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NPF receives dividends from controversial SMI

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THE Solomon Islands National Provident Fund (SINPF) has achieved a milestone in the controversial former Solomons Mutual Insurance Limited (SMI) now renamed Providence Properties Limited (PPL).

This came after it received fair returns of $7,212,639.57 million from its shares on Tuesday and also took ownership of the title of two valuable seafront properties worth $13 million.

This was made possible as the investment into the company will come to an end this Friday.

Sathasivam Sivakumaran, who owns 10 percent shares in the company, will also receive his $7,813,117.83 million.

While Workers Mutual Insurance (PNG) Limited, which owned 15 percent, will not receive any share after NPF purchased it for $2.495 million.

NPF negotiated the deal following a scheme of arrangement entered into with the approval of members and creditors (including policy makers) and was sanctioned by the High Court on 5th July 2006.

The scheme of arrangement was proposed after on 29 March2006, the High Court appointed Gregory John Thompson as provisional liquidator of SMI, while winding application was adjourned to give time to the parties to work out a solution.

Chairman of SINPF Board, Baoro Laxton Koraua said the final curtain of this investment is drawn, ending a long process that commenced about seven years ago in March 2006.

Mr Koraua said there were some good positive experiences, for example serving notices in another jurisdiction has been difficult especially when the other shareholder was uncooperative.

“It has been a long out process that was successfully concluded to secure what the Board in 2005 sets out to achieve,” Mr Koraua said.

“NPF was able to get rid of the controversial shareholder, Mr Sivakumaran.

“All NPF’s debt in the company recovered in full plus all interest.

“Equity of $6,245,403 paid by NPF into the company recovered in full plus a realised capital gains of $967,236, for capital gain profit of 15%.

“NPF secured and took ownership of the title of two valuable shore front properties for $13 million,” he said.

Mr Koraua said these properties are now maintained under local ownership for the further development of a feasible commercial investment property.

Former SMI was established on 26 June 1997 as a joint venture between SINPF Board (75%), Workers Mutual Insurance (PNG) Ltd (15%) and Sathasivan Sivakumaran (10%), who was the company’s CE/Advisor at that time.

The issued capital was 500,000 shares at $10 each for $5,000,000.

SINPF’s initial investment in SMI was $3.75 million.

To carry on the business of insurance, the SMI is required to hold relevant licenses for general and life insurance businesses under the Insurance Act (cap 82).

From 1997 to 2005, the company carried on the business of insurance.

However, in 2005 the Controller of Insurance (COI) was concerned about various breaches of the Insurance Act and the terms of SMI licences and refused to renew the licences.

As a result the SMI could not lawfully do business and the COI petitioned the High Court to wound up SMI.

 SMI and SINPF opposed the winding up with the SINPF board wanting to protect and acquire the prime shore front property owned by the company.

At the end it succeeded in this move to acquire the properties today following the end of the liquidation process tomorrow.

By Eddie Osifelo