Alternative Prime Minister Nominee and Member for Finschhafen, Hon Rainbo Paita, has urged the government and Prime Minister James Marape not to hastily sell the country’s shares in BSP Financial Group held by Motor Vehicle Insurance Limited (MVIL).
Mr Paita made this statement in reference to the National Executive Council’s Special Meeting No. 11/2023, Decision No. 94/2023, which opted to sell MVIL’s shares in BSP Financial Group. This decision was brought forward because the country’s coffers have been depleted over the last two months.
“The people of Papua New Guinea own BSP through their shareholdings held under trust by the State through Kumul Consolidated Holdings Limited (84,811,597 shares representing 18.15% ownership of BSP) and Motor Vehicle Insurance Limited (31,243,736 shares representing 6.69% ownership of BSP),” Paita said.
“The country’s combined shares in BSP provide substantial consistent income to support our annual national budgets, unlike our volatile resources sector assets over many years since Prime Minister Sir Mekere’s term in the late 90s.
“BSP is a well-run banking and financial services juggernaut in the Pacific, proudly majority-owned by the people of PNG and its institutions, with historical dividend yields averaging 10% annually.”
Paita emphasized that this is a long-term investment respected by former prime ministers. He also pointed out conflicting statements regarding whether Papua New Guineans, provincial governments, or the public are able to purchase these shares, as the NEC decision does not indicate this arrangement.
“This investment will continue to support our country’s annual budget into the future, even after our time in Parliament, and therefore was never touched,” he added.
“The state’s BSP shares have a current combined value of K2 billion based on current market prices. Why is the Prime Minister secretly trying to sell MVIL’s portion in haste for a merger of K300 million?
“I ask again, in whose interest is the government pursuing this divestment? Certainly not the countries!
“There must be a bipartisan call by all MPs on both sides of Parliament for the Prime Minister not to touch blue-chip assets like BSP that have and will continue to support our children and future generations.
“On the same note, I also call upon financial intermediaries and counterparties, both on and offshore, to STAY CLEAR of this rogue deal. If allowed through their companies, it will be vigorously investigated by the incoming Government, and those responsible will be held to account.
“I call on the Prime Minister to transfer these shares to KCH instead if he truly feels that MVIL is not a holding company and not use this meager excuse to transfer our ownership in BSP to vested interests.
“The country demands an immediate and transparent explanation from the Government for this extraordinary decision. The Prime Minister must answer the following questions:
What was the business case for selling MVIL’s BSP shares at a massive capital loss, and what other alternatives were considered by the Government and MVIL board of directors to dispose of the shares at a better price and on better terms? Who selected, and who are, the specific “provincial governments, citizens, and landowner companies” to be the purchasers of the shares and benefit from a K214 million capital profit? Why were the BSP shares not offered on an off-market tender at the best price? Will the MVIL BSP shares be sold at the same price to each purchaser, and who decided on the price or prices? Which broker, if any, organized the share sales, and what effort was made by the broker to identify other potential purchasers to improve the net sale return to MVIL? Will each purchaser pay cash for their shares? Will each purchaser pay the stamp duty on their shares from their own funds, or has duty been waived? Is the K300 million the gross proceeds from the sale or the net return to MVIL after all costs, including brokers’ fees? What will be the financial effect on MVIL and its business from the sale of the BSP shares – will MVIL still be solvent after the sale?”
