Credit:  A Fijian Success - from the January 2005 Issue of the Fiji Islands Business

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Who is a Rotuman becomes a side issue to FHL's phenomenal growth.

By Samisoni Pareti

Does anyone know who or what a Rotuman is? At the very least 10,000 of Fiji’s citizens consider themselves as being Rotumans. This is not good enough for Fijian Holdings Ltd, a highly profitable public company, which allows only registered Fijians and Rotumans to be its shareholders. As it sees it, Rotumans don’t really exist until it is given a satisfactory definition of who a Rotuman is. The answer to that question is holding up the transfer of Fijian Holdings shares to the Rotuma Island Council and to the country’s 14 Fijian provincial councils. These class B shares, as they are described in FHL , are being held in trust by the Fijian Affairs Board (FAB) on behalf of the island council and the provinces until a definition is struck.

The shares were with a free gift of $20 million in taxpayers’ money fixed up by the then interim government of the late Ratu Sir Kamisese Mara in September 1989. While the FAB is ready to transfer the shares to the 14 provinces and Rotuma Island Council, it is obstructed by the Rotuman Act’s definition of who qualifies to be a Rotuman. “We at the board find the current definition too broad,” explains FAB’s deputy secretary, Adi Litia Qionibaravi, who is also the FAB’s representative on the FHL’s board of directors. “We’ve asked the Rotuma Island Council to come back to us with a more defined definition and we’re still waiting. “The last thing we want to do is to jeopardise the value of shares of the other 14 provinces because of the confusion about who really qualifies to benefit from the share transfer to Rotuma.”

Rotuma Registry

Qionibaravi says part of the problem lies in the absence of a Rotuman registry, an equivalent to the indigenous Fijians’ Vola-ni-Kawa-Bula (VKB—roughly meaning ‘register of Fijians who are alive’). She says the board hopes a current review of the Rotuman Land Act will arrive at a precise definition. The current definition of a Rotuman has also been questioned by the Fijian Education Scholarship board, says Rotuma’s elected member of the House of Representatives, Marieta Rigamoto, who is an assistant minister in the office of the Prime Minister. She says the Rotuman Act prescribes a Rotuman as being anyone who can trace his or her lineage to Rotuma. This means anyone who can trace their ancestry through a Rotuman father or mother.

Rigamoto agrees the current definition is too broad but says it will be amended only if Rotumans desire to do so. “At the moment, a review of the Rotuman Land Act is underway, which will precede the convening of a Rotuman Lands Commission. Nothing has been said about the review of the Rotuman Act and the definition of who really is a Rotuman.” Lyle Cupit, chairman of Fijian Holdings Limited, is aware of the hold-up over the Rotuman issue but says it is a matter for FAB and the Rotuma Island Council to sort out. 

Cause for celebrations

It is not an issue that caused any problem for celebrations in December for the 20th anniversary of Fijian Holdings. Cupit believes the company has a lot to celebrate about because, he says, its financial figures speak for themselves. From a start-up capital of $1.2 million in November 1984 and the  $20 million taxpayers’ money handout injected through the FAB in 1994, FHL has grown by more than 1000 percent to control a total group asset valued at $200 million. From a mere paper company 20 years ago, it now fully owns seven companies, it holds majority shares in four others and owns shares in eight other companies. In a venture it rates as being substantial and safe, the company is prepared to invest up to $20 million.

Fijian Holdings has paid its shareholders more than $37 million in dividends. The company estimates that this is money in the pockets for more than 20,000 Fijian families. Cupit, a former head of the Carpenters Group of companies, can’t own a single share because he isn’t a Fijian. A lot of Fijians can’t buy shares either because they are not listed in the VKB register. Cupit says he had no qualms about chairing a company that bars him from owning its shares because its task is simply to watch Fijian Holdings stay true to its mission. This is to be a vehicle for enabling Fijians to own stakes in successful businesses. “It has moved itself into the flagship of what we are trying to do which is our idea of moving Fijians, indigenous Fijians, into the main business stream of corporate profits,” he told FIJI ISLANDS BUSINESS.

In the company’s 2004 annual report, he notes that sectors leading Fiji’s economic growth make up 61% of the company’s investment portfolio. They are tourism (Blue Lagoon Cruises, Sheraton Fiji, Sheraton Royal); construction (Basic Industries, Fiji Industries), and trade and finance (Fijian Holdings Trust Management, Fijian Holdings Securities, Merchant Finance, Fijian Holdings Unit Trust, Marsh Limited).

Fijian Holdings has not grown without criticism and questions.

Some say there is nothing magical about growth by a company that got a free $20 million grant. Cupit, in reply, alludes to other causes of the company’s success.When in the 1980s Ratu Mara asked for advice for boosting Fijian participation in commerce, Cupit proposed an investment company able to make capital grow so as to enable its owners to live off dividends, not the capital. The company’s shrewd management has been led by Cupit, managing director Sitiveni Weleilakeba, and general manager-investments Jaoji Koroi. Cupit has been chairman since the company’s 1984 launch. The company has ridden out some hard knocks, he says. “We’ve had three coups, that’s no good for business. But I think we’ve done very well. The capital value of our assets is very secure. There’s no promises in there, it’s actually in the ground. Yes, we’ve done well.”

The company’s early days were and still are painted with controversy about the circumstances in which some of its first shareholders bought their shares. Some of the shareholders, including directors and employees of the Fiji Development Bank, of which Cupit was also chairman, financed share purchases of Class A shares with loans from the Fiji Development Bank. One such investor was then FDB managing director, Laisenia Qarase. There was criticism that a number of prominent Fijians were given unfair access to the shares in a manner that bordered on ‘insider trading’.

Cupit defends the purchases and says he would today exactly follow the same path.

“What was done was clearly done in full disclosure and totally transparent, and if the governance framework was in place, it would have passed those deals. “Those deals are clean. It’s people’s imagination that’s getting them wrong. They were clean. If we formed the company again and with the governance framework, it would still go through.” Modelled on Singaporean lines, Fijian Holdings has just completed drawing up a code of business ethics that insists on transparency and good corporate behaviour. This is going to be written into the employment contracts of all FHL executives,” Cupit says.

“You are not allowed to tell half lies when you are dealing with big companies. You got to be truthful. That’s what it’s all about. “We won’t fall into that gap that some American companies fell into. We stick to the standards, and in actual fact certain provisions of the standards of disclosure and accounting are already in our (financial) accounts.” Cupit agrees however, that the standards the Fijian Holdings conforms to should have barred Weleilakeba from a share deal which in 2004 caused the temporary suspension of the company’s licence to operate as a broker on the South Pacific Stock Exchange. “It was indiscipline because Sitiveni assumed he had the right to handle a transfer of joint names. That’s been handled by CMDA (Capital Markets Development Authority) and we’ve met their requirements.

“Of course, it was a worry, a worry to me. I guarantee it won’t happen again. We were in the middle of a domestic fight, and I don’t like that sort of things. I don’t want the company mixed up in those things.”

Fijian elite
An image Fijian Holdings had difficulty in rejecting is that it is a business that benefits mainly the Fijian elite. Former prime minister Sitiveni Rabuka told FIJI ISLANDS BUSINESS that it was because it felt that ordinary Fijians were being left on the wayside by Fijian Holdings that his Government formed Yasana Holdings, an investment arm for all the 14 provinces and Rotuma. “Our intention was for a more equitable sharing of wealth because we were seeing that Fijian Holdings was only for the elitist of Fijians who were using the company to accumulate more personal wealth.

“When they float shares, they usually limit it to a day or two only and they set the minimum amount of shares that can be bought.

“Which ordinary Fijians can find money to invest within two days unless he or she is well connected with the banks or has enough personal capital to take advantage of these offers?”

Cupit, on the other hand, insists that only “sensible” Fijians had benefitted from Fijian Holdings. Many shareholders, he says, were re-investing their dividends that Fijian Holdings Unit Trust was founded. 

“When we pay out dividends, people give their cheques to Unit Trust and suddenly start earning money again, so it’s a double earning power.”

The latest shareholders’ registry appears to bear out Cupit’s point. The company’s shareholders include 642 individuals, 14 co-operatives and 199 trusts. Proof that the company’s shares have trickled down to villagers is the 15 mataqali shareholderss as well as 17 provincial companies, 19 districts or villages and eight yavusa. Journalist Wainikiti Waqa-Bogidrau verified this trend when working on a thesis for a master’s degree in Pacific Islands studies at the University of Hawaii in 2003. She researched alternative paths to rural development and focussed on the role of Fijian Holdings. Bogidrau said she studied 16 cases of villages or districts that bought shares in Fijian Holdings and became impressed by her findings.

“I came up with the Mavana model, named after the village of Prime Minister Laisenia Qarase in Vanuabalavu,” says Bogidrau.

“Shareholders in Mavana now enjoy new, modern homes, the village have good, concrete drainage and they have also been able to use money from their investments to reclaim a big portion of the village’s foreshore.

“All enjoy piped water and electricity, and Mavana boasts a new village hall, church and even their own supermarket.”

Among other models she studied included Vatulele Tikina Holdings, which used royalties from a resort on the island, to buy Fijian Holdings shares. It now manages a lucrative real estate business in Suva as well as an active school infrastructure improvement programme to “attract qualified teachers to Vatulele and enhance student performance.” Bogidrau focussed on her own village of Lomati in Nabukelevu tikina in Kadavu.

“When Lomati was told to contribute to the tikina’s share of $11,000 to the province’s fundraising, none of the villagers used a single cent from their pocket. All the village did was to use its Fijian Holdings dividend, the same dividend that helped us built our new church in 1995.”

As for the next 20 years, Fijian Holdings envisages continued growth including most probably some investments offshore. Already the company has been testing the grounds in Papua New Guinea, but any expansion beyond Fiji will require the Reserve Bank’s consent. The group also wants two more of its subsidiaries to go public. Cupit says Blue Lagoon Cruises and Merchant Finance should be listed on the South Pacific Stock Exchange by 2006. Meanwhile, the veteran chairman of Fijian Holdings sees retirement beckoning. He is 73 and the age ceiling for directors is 75. He intends to take a long-postponed retirement confident in the belief that the group is in safe hands.

“Your power is people. If you don’t have people, you can’t run a thing. It doesn’t matter how smart you are.”