Business and Development

Fiji Sugar Palatable, But Gold

Has Lost Its Glitter

From SUE WENDT in Suva.

The Fiji Government has crossed the final multi-million dollar hurdle in its negotiations re garding takeover of the Fiji sugar industry—but has rejected any possibility of nationalising its other problem industry, gold.

The government has agreed to pay $lO million for the Colonial Sugar Refining Co’.s 98 per cent, holding in South Pacific Sugar Mills Ltd. It was announced in April that, subject to adjustments allowed for in a share purchase agreement, the price to be paid for each of the 36,199,300 shares would be 27.625 cents.

Minister for Natural Resources, Mr. D. W. Brown, told the House of Representatives that CSR would be paid $5 million in cash by April 1, 1973. It had been agreed that the balance would be paid over 15 years.

Prior to Mr. Brown’s announce ment, the House ratified the share purchase agreement by unanimously approving a bill to empower the government to buy SPSM.

Besides CSR, about 1,650 other shareholders —most of them Fiji residents—have a total of 800,700 shares in SPSM. The government has agreed they should be offered the same price for the 50c shares as CSR —27.625 c.

Negotiations for the government’s takeover of the sugar industry follow CSR’s decision last year to withdraw from Fiji. The company declared that it could not continue to operate profitably in Fiji because of the terms of an arbitration contract—the Den ning Report—which gave a greater share of sugar proceeds to farmers.

The next task for Fiji is to set up an efficient organisation for the running of the sugar industry.

Ratu Mara has said the government would establish a sugar authority whose initial purpose would be to oversee the present CSR-run organisa tion, and run it according to govern ment policy. It was “not the govern ment’s intention to nationalise the industry,” he said.

The government will have to look for overseas funds to buy the CSR’s shares in SPSM. Fiji’s new sixth development plan provides for ex

ternal borrowing of $3O million in the next five years. This will now have to be increased to $35 million.

In addition to paying $lO million for the CSR shares, Government will have to find $3.75 million to buy CSR land.

Finance Minister, Mr. W. M.

Barrett left Fiji in mid-April to attend a meeting of the Governors of the Asian Development Bank, from which he hoped to be able to find the finance for development plan projects. He was also to visit Britain in May to discuss finance for the plan and to establish terms under which aid might be provided. He will also be investigating other financial markets in Europe and Washington.

Closer to the canefields themselves, it was announced in April that more than 1,000 cane farmers or their sons had now attended farm management courses conducted by the SPSM.

The nine-day courses have been con ducted in the various cane districts since February, 1968. They are an adjunct to the SPSM’s farm advisory service. Further courses are planned at Lautoka, Tavua, Rarawai and Labasa.

A joint Fiji Government and Op position mission were due to fly to Washington in late April to strengthen Fiji’s case for maintaining or increas ing its United States sugar quota.

Fiji wants to increase its quota from the present 42,784 tons to 100,000 tons.

Minister for Labour, Ratu Sir Edward Cakobau, was expected to lead the mission, but that depended upon whether the strike of dock workers had been settled satisfactorily.

They were to attend hearings by the agricultural committee of the US House of Representatives in Washing ton in late April.

The hearings are preliminary to a new US Sugar Act, under which the amount of sugar bought by the US

from sugar-producing countries will be decided.

Under the present act, which will expire next year, Fiji is able to sell a minimum quota of 36,675 tons a year to the US.

This quota is particularly valuable because it is bought at a premium price. It is therefore vitally important for Fiji to maintain or possibly in crease its quota of sugar sales to the US.

On the subject of Fiji’s ailing gold industry, however, the government is adamantly against nationalisation.

Finance Minister, Mr. W. M.

Barrett, told the House in April that there could be no comparison between the two industries.

Colonial Sugar Refining Co. staff would stay on in a management capacity for as long as needed and the company’s technical resources would remain open to the industry.

It seemed unlikely, said Mr.

Barrett, that the Emperor company and its staff would want to stay as sociated with a declining industry, in the event of nationalisation.

There was no guarantee that nationalisation would make the gold mining industry any more efficient— and in any case, the government did not have the resources for such a move.

“The sugar-milling industry could strain the government’s resources at the present time and place in jeopardy the very objective it is hoping to obtain,” declared the Finance Minister.

Mr. Barrett was asking the House to approve financial aid to the Emperor Gold Mining Co., to tide it over the next few years. The aid proposed by government consists of a cash grant of $150,000 and an interest-free loan of $450,000, re payable over six years.

Mr. Barrett gave some home truths

about the once-important gold industry, pointing out that it now represented less than eight per cent, of the total value of Fiji’s domestic imports and four per cent, of total foreign exchange earnings. Annual gold production was now about 100,000 oz —worth about s3± million, he said.

He revealed that recent problems— apart from the perennial ones of rising costs and a fixed gold price—included the failure of machinery and an un expected fall in the amount of gold being extracted from ore. This short fall was running at between 500 and 800 oz a week.

However, the industry was im portant from the point of view of employment. Some 1,700 mineworkers and many thousands of other people living in and near Vatukoula depended on the mines.

Known ore reserves would be exhausted in about three years at the present mining rate, but with certain other work the mines could continue to operate for the next four years.

Government had decided to actively seek other employment opportunities to absorb redundant workers, and in the meantime give further aid to the gold mines in order to prevent the trained workforce at Vatukoula from dispersing.

Opposition members protested that the Emperor company had milked the gold mines dry— and now had an obligation to retrain the Vatukoula workers, instead of leaving this task to government.

Mrs. Irene Narayan (Opposition) referred to a government grant to Emperor of $1 million some years ago and declared that instead of making it a subsidy, government should have demanded shares amount ing to $1 million in respect of that investment.

Mr. Barrett ridiculed an Opposition member, Deputy Speaker Mr. R. D.

Patel’s suggestion that Fiji should warn the US that it was not prepared to stand economic imperialism. (He was referring to the control the US has over the price of gold, which has been kept at SUS3S an ounce for 35 years).

“These might sound like bold words coming from such a small country, but no-one has the monopoly on wisdom,” Mr. Patel declared.

“Nothing would be lost and every thing would be gained if this country started the ball rolling by lobbying for a convention of gold-producing countries.

“I am certain that if all the countries made a concerted effort and broueht pressure on the United States of America, the United States would have to listen and revise the price.”

Mr. Barrett observed; “No doubt by now, this information will have been relayed to the US Government and 1 don’t think it would improve our relationships. The remark would please other sugar-producing countries who are now lobbying in the US.”

Mr. Barrett remarked that it would hardly enhance Fiji’s position if visiting US Congressmen and Senators were informed that Fiji wanted to lead a group of countries “to bring America to her knees. We have gained independence. Let us act responsibly,” he urged.

Replying to suggestions that large profits had been made from the gold-mine, Mr. Barrett said that in 1964, the company paid a dividend of 2i cents per share. The same payment was made in 1965 and 1966.

However, these were the first pay ments since 1955.

Between 1956 and 1969, the com pany had paid a total of $319,000 in dividends. In the same time it had paid out $2O million in wages in Fiji. In the same period it had paid out $1,384,000 in royalties and Customs duties and $597,000 in indirect taxes.

He added: “I cannot believe that any member of this House is so possessed with saving the nation £75,000 that he would be prepared to throw the workers of Vatukoula on the scrap heap as so much worth less junk.”

New Caledonia's

1970 Import Bill

Doubles

New Caledonia’s import bill last year almost doubled its value in francs over the previous 12 months, registering an all-time record of 23,271 million CFP (SUS 232 mil lion). Exports, valued at 19,362 million CFP (SUSI 94 million), were 50 per cent, above the 1969 level.

The unprecedented rise in imports produced a trade deficit of SUS 39 million. The situation is, of course, explained by the heavy investments being undertaken to prepare for greater exploitation of the island’s nickel ore reserves.

In comparing figures, it must be remembered that the franc lost 12i per cent, of its value with devalua tion in August, 1969. This results in a lesser percentage rise in figures, if dollar values are used. At current exchange rates, 100 Pacific Francs equal one US dollar.

The most significant increases in imports have been in the sector of capital equipment. As a point of

comparison, foodstuffs have risen 40 per cent, in francs value from 1969 to 1970, while metals and metallic products have more than doubled.

Machinery and electrical equipment imports have quadrupled.

In addition, the growth in the building industry is reflected in the fact that the volume of cement im ports almost doubled last year.

Main beneficiary of the expanding New Caledonian market has been France, which doubled its exports to the territory last year. Its sales reached SUSII6 million—so per cent, of the island’s total imports. Tariff regulations favour goods from France and the Common Market, which thus supplied 65 per cent, of Caledonian imports.

However, various Pacific countries also share in the growth of this French territory. After France, major supplier is Australia, which last year made SUS3I million sales, account ing for 13 per cent, of the territory’s imports. In third place, the US (7 per cent.) doubled its exports to New Caledonia. West Germany (6.5 per cent.) follows, also doubling its sales there last year. Italy (3.5 per cent.) and Holland (3 per cent.) rank next as fifth and sixth suppliers.

Japan sold almost SUS 6 million worth of goods, with Britain doing almost as well.

New Zealand is ninth source of supply and last year sold SUSS mil lion worth of merchandise to the territory, doubling its 1969 sales.

On the side of exports, 99 per cent, are nickel ore and metal. Agricultural products, coffee and copra, figure in quite negligible quantities. Nickel exports last year reached SUSI9I mil lion (see below).

With the territory’s continuing, though quota-controlled, increase in nickel ore exports, Japan last year became New Caledonia’s major customer, displacing France for the first time. Japan’s purchases were valued at SUS 94 million—4B per cent, of the total value of exports.

France’s share of Caledonian ex ports dropped from 49 per cent, in 1969 to 42 per cent, in 1970. The territory’s third major customer was the US, with SUS 9.6 million purchases. Next came Italy (53.6 million) and Canada ($3.1 million).

New Caledonia keeps

ud its nickel boom

New Caledonia’s production of nickel metal rose 10 per cent, last year, compared with 1969, while nickel ore output was 23 per cent, higher.

The nickel metal, produced ex clusively by the Societe Le Nickel,

wkh h 39 7lwlfti ri %fto nS M C? n ared ith 39,795 tons in 1969. Nickel ore °«P“‘ 7 s “P to 6,8 million tons, compared with 5.5 million tons m ’ .

Le Nickel is currently engaged upon an expansion plan at its Domambo smelting works near Noumea. This resulted in ferronickel production registering 27,964 tons, while nickel matte remained stationary at 15,856 tons Of the total 43,613 tons exported, 31,103 tons went to France. The remaining 12,510 tons were destined for foreign markets. Main clients were the US, taking 3,682 tons ferronickel, with Japan and Canada buying 5,948 and 1,451 tons of mattes respectively. Among other lesser customers, Australia purchased 359 tons of ferro-nickel. , . , 8 c t 0 h U - SUa .?r eatl °? °* stockpiles and the imposition of ex- 1C t k ? OI J ? P0 « S Fe “ fnH f d cH n otal . 11 9 r0duct ; 0 ° fi § ures and reached 4.1 million wet tons, one to ns

d hlri 196l 969 ‘ Last

ntfnt 9 ra ® e mc * el + cobalt content of 2.5 per cent. The average price FOB per wet ton was SUSI 6, transported from the terntory m 310 shiploads.

Leading exporters were the Societe

Le Nickel (1 million tons > mg 24 per cent, of the territory’s ore

exports, and leading independent

Caledonian miner Edouard Pentecost (934,301 tons) selling 23 per cent. of total ore shipments. Main customer is, of course, Japan which purchased just over 4 million tons.

' i

Unionists refused

entry' to Caledonia

T „ • ,9 Canadian trade union offi vl als hav f , be ? n refused entry into :/ ew Caledonia, following a visit tbe . re ! ate las ! V ea r of Meyer Bern stem international affairs director of Jm Ar Un T lted Ste eJworkers of America J^ n j p - 96 )- Ml \ Dayton, secretary general of New Caledonia s largest trade union, the SOENC, said in April a complaint had been lodged with Governor Louis Verger con cerning the Administration’s refusal to allow the Canadian unionists into the territory The two ' French-speaking Cana- Messrs. Vallee and Seguin, were obliged to fly on by the same plane to New Zealand. Their ex pected arrival in Noumea had been announced at a trade union congress held j n December, at the west coast town of Bourail. Unionists were then

told that the two Canadian experts could be expected to train the Cale donians in financial and administra tive organisation of trade unions.

The interest of North American unionists in New Caledonia has been heightened by the operations here of the International Nickel Company of Canada (a partner in the COFIMPAC project) and the Kaiser Aluminium and Chemical Corp., which is working with the French company Le Nickel.

Nauru Pools man

in bankruptcy court

An echo of the failure of Pacific Sporting Pools was heard in Sydney early in April when the Registrar in Bankruptcy, Mr. V. D. Summerhays, started a public examination into the bankruptcy of William Maurice Mayberry, one of the promoters of the scheme. The plan was to conduct football pools from Nauru.

Mayberry was made bankrupt on December 1, 1970, on his own petition. He then had assets of 5A24.59 in cash, and two horses.

Against that were liabilities of $33,657 owing to unsecured creditors; a contingent liability for Seiher Cocoa Estates Pty. Ltd.; $22,500, plus interest on what he described as a secured debt owing to the Bank of NSW; and $29,000 or $30,000 owing to trusts for his children.

He had also received $15,000 from his wife over the years, but she did not want the money back. Altogether there was a deficiency of about $90,000. He was at present earning $lOO a week as a liaison officer for Gem Prospecting and Development Pty. Ltd.

Mayberry told the Registrar that he had $2,000 to $3,000 in Sloop Ltd., which was registered in Norfolk Is. That company was taken over by Consolidated Football Pools Ltd., also registered in Norfolk Island in August, 1968. Consolidated Football Pools, in turn, was taken over by a Nauru-registered Pacific Sporting Pools Ltd. in November, 1968.

Mayberry, in reply to a question by Mr. C. Darvall, who appeared for the Official Receiver, said he had invested more than $2,000 to $3,000 in cash or kind in Sloop Ltd. The money referred to was a reimburse ment for travelling expenses. The amount he invested in Sloop was more than $7,000.

His shares in Sloop were for past services. Apart from himself and Mr. George Pearce, who was on the same basis as himself, the other shareholders in Sloop were Mr. L. G.

Scanlan and Mr. D. Berry, Scanlan

put in $3,000 or $4,000 and Berry $l,OOO or $1,500.

There was an advantage to all shareholders in the takeover by Consolidated Football Pools. They sold their shares for cash at $2 a share. There was a mark-up of two for one. The cash came from outside shareholders.

Mr. Darvall: So it was other people’s money being used by your self and the directors, I think who were directors of Sloop Mayberry: No, Mr. Pearce and I were directors of Sloop and two or three other Norfolk Island residents.

He thought the board of Con solidated Football Pools was the same as that of Sloop. The Norfolk Islanders gave the company its residency for the purpose of taxation evasion. His own shares were held by somebody else in trust. It was a sham arrangement to evade taxation. As a second stage in the sham arrangement he made a profit in sales to Con solidated Football Pools.

When Pacific Sporting Pools was formed in Nauru he became a direc tor. Pearce was also a director. When that company took over the shares which were held by nominees on his behalf he suggested the transfer.

There were other directors at that stage—Alan Newbury and Ray Lord, with L. G. Scanlan as the alternate director in Sydney for Lord.

Mayberry said there was also a benfit to shareholders in the transfer of shares from Consolidated Football Pools to Pacific Sporting Pools, and again it was two for one. A lot of money, about $60,.000, had been put into Consolidated Football Pools by outside shareholders.

Mr. Darvall: The whole basis of this leapfrogging was that you doubled your shareholdings each time, did you not?

Mayberry: That is correct.

He agreed that the actual cash raised for Pacific Sporting Pools, out side capital generated by transfers, was about $370,000.

He considered the dealings were honest as far as shareholders were concerned because they were fully aware of everything. There was no prospectus, but confidential memos were written.

He thought 1,000 shares in Pacific Sporting Pools were registered in his name as a director’s qualification, and he was entitled to another 24,000 registered in the names of Norfolk Islanders. They were in the name of a company, Jacarra Investments Ltd.

Asked who were the directors of the investment company, Mayberry said he could be wrong—there were a number of companies there, but with Pacific Sporting Pools it was

Mr. Ombler and Mr. Nagle. He thought Mrs. Nagle was secretary.

The Nagles were residents of Norfolk Island. The Omblers were residents at the time.

For a company to be formed on Norfolk Island and have residency it was necessary that the shares should be beneficially owned by local residents. He was using Jacarra for a false picture.

Mr. Darvall: It was a false picture being created for the express purpose of defeating the Australian taxation authorities?

Mayberry: Yes.

Mr. Darvall: Do you consider that was honest? —Yes.

He considered it was honest because it was disclosed to everybody con cerned. It was never disclosed to the Australian taxation authorities.

To another question by Mr.

Darvall, Mayberry said he would agree that non-disclosure was dis honest.

Mayberry repeated that every person who put capital into Con solidated Football Pools was told the position. It was the same with Pacific Sporting Pools.

But it was never disclosed to the Supreme Court of Nauru. The liquidators of Pacific Sporting Pools knew the position because they were the auditors. They knew transfers were for directors’ profits.

Mayberry agreed that shareholders in Pacific Sporting Pools lost all their investment; he knew that creditors of that company would not be paid, and also that creditors of Central Pacific Hotels, a subsidiary of Pacific Sporting Pools, would not be paid.

Mayberry said one of the reasons for his bankruptcy was failure of the Pacific Sporting Pools group. He had also lost $lB,OOO in Seiher Holdings Pty. Ltd.

The examination was adjourned to a date to be fixed.

Carpenter to sell

Unilever, coconut oil

From July, W. R. Carpenter will sell to Unilever of Australia coconut oil from New Guinea worth at current prices between SAI.4 million to $1.6 million.

This follows decisions made early this year by Unilever to close down its Edible Oil Industries Pty. Ltd. crushing mill at Balmain, Sydney, after nearly 70 years of crushing copra from the Islands.

Unilever’s last shipment of Islands’ copra is due in Sydney aboard the Karlander freighter Sletholm from the Western Solomons in June.

In July New Guinea Australia

Line, a competitor of Karlander, will introduce a new vessel on its Australia-New Guinea run—the New Guinea Chief (see p. 75). Equipped with bulk oil facilities, she will bring down to Sydney several hundred tons of coconut oil from Carpenter’s Rabaul mill.

Terms have been agreed between Carpenters and Unilever for the sale of between 4,000 and 5,000 tons of oil a year. Current prices are £EI6S a ton. PIM understands the above volume could well be exceeded.

In its time, Unilever’s mill in Sydney—originally designed to pro cess big shipments of oil from Unilever’s plantations in the Solo mons—has crushed many hundreds of thousands of tons of copra from the Islands. Early volume was from 16,000 to 20,000 tons, but volume in recent years has been nearer 8,000-9,000 tons.

Unilever feels that today’s trend is to process most copra in or near producing areas. The Islands’ big mils are in New Guinea and Fiji, smaller desiccated coconut mills are in Tonga, New Guinea and French Polynesia and negotiations have slowed on a major coconut oil mill for the New Hebrides.

Concern over some

Fiji insurance

Fiji Minister for Finance, Mr.

W. M. Barrett, has rejected an ap plication for a licence to establish a new insurance company in Fiji.

As a result, in the House of Representatives in April he answered allegations that Fiji citizens were being denied the right to enter the insurance business in their own country.

He commented on a newspaper article which contained allegations made by Mr. David Gamble, a pre vious manager of the British-Ameri can Insurance Company in Fiji, whose application for a licence to operate an insurance company had been rejected.

The Minister said it was the declared policy of the government to encourage any worthwhile venture, “providing it wasn’t going to result in the workers, farmers, housewives and the man in the street being sub jected to high-pressure door-to-door selling tactics which could result in their entering into agreements which they did not fully understand.”

He said that when the application for a licence was first made, it was stated that the company would have a nominal capital of $F 100,000, 60 per cent, of which would be owned

Continued on p. 97

by investors domiciled in Bermuda.

Of the remaining 40 per cent., $24,000 worth of shares would have been offered locally with $16,000 on call.

In the meantime, Mr. Gamble obtained a residential permit for Fiji.

Mr. Barrett said he understood the reason he gave for wanting to reside here was to buy or build a tourist motel and operate it.

Last November, Mr. Gamble was advised that his application had been “most carefully and sympathetically” considered, but the government was not prepared for the time being to authorise the establishment of further insurance companies in Fiji. He was told that this was a decision of policy taken before his application.

In January, a further submission was made from Mr. Gamble’s solicitors stating that his second ap plication was supported by a group of local citizens. They included Messrs. Y. P. and R. S. Reddy of Reddy Construction Company Ltd., Mr. Harvey Hunt, of Hunts of the Pacific, Mr. R. F. Burness of the Fiji Development Company, Mr. R.

N. Patel, Dr. Ali Asgar and Mrs.

J. B. Kantilal Jina.

Mr. Barrett told the House that door-to-door selling—which was the form that industrial sickness and accident insurance, etc., took—was highly lucrative for the owners or shareholders of a company.

In 1969, he said, non-life insurance companies, which were generally known as general insurance com panies, collected premiums on per sonal accident, sickness, medical and hospital insurance policies amounting to $250,000. However, they paid out claims of only $BO,OOO.

The life companies authorising this type of insurance collected premiums amounting to $364,000 but paid out a mere $57,000 in claims.

“Our people generally are not a sophisticated group,” Mr. Barrett said.

“The workers in particular are trust ing and susceptible to high pressure door-to-door salesmanship.

“Unable to resist, they buy policies which are in force so long as the policy holders pay their premiums weekly or monthly. Once a policy holder is unable to meet his com mitments because of unemployment or some other financial emergency, the policy lapses. In 1969, some 16,000 policies were surrendered as lapsed policies.”

Mr. Barrett added: “Government is looking closely at the area of insurance not controlled by the Assurance Ordinance and which enabled substantial sums of money to flow out of the dominion un resticted.”