The Niue government is struggling to recoup $350,000 owed by a group of so-called investors in a situation that New Zealand National Party MP John Hayes says should never have arisen.
Niue is largely dependent on aid – it got $14 million from NZAid this financial year, half of which was budget support – and has been criticised for how it manages its finances.
Now the government is under fire again over debts at a hotel it half owns. A group of people came to Niue some time ago promising to spend big money investing in health spas. Reports have said the group are connected to a cult called Maha Devi Ascension Movement and the real goal was to set up spiritual centres.
The group, which included a man from Hong Kong and a German-American woman, stayed at the island’s main hotel, the Matavai, but have not paid any bills since August and have racked up bills of about $350,000 which remain unpaid.
Last week Premier Young Vivian told New Zealand reporters the group had paid some of the bill.
Asked why the group – of which about five people remain on the island – were allowed to stay for so long without paying, Mr Vivian said the government had believed they would pay.
“Now they are paying up. If they don’t pay up they have broken the law,” he said.
However, Niue’s Finance Minister Fisa Pihigia said he did not believe the group had paid any money.
“That’s news to me. I don’t want to contradict what the premier said but through my adviser who is dealing with this case, they are waiting for these people to pay up. Failing that we’ll take further action.”
He was reluctant to have the group arrested because of the expense it would put on the nation of only 1600 people.
“Arresting them and putting them in prison will cost the government. They are not going to go anywhere here in Niue. We have confiscated their passports and we are not going to allow any landing rights for any plane to come here to take them up until they pay.”
Mr Pihigia said changes to how the hotel was run could be made.
“That’s one area we will look into, once all of this is settled then we will look at the membership of our board of directors.”
The hotel’s board chairman is Hima Takelesi, previously known as Hima Douglas, who is also a national legislature member.
Mr Hayes said the debt was unsurprising and he doubted it would be recovered.
“The sort of problem you have encountered is just one of a long, long series of examples of incompetent administration and a readiness to be sucked in by snake oil sellers,” he said.
Mr Hayes said New Zealand taxpayers ended up footing the bill and the Niue government had not improved its act.
It was frustrating that Niue did not seek advice from New Zealand on such cases, especially as legislation that set Niue up to be self-governing in free association with New Zealand specifically provided for New Zealand to provide help and advice.