Tuvalu’S Pm

Has The ‘Big

Four’ Worried

Tuvalu Prime Minister Toalipi Lauti’s investment of more than SA 500 000 of his country's reserve funds with American business man Sidney Gross has hurt the newly-independent country's credi bility with several big Western nations. The damage could turn out to be serious because Tuvalu depends on some of them for continued 'financial support mainly in the form of aid.

The Right Honourable Toalipi Lauti (he was recently created a privy counsellor by Britain, entitling him to that form of address on formal occasions) invested the money with a Texas real estate man who promised 15 per cent interest, payable quarterly, and under took to try to raise a SUSS million loan to establish a fish ing industry in Tuvalu (PIM

May).

Mr Lauti’s deal in the United States has sparked strong reac tion in Canberra. Wellington.

London and Washington,

which obviously has developed

as a result of reports from the coterie of diplomats of these major nations which use Suva as their Pacific Islands listening post. Undoubtedly, there has been much note-swapping The general view is that in his actions to invest the reserve funds Mr Lauti was impulsive and took insufficient care to check beforehand the likely re percussions. While there is no doubt among the diplomats about Mr Lauti’s honesty and integrity, their view is that his attitude was too naive for a man in charge of a government and that the future for Tuvalu may not be very encourag

ing.

The concern is that Tuvalu’s prime minister, a man of strong determination, may have embarked on a highly personal style of government, insisting upon taking action despite the views of his advisers.

Some confidence has been lost in him also because he attempted to overcome one of the possible legal difficulties in the way of investing the money in the way he did by suggesting rewording of documents to make his actions suit the cir cumstances. Even then. Prime Minister Lauti struck difficult

ies with the transaction.

To his embarrassment, it was discovered that the cheque he handed to Mr Gross for $A544 000. drawn on a Sydney bank, could not have been met if Mr Gross had attempted to cash it because there were insufficient funds in the

account to meet it. More money had to be transferred to Sydney from government accounts and this transaction resulted in severe cash flow problems for Tavalu and brought criticism on the prime minister’s head from worried officials.

There were even rumours in Funafuti at the time that there was not enough cash left to en able the public servants to be paid, which was untrue, but it is an indication of the upset caused by the prime minister’s methods.

Even further strains were created on Mr Lauti’s return because he felt there may have been deliberate obstruction by some of his officials.

Although Prime Minister

The Region

Lauti has made a full statement to parliament and there is no suggestion of any cover-up, his government officials and ministers are reported to be still very uneasy about their re cent experiences. There is every possibility that the ‘big four’ will be wary before they commit any further funds,

hoping to satisfy themselves

that the prime minister has learned to better evaluate financial deals and take specialist economic advice.

The prime minister himself has defended his action on investment in a letter to PIM: ‘Like any investment, only time will tell, but as the person responsible for it I have every confidence,’ he says. Mr Lauti’s letter is published on page 4.