The Government of Tonga has formally requested the Asian Development Bank (ADB) to investigate the Tonga Development Bank (TDB) in light of recent allegations of mismanagement, regulatory breaches, and questionable loan practices. The call for an external probe follows a political shakeup, including the surprise dismissal of the entire TDB Board by Prime Minister Dr. ‘Aisake Eke—who also serves as Minister of Finance.

Deputy Prime Minister Taniela Fusimālohi has taken the lead in announcing the government’s request to the ADB, suggesting growing confusion about which arm of the government is truly in charge of the issue. While Prime Minister Eke initiated the board replacement, the DPM now appears to be steering the investigation and making public declarations, creating overlapping signals and unclear lines of responsibility.

Why ADB?

It’s important to consider whether ADB is the most appropriate institution to carry out this investigation. On one hand, the government’s decision is understandable: requesting a reputable, external multilateral institution like ADB could lend neutrality, especially given the political sensitivity surrounding the matter. It also relieves the government of bearing direct investigation costs if ADB absorbs or shares the burden through its technical assistance programs.

On the other hand, ADB’s core mandate is not as an investigative agency but rather a development finance institution focused on lending, technical assistance, and policy reform. While ADB can support governance assessments and capacity building, deploying it in a quasi-auditorial or investigative role risks blurring the lines of its function. If an independent domestic or international forensic audit firm had been engaged instead, the government would have to foot the bill, but it would have maintained clearer procedural independence.

Governance Problems Run Deeper Than a Single Investigation

Regardless of who conducts the probe, the deeper issue facing Tonga Development Bank is chronic governance instability. TDB has long struggled with a lack of experienced and capable leadership with the banking, regulatory, and commercial acumen to run the institution effectively and independently. Without long-term strategic direction and qualified board appointments based on merit—not politics—the bank will remain vulnerable to shifts in government leadership.

Moreover, the consistent pattern of government interference—where the bank’s direction can be reshaped depending on the “whims of the government of the day”—undermines the very notion of institutional independence. As a development bank, TDB is supposed to walk a fine line: fulfilling its mandate to support national development and access to finance, particularly for underserved sectors, while remaining commercially sustainable. That balance requires policy stability, not revolving leadership and scapegoating.

The $14 Million Loan Scheme Controversy

One trigger for the investigation is the allegation by Minister of Public Enterprises, Piveni Piukala, that a TDB-managed $14 million loan scheme failed to meet its intended goals—namely, to assist low-income earners such as weavers and fishermen. Instead, the Minister claimed, the loans went to individuals with stable or high incomes. However, this criticism reflects a broader misunderstanding of TDB’s dual role: development impact and financial return.

A development bank must still operate as a business—it must recover loans, manage risk, and ensure sustainability. Serving only the poorest without balancing repayment ability can destabilize its loan book. The criticism suggests that political figures may be using the bank to pursue populist aims, rather than supporting it to achieve financial inclusion in a responsible manner.