Questions Arise Over Prime Minister’s Role in Lulutai Airlines Share Sale to Retirement Fund
Lulutai Airlines Limited, a government-owned entity, made headlines when it sold a significant bundle of shares to the Retirement Fund Board in August 2023. This strategic move aimed to fortify the airline’s capital for acquiring a new twin otter aircraft, yet it sparked discussions about potential conflicts of interest and calls for transparency during the Vote of No Confidence (VoNC) in 2023.
The transaction, executed on August 14, 2023, involved Lulutai Airlines issuing 784,314 additional ordinary shares, constituting 27.19% of the company’s shares, to the Retirement Fund Board. Prior to this sale, all shares were held by the Government of Tonga, totalling 2,100,000 shares.
Independent MPs who orchestrated the VoNC claimed that the government had not provided any information on the sale price and its methodology, as would be expected from an independently professional process. According to one MP, they had requested a financial report from Lulutai numerous times, but the government has yet to respond.
When the issue of purchasing the twin otter was raised in parliament the previous year, Prime Minister Hon. Hu’akavameiliku (Siaosi Sovaleni) indicated that Lulutai would be borrowing from the Retirement Fund to finance part of the aircraft’s total cost.
What makes this deal particularly noteworthy is the dual role held by the Prime Minister, who serves as both the Chairman of Lulutai Airlines Ltd. board and the chairman of Tonga’s Retirement Fund Board. This situation has sparked concerns and questions regarding whether the Prime Minister acted in the best interests of Lulutai Airlines or the Retirement Fund Board.
This major conflict of interest was a focal point in the Vote of No Confidence, yet to date, the government has not explained how they believe this is in the best interest of the country.
Subsequently, Parliament established a selected committee to investigate the operations and governance of Lulutai. The Prime Minister, as chairman, has been sent a list of questions and information requests.
Critics and observers are now demanding transparency and accountability in the dealings of state-owned enterprises. The lack of clarity in the deal and the potential conflict of interest arising from the Prime Minister’s dual roles have led to demands for a thorough examination of the decision-making process.
This situation underscores the necessity of separating roles to prevent conflicts of interest, especially in entities where public funds and assets are at stake. If not addressed transparently, this controversy could have broader implications for the governance of state-owned enterprises and the public’s trust in the accountability of government officials.
It is interesting to note that the Prime Minister holds five key portfolios. He is the Minister for MEIDECC (Meteorology, Energy, Information, Disaster Management, Environments, Climate Change and Communication), Public Enterprise (Tonga Power Ltd, Tonga Water Board, Waste Authority, Tonga Airports Ltd, Ports Authority, Friendly Island Shipping, Tonga Broadcasting Commission, Tonga Communication Corporation) Minister of Education, Minister of Police and Prisons and Minister of Defence. The Prime Minister is also Chairman of Lulutai Airlines, Retirement Fund Board and the Tonga Rugby Union.
As the public awaits further explanations and disclosures, the focus remains on ensuring transparency in financial transactions involving government entities and the need for clear guidelines to prevent conflicts of interest in the future.
Stay tuned for updates as this story continues to unfold, bringing into question the delicate balance between governance, accountability, and public trust in Tonga’s state-owned enterprises.
