Sevele’s City Assets refuses to sign contract for Chinese loan, Parliament told

Lord Sevele and his City Assets business have rejected a demand from the Tongan government to sign a contract to make sure he is obliged to pay back the money he borrowed to rebuild his business after the 2006 riot.

Prime Minister ‘Akilisi Pohiva told Parliament five companies, including Lord Sevele’s, borrowed a total of $TP42 million from money the government borrowed from China.

A Parliamentary report in 2012, led by Hon. Pohiva and former MP Dr Sitiveni Halapua, revealed Lord Sevele’s business City Assets business, formerly known as Molisi Tonga Ltd, was allowed to borrow money from the Chinese loan without Parliament’s approval.

Other companies which drew on money to repay the Chinese loan, including Tungi Colonnade and Royco, have already signed the contract.

The TP$118 million Chinese loan was made to help reconstructed businesses which were burned down during the riot.

Hon. Pohiva said the interest of the loan had now reached $TP20 million and the Tongan taxpayers were paying it.

He said the government was concerned that these companies had only managed to pay back TP$1.1 million instead of the TP$6 million required according to the contract.

Hon. Pohiva said while they were trying to resolve the problems of late payments, Lord Sevele was “evasive” and did not want to sign the agreement.

According to the Parliament’s minute of June 27, the Prime Minister said, in Tongan: “Anga fēfē ‘etau feinga’i e me’a ko ení ‘ikai ke fie fakamo’oni ia kalo ia mei he me’a ko ení.”

The loan from China is guaranteed by the government and it was the government that had to deal with China in anything regarding the loan, not these businesses, Hon. Pohiva said.

He said these companies could not pay the interest on time and there was a late payment of TP$6 million pa’anga.

Hon. Pohiva said in the current financial year the taxpayers will pay China TP$27 million for the loan.

He told the House Tonga has already paid TP$20 million, while the companies only paid $TP1.1 million.

He said it was Lord Sevele’s government which had secured the loan and it was his government that allocated how the loan should be spent.

The Prime Minister was repeatedly interrupted in the House by Lord Nuku, who told the Prime Minister he should not have named Lord Sevele.

The noble said he should have only referred to Lord Sevele’s business.

Lord Nuku also asked Hon. Pohiva to think about who burnt down Nuku’alofa.

He said if the capital was not burned down Tonga would not have secured such a huge loan from China.

Parliamentary report

The 2012 Parliamentary report was set up to investigate how the Chinese loan was spent.

It revealed Lord Sevele’s business City Assets business, which was formerly known as Molisi Tonga Ltd, was allowed to borrow money from the Chinese loan for its reconstruction without Parliament’s approval.

The report said the allowances made for Lord Sevele over the loan were not publicised in Parliament and money for the City Assets building was simply embedded in the Government Budget of May 2011.

The report said unconstitutional decisions made by the Nuku’alofa Development Corporation (NDC), chaired by Sevele, included alteration of the loan’s terms and conditions without referring it to Parliament for further discussion and adoption.

It said the amount of money that went to Lord Sevele far exceeded the $TP15 million limit and should have been approved by Parliament.

At the time Lord Sevele denied in an interview with Television Tonga conducted by former TBC boss Nanisé Fifita, there had been any misappropriation or wrong doing regarding the loan.

He said he informed Parliament about the variation, although he did not seek resolutions to formally approve those variations.

The main points

  • Lord Sevele and his City Assets business have rejected a demand from the Tongan government to sign a contract to make sure he is obliged to pay back the money he borrowed to rebuild his business after the 2006 riot.
  • Prime Minister ‘Akilisi Pohiva told Parliament five companies, including Lord Sevele’s, borrowed a total of $TP42 million from money the government borrowed from China.
  • A Parliamentary report in 2012, led by Hon. Pohiva and former MP Dr Sitiveni Halapua, revealed Lord Sevele’s business City Assets business, formerly known as Molisi Tonga Ltd, was allowed to borrow money from the Chinese loan without Parliament’s approval.
  • The TP$118 million Chinese loan was made to help reconstructed businesses which were burned down during the riot.

For more information 

Tonga Chief Justice rejects Lord Sevele’s judicial review application

State of emergency after Tongan riots (The Guardian, 2006)

Chinese loan for Tongan capital questioned (ABC, 2012)

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