Tuvalu Update

In this special segment, Bikenibeu Paeniu, Tuvalu Minister for Finance, Planning, and Industries, provides his own account of some events analyzed by Tauaasa Taafaki in a 2004–2006 review of Tuvalu (The Contemporary Pacific 19 (1): 276–286 [2007]).

In the review, Taafaki discussed events surrounding a march on Parliament in April 2006 organized by the Chamber of Commerce. Paeniu notes that the controversy involved a grant provided by Taiwan for Small/Medium Enterprises and administered by his ministry: "The article gave the impression that this grant was intended for the Chamber of Commerce. However, it was for small and medium sized enterprises, not for the Chamber of Commerce. To protect the grant from being politicized, I outlined in a memorandum to the secretary for Finance how the funds would be administered: US$100,000 was to be administered by the Small Business Centre in the Department of Commerce and Industries and used for training entrepreneurs; $30,000 would take the form of a direct grant to the Chamber of Commerce (this amount was determined based on an earlier written submission by the chamber); and the balance of the money would be administered by the Development Bank of Tuvalu (DBT). In the same memo I asked the secretary for Finance to work out clear terms of reference for the administration of the DBT grant, and I subsequently obtained the approval of cabinet for the policy overall. When I returned from an overseas trip I learned that the secretary and the president of the Chamber of Commerce had lobbied all the ministers, including the prime minister. After the Speaker refused a request to allow them to meet with Parliament, they called on their members to march. I met with the marchers when they arrived at Parliament and explained the government's side of the story. My department secretary, accountant, and aid coordinator were also present to clarify the situation with regard to the grant and the disbursement of funds. The marchers started disbursing as the members came to understand my side of the story."

Bikenibeu Paeniu also took exception to an assertion in the review that as Minister of Finance he was "firmly behind" a German-based proposal to establish a bank in Tuvalu, which turned out to be a scam. Paeniu states that in 2004 he was asked by Prime Minister Toafa to investigate the German proposal. "He handed me the documentation and especially a 'red' [book] that contained all the details of the proposal. I expressed my reservations, but the prime minister insisted that I take it on board. It so happened that the Head of the Pacific Financial Technical Assistance Centre (PFTAC) was visiting, so I gave him the 'red' book and requested his advice. The PFTAC came back and advised no. However the Prime Minister insisted I take a closer look at it. In early 2005 we traveled to Germany, where we visited the OECD [Organisation for Economic Co-operation and Development] as well as the Centre for Money Laundering and Tax Office in Bonn. Although we agreed for the German investors to come to Tuvalu to make a presentation to Cabinet and members of the public, their proposal was yet to be officially endorsed. I still had many serious questions about a proposal that seemed too good to be true. Negotiations continued, the proposal got more complex, and the press got involved. The late Robert Keith Reid was preparing to publish an article, and I managed to consult him in time and provided my side of the story. He finally wrote an article for Islands Business, which I liked very much (Keith-Reid and Pareti 2005). As the dialogue continued, I came to realize that the German proposal was becoming more complicated, when by this time it should have been more easily understood, so I came to the conclusion that it was a scam. Eventually I said no to the proposal and informed the cabinet accordingly. My decision was not the result of pressure from Australia, New Zealand, or anybody else. The whole proposal was a fake, and I came to believe that the investors...