Tonga: Keynote Speech

9th March, 2011

Keynote Speech

by the Minister for Public Enterprises and Revenue Services, Hon. Clive Edwards

at the Public Enterprises Directors’ Workshop, 8th March 2011, Nuku’alofa.

Good morning and welcome to all of you who have made a particular effort to attend this morning's workshop. The workshop is designed as a familiarisation course for better understanding and performance of your responsibilities and duties under both the Public Enterprise Act 2002 (Amendments 2010) and the Companies Act 1995.

As Directors of Public Enterprises you are required to know and understand your core functions as Director. In connection with that responsibility you are required to know and understand the Public Enterprise Act and its amendments as well as the Companies Act.

Both these legislations deal specifically and generally with the requirements relating to your role as a Director. Failure to understand these basic requirements will cause problem in the governance of our Public Enterprises and may render you liable for negligence etc.

Traditionally the role which you are performing was regarded as a community service. It was a duty to your fellow citizens and to your country. It did not perhaps involve the high degree of expertise and specialisation which are now attached to that role.

In respect of the Public Enterprises I should say that we paid out to Directors and members who served on the Board of these Enterprises the sum of approximately $753,000 last year. With the amount of money that we pay out to Directors the concept of community service may no longer be valid.

The total assets that government has invested in Public Enterprises in 2010 amount to $272,192,531.00 (compared with $264million in 2009). The shareholders funds or equity as recorded in these enterprises is $204,281,702.00. It represents the depreciated value of the assets invested in these enterprises. The return on government's investment is 0.3%.

The Enterprises which recorded losses in its present operation include the Waste Authority Ltd a loss of $646,000.00. The second highest loss goes to Tonga Timber Ltd at $355,382.00. The full extent of its losses cannot be properly determined through lack of proper records etc. There is a high suspicion of fraudulent mismanagement and possible collusion amongst the staff. It is a bad example of mismanagement of a Public Company and I would hasten to add that the Directors of Tonga Timber Ltd are not involved in the mismanagement allegations. The Directors may have been misled by the reports placed before them. The third highest loss is Tonga Post Ltd. There were 8 Public Enterprises out of 13 which operated at a loss.

I have attached to this speech note details for each of our Public Enterprises showing the profits and losses sustained by each entity and their compliance record. It is often misunderstood that the Janful GOVERNMENT OF THE KINGDOM OF TONGA

Dateline International Hotel is not a Public Enterprise. The Tongan government has 49% shareholding interest in that company.

ENDS

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