Under scrutiny

[Stacey King]

FIJI TIMES ONLINE By ELENOA BASELALA Tuesday, August 11, 2009

THE Unit Trust of Fiji (UTOF) has been placed under formal controllership by its regulator, the Capital Development Markets Authority (CMDA) following concerns on its operations.

The trust will in the next six months be under the scrutiny of local accountancy firm, G.Lal & Co who were appointed on July 27.

CMDA chief executive Mereia Volavola confirmed yesterday that apart from a need to improve its policies and procedures, the trust's Momi Bay Investment was a major failure costing $12million with the Banaban Trust losing $1m.

"While the institution has suffered some losses from some of its investments and which have impacted on the income level and dividends being paid to unit holders, UTOF is taking all the necessary actions to better manage its investment portfolio.

"The authority would also like to reassure the investment public that the institution is operating its business as usual," Mrs Volavola said.

She said the CMDA could have denied UTOF a licence but saw that it could still continue its operations. Thus, the appointment of G.Lal & Co as supervisors or "financial consultants".

G.Lal & Co has been given a term of reference to implement during its term as controller.

"In 2007 and 2008 the CMDA undertook routine inspections of UTOF operations and made recommendations to the UTOF board on changes to be made for the improvement and growth of the fund," Mrs Volavola said.

"To assist the UTOF board and management G.Lal & Co have been appointed as financial consultants for a period of six months.

"The appointment of the consultant is a decision made in the interest of the unit holders and to ensure that the fund is managed in a safe and sound manner given the challenging economic conditions currently experienced.

"The authority believes that the appointments of the new trustees and G.Lal & Co as financial consultants will strengthen and improve the overall management of the Fund."

She said people could still buy units. She also announced the appointment of Anil Tikaram and Iowane Naiveli as directors of the Unit Trust of Fiji (Trustee Company) Limited.