|Outgoing NASFUND Joint CEO Rod Mitchell|
Sunday, December 04, 2011
Reform and change is never over: a personal goodbye from outgoing NASFUND Joint CEO Rod Mitchel
Dear NASFUND Members,
As you are aware, I will be leaving NASFUND at year end after serving for nearly 13 years.
It has been a most rewarding time and a privilege to serve the private sector membership of Papua New Guinea. I look back to that time in early 1999 when we began the enormous clean up of the old National Provident Fund, a Fund that was mired in debt of K154 million from the shackles of corruption; an organisation with no policies, procedures, registers, bank reconciliations, with two years of annual reports uncompleted and of course facing imminent bankruptcy.
We took immediate remedial measures, made some very unpopular decisions about member Fund balance write downs and pushed for a Commission of Inquiry to not only reveal the facts about the state of the fund, but also lay the very ground work for reform.
That reform of course came through former Prime Minister Sir Mekere Morauta who in a heady two year period transformed the financial sector of which the Superannuation Act 2000 was a key piece of the reformist agenda.
Since privatisation in 2001, your Fund has not looked back.
From a net asset balance of K125 million, your Fund is now worth in excess of K2.3 billion – an annualized growth rate of 27.5% - no small feat especially in a decade characterised by international economic turmoil. We have seen the Fund membership and employer base triple over that same period since the creation of NASFUND, we have led the field in terms of not only returns to members, but also in the range of services and service standards.
The last five years in terms of return and crediting rates have been outstanding with an average return of 17% over five years.
A far cry from the dismal performance of international superannuation funds in the same period.
Similarly the Fund has k100 million in reserves – over 4% of the Fund assets.
A deliberate strategic buffer against what we saw as the reemergence of global instability in 2011.
Similarly in terms of cost we have seen the Management Expense Ratio fall from over 5% to 1.1% over the period, making us the most efficient provider of service in the industry.
I can also look back with some pride that without NASFUND assistance with the early loan capital support, the BSP/PNGBC merger would not have taken place.
We acted as the “last resort” glue to ensure that Bank South Pacific could emerge as the strongest Bank in the Pacific.
And today we sit with pride with our 10.85% holding, making NASFUND the second largest shareholder in the Bank - and of course with the deeper meaning that private sector workers of PNG through their superannuation have ownership in Papua New Guinea's largest bank.
Moving over the years we have seen an enormous growth in our assets.
From only one major empty building, Deloitte Tower in 1999, to now the most prestigious commercial and residential property portfolio ownership in the country with our Harbour City developments as the jewels in the crown and all 100% occupied.
We also aggressively took control of the Burns Philp site and now we begin the transformation of that area of town, just as we have done with Harbour City and Konedobu. Agents of change always have their detractors but the evidence is overwhelming in that we as an organisation have been key in revitalizing Port Moresby.
We were also key in developing the new frontier suburbs of 8 & 9 mile for PNG’s burdening population growth.
Over the last decade NASFUND has built nine new high quality either commercial or residential apartment buildings.
A further three are under construction which will complete before 31 December 2012. It has been a very busy twelve years.
We have also seen strong growth in our equity portfolio over this period.
We were the key investor in allowing City Pharmacy to purchase the Stop ’N’ Shop chain of supermarkets. We took advantage of the ISP revolution by our strategic purchase of Data Nets and when Mainland Holdings had its back against the wall, mired in debt, we became the largest shareholder to which we have now stabilised the company and are returning it to financial health.
When Ramu Sugar Limited began fraying under large debt we also took the initiative to support New Britain Palm Oil (NBPO) effect a take over that ensured that Ramu Sugar maintained a strong balance sheet and we took benefit from this take over through our strategic holding in both NBPO and Ramu Sugar.
We also took on the tough challenge of liberating the Pacific Balanced Fund from incompetent management by taking a large stake in the units of the company.
Soon we will see the fruits of that intervention when the accounts are finalised and a new unit price is struck. Hopefully our endeavours there will not only help our membership but also some 35,000 “mum and dad” members of the Pacific Balanced Fund that have been treated poorly for far too long.
Internationally we have also proudly flown the PNG flag, with our majority ownership in the recently constructed Heritage Park Hotel and commercial annex in the Solomon Islands.
Heritage Park in a very short time has become the number one hotel destination in Honiara with strong high 70’s occupancy rates.
We have now commenced with our joint venture partners the redevelopment of the Grand Pacific Hotel site in Suva Fiji, which also promises to be the leading commercial hotel in that city as well.
Over the decade we witnessed at NASFUND a determined value system of action and results of which I term NASFUND exceptionalism.
This is a culture based at its primacy on service delivery, product differentiation and above all actions over “talk talk”.
We led the way in Branch rollouts going from 4 to 14 nationwide.
We introduced Text Bal using both push and pull technologies – a first for superannuation world wide. Today some 70,000 members per month use their mobile phones to access their superannuation balances – finger tip client service!
We transformed the governance aspects relating to superannuation with a web based disclosure regime unparalleled in PNG and in most companies internationally.
We also introduced new products like Eda Supa, - a savings vehicle for those outside of superannuation that now covers a large number of self employed and informal sector workers.
We introduced the first ever online will kit, the first monthly electronically delivered newsletter to some 25,000 people per month.
And of course we built from a small humble education savings of some of our members to a K80 million savings and loans vehicle called NCSL- the fastest growing savings and loans vehicle in the country today.
And to the membership, for the last ten years, the annual report and crediting of interest to member accounts has happened within seven to eight weeks of end of year balance.
No other institution has bettered that efficiency and commitment to its stakeholders.
On the NASFUND staff culture internally, we from day one set out on a programme of equality, pulling down old value structures, replacing them with equal opportunity, better support services, non discrimination on the base of sexuality and more recently a maternity scheme that is probably the best in the private sector today.
We said that staff matter, we showed them that they do matter and they have shown through empowerment the extradordinary capabilities that can be unleashed when management and staff are one.
But I have said continually over the last decade that an organisation that does not talk about the wider societal issues or as we coin it “social responsibility” can never be a leading company.
To be successful in business you must have empathy and context to the community that you operate within. Of all the things we at NASFUND can be pleased about is the role we have played in HIV & AIDS and our direct involvement in the Business Coalition against HIV & AIDS or BAHA. As we approach World AIDS day, how pleasing is the BAHA led wear red campaigns and hang red ribbons from buildings now being seen everywhere.
This is but testimony to the rapid change in thinking by corporates and the general public to this very serious health and development issue.
Similarly the recent setting up of the Serendipity Fund for children under BAHA whose lives have been affected by HIV and AIDS is but the next phase in support for those whose lives have been irreparably been changed by this disease.
Currently over 100 children are direct beneficiaries of that programme.
Proudly too has been the introduction of the NASFUND Trainee Directors Programme,- giving young aspiring Directors the opportunity to work and learn by being on a Board in real time.
Hopefully, overtime we will see the fruits of this programme as more and more educated young Papua New Guineans take the directorship mantel going forward.
I am pleased that NASFUND also rescued the Institute of Directors when it collapsed from financial scandal years back and that too is now housed under the NASFUND roof along with two other wonderful organisations – the Coalition for Change – combating family violence and of course the Buk Bilong Pikini organisation under the control of the former Australian High Commissioner of Australia’s wife, Anne-Sophie who has been an extradordinary agent for change in the important process of getting books into children’s hands.
The other area that has been of immeasurable success is NASFUND’s push into the Arts.
For 12 years we have promoted Papua New Guinean artists in our annual reports and website.
Recently will commenced the K5,000 annual arts prize at the Luk Save Arts show.
As much as we can directly promote protection of the family whether it be through reducing domestic violence or HIV awareness, the Arts has always been a marvelous glue that transcends all layers of society and softens what is an often harsh social environment that we face in the country.
Finally as we look forward, the elevation of Ian Tarutia from joint CEO to sole Chief Executive Officer is to me personally important.
He along with me has been the main driver of where we are today, and for my brother to take the reigns as sole CEO is but a very proud moment for me too.
I know that as I now leave the organisation, it remains in solid hands tested by a very tiring decade as we built not only the NASFUND foundations, but the foundations for the industry - and at times against some very large opposing forces.
And when I talk about the foundations, I talk about the comprehensive submissions to taskforces, the comprehensive dialogue within the private sector, the NASFUND created Association of Superannuation Funds of PNG and the absorption of small often corrupted or poorly administered Funds into the NASFUND family, which in turn strengthened the Industry and built the necessary confidence for it to flourish.
To the staff, I say thank you for coming on the journey.
It has been a privilege to work with you and watch us grow as a family together.
And what a weird, often wild and wonderful family we are!
How many times on a Friday night in the staff car park have we had a few drinks and cried with laughter into the midnight hours.
Of everything that has been achieved, it has been the incredible change I have seen in all of us as we kept striving for the best.
It fills me with the utmost pride. Thank you for being my family abroad.
To the men and women of the NASFUND reform era, I personally thank you for your strong support and for being part of the “pedal to the floor revolution” in developing a safety net and retirement savings regime in Papua New Guinea.
And from what we have achieved, I can look back and say, not bad at all.
And I am sure NASFUND will in the future as has been over this tumultuous decade; continue to be the burning lamp which provides the light for others to follow.
I look forward to what will be an action charged “Tarutia decade” and I know he will not disappoint.
To former Prime Minister Sir Mekere Morauta who took the bold decision to reform Superannuation through the Superannuation 2000 Act – I humbly state, Mission Accomplished!