NEW GUINEA WORKERS’ MUTUAL INSURANCE “GROSSLY INSOLVENT”

Papua New Guinea’s Workers’ Mutual Insurance (PNG) Ltd has been declared “grossly insolvent”, following an investigation by Statutory Manager Simon Fraser into the company’s accounts, reports local paper The National . Mr Fraser, of PricewaterhouseCoopers, said that a liquidator would be appointed to work out how policyholders and creditors could be compensated. Mr Fraser, appointed to his post in May by the country’s Central Bank after the previous statutory manager allegedly been subject to violence and threats, said that WMI had failed to meet the conditions of its licence under the Life Insurance Act 2000, and that the company’s accounts were not in order, making it impossible to ascertain the true financial situation of the company. Mr Fraser was reported as saying that the insolvency was in part a result of “systematic misappropriation over several years”. Substantial payments were said to have been sent overseas to a private company owned by a previous chief executive of WMI. The report found that a substantial deficiency existed on December 31 2003, despite the official accounts showing a surplus of 9.7m kina. WMI was found to have overstated its income for 2003 by 4.2m kina, to have failed to disclose assessed taxation liabilities of 1.2m kina, and to have failed to pay any outstanding tax liabilities. Mr Fraser also stated that there was no statutory fund set up to compensate policyholders, which meant that policyholders were likely to suffer loss.