is adamant the “investment’ is secure and the Government will honour the bills. Joint Chief Executive Officer of Nasfund Ian Tarutia says Nasfund has done the right thing by holding talks with unions and has also publicly explain its position in public notices published in the newspapers.
He says it’s a contract between the Government and Nasfund which he is sure was approved by the NEC.
We have been told though, in statements published that the Government will not honour the ”loan’’. In that case, Nasfund says it will go to court to challenge that.
It is easy to see where the unions are coming from. Their membership not too long ago suffered immensely when Nasfund, under its previous management, entered into some insecure and funded public investments that had the fund returned much less than what was going out, threatening to cripple the superfund.
The fund has rebounded from that with prudent management by the current managements which made the heart-breaking decision that the only way to save the fund was to write down members contributions. And that happened with contributors losing.
However, the fund rebounded and its returns have been huge dividends to its contributors. Contributors have enjoyed unparralled windfalls year after year with declarations of double digit dividends, the highest over 20 per cent.
So, with all this talk of the Kokopo loan likely to fall on its face, they are understandably jittery.
All we can do is call for level headed discussion to clear the air and wait on whether the Government will honour the obligations under the arrangement or not. The Government, on its part, has to come clean. Tell it how it will be. If the deal was done outside the rules and regulations, governing the issuance of Treasury bills, say so.
On the part of the unions, we appeal for calm. If there is to be an investigation, it will and must happen but to prematurely force it through stop-work calls can only be harmful. We do not need that.


source: http://www.postcourier.com.pg/20110608/yutok01.htm

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