10 July 2012

Part 2: Witness for PM Qarase: Lyle Cupit on Class A share allotments

In the crowded Suva High Court room today, former FHL CEO Sitiveni Weleilakeba told the court that he agreed with the late Lyle Cupit, the founding chairman of FHL, that the purchase of shares by executives of FHL was within the ambit of the law and the policy approved by the FAB and GCC. 


It is day four of the trial and Weleilakeba the former FHL CEO is the second FICAC witness. The first FICAC witness was Meli Bainimarama, Fiji's current Ambassador to Malaysia. Bainimarama was PS Fijian Affairs at the time, and Secretary to the Fijian Affairs Board. Because the events in question took place twenty years ago, Bainimarama could not recall many of the details of the events that took place, so his time in the witness box was very brief. Weleilakeba took the stand on the afternoon of Day 1 July 5, and this is his 4th day on the witness stand. 



The fact that these events took place twenty years ago is enough to nullify this trial. PM Qarase cannot get a fair trial with crucial witnesses now deceased like Lyle Cupit and the former President and the late Turaga na Tui Nayau, Ratu Sir Kamisese Mara. 

Ratu Sir Kamisese Mara and his Cabinet in 1984 approved the establishment of the FHL, under its affirmative action program. Cupit would be able to tell the court the circumstances surrounding the sale of these shares which are the subject of the nine charges filed by FICAC against PM Qarase.




Cupit speaks from beyond the grave - the FHL Annual Reports of 1993 and 1996
Upon request from PM Qarase's defence lawyer, Weleilakeba read out parts of the FHL Annual Report from 1993 and 1996 where Cupit, the then FHL Chairman, defends the practice and the policy adopted by the FHL Board with concurrence of the FAB and GCC. He told the court that he agreed with the late Mr. Cupit's views on the issue. 



1993 FHL Annual Report - extract from Chairman's Report
“Misleading public statements over the purchase of certain shares in Fijian Holdings by some individuals and companies created much controversy. 

I wish to once more stress that the policy involved had been publicized and was implemented with the approval of the Great Council of Chiefs and our major shareholder, the Fijian Affairs Board. 

We stated in last year’s annual report that we intended to cater specifically for individual Fijian investors, Fijian owned companies and Tikina Councils. This was done.

The provision for Fiji Development Bank loans for equity purchase has been in place since 1976.

Details of the special share issue of $2million announced in May were well publicized in the Fijian language over three days on Radio Fiji’s Fijian programme. This has a wide listenership among the Fijian people. The broadcast announcements helped ensure a wide cross section of individual Fijians, Tikina and Provincial groups and Fijian companies – including a number of investors from the outer islands participated in the share issue.”



Chairman’s report, page 9- 1996 FHL Annual Report.


“I wish to clarify, hopefully once and for all, this matter of the $20million interest free loan that Government provided to the Fijian Affairs Board in 1989 to enable that Board to acquire 20million shares in Fijian Holdings Limited. It has been exercising the minds of some people in the media and we would like to lay the matter to rest by explaining the purpose of the loan and our company’s share policy.

The $20million loan was lent by Government to Fijian Affairs Board to accelerate and broaden Fijian participation in the commercial and industrial sector. Fijian Affairs Board used Fijian Holdings as the vehicle to achieve this purpose.

With the $20million, Fijian Holdings Limited mounted a vigorous investment programme which has more than matched government’s expectations.

As a result of this, not only do we have a strong balance sheet, we have also had a consistent record of profitability and good dividend payments to our ordinary shareholders.
To reflect the distinctive nature of the Fijian Affairs Board investment in Fijian Holdings Limited, the company created a special “B” class shares.

A ten year moratorium on repayment was agreed to between the Fijian Affairs Board and the Government. This was to enable Fijian Holdings Limited to consolidate, expand and diversify its investment portfolio before the Fijian Affairs Board is required to begin repayment on September 30, 1999.

This Fijian Holdings Board took a strategic decision in 1993 to start paying the Fijian Affairs Board from that point $1million dividend every year. This was equivalent to a dividend of five cents a share. By September 30, 1999, the Fijian Affairs Board should have accumulated some $6million in dividends to enable it to start servicing the original $20million debt to Government.

Fijian Holdings Limited has shareholders from all sectors of the community and equity in the Group is in excess of $48million.

For some time now the company’s share policy has come under severe criticism and this cannot be allowed to go unchallenged. I refer in particular to the unrelenting media attention focused on executives acquiring shares in Fjian Holdings Limited.

When the company decided to float shares in 1991, to Tikina Councils, village groups, individual Fijian investors and family companies, it did so with the concurrence of our major shareholders the Fijian Affairs Board, the Great Council of Chiefs.

This decision was based on a legitimate premise. Among other things it was an attempt to reduce the company’s dependence on Government for funding assistance and to allow as many Fijians as possible to participate in the equity of the company.

Given this strategic decision and the fact that there is no bar, legal or otherwise against executives owning shares in the Fijian Holdings, to suggest that they had done something reprehensible is to twist the facts and show a deliberate disregard for the truth.

In this case, as in all other share transactions, the Fijian Holdings had acted within the ambits of the law and in conformity with the company articles of association and in accordance with policy established by the Great Council of Chiefs and the Fijian Affairs Board."

Page  9 – FHL Annual Report 1996, Report by Chairman Lyle Cupit

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