Minister for Sugar Industry, Charan Jeath Singh, has formally requested legal advice from the Attorney General’s Office regarding a $35 million insurance payout accepted by the Fiji Sugar Corporation in 2016 following damages caused by Tropical Cyclone Winston.

Singh alleges the payout, significantly lower than the initial $91 million claim, resulted in a $55 million loss to the FSC and contributed to the closure of the Penang Mill in Rakiraki.

Singh says this payout was quite less than the actual report that had been prepared by the FSC’s consultants.

He says following TC Winston FSC’s insurance brokers engaged the services of Erasito Beca, a reputable engineering consulting firm, to assess the damages and prepare an insurance claims report.

Singh says a claims report was completed on 11th September 2016 which indicated a cost of over $84 million and the same was lodged with underwriters through Aon.

The Minister says despite the earlier recommendation from Erasito Beca and AON which indicated a potential claim in the range of $65 million to $100 million, the FSC’s Board, in a meeting on 24th August 2016, agreed to accept a cash insurance payout of $35 million, inclusive of deductibles.

He says this decision was further solidified when, on 7th October 2016, the then CEO, Abdul Khan, signed an insurance settlement agreement for a final payout of $37 million including the deductible of five million.

“So there was a loss to the FSC and to the corporation itself of almost about $55 million or so. And this was a concern. And we are now trying to find out who had agreed and why did they agree on the first place?”

Singh, briefed by current FSC chair Nitya Reddy, expressed concerns about potential governance and accountability issues in 2016.

He seeks to determine the rationale behind accepting the lower payout and its impact on the Rakiraki mill’s closure.

“So if you can see the breakdown of the $30 million that was paid out by the insurance company, $8.5 million was actually been for the Rakiraki mill damage. And if the $8.5 million was well spent on a mill and government putting another two or $3 million that Rakiraki mill would have been still be there. So that was whole thing that we wanted to find out. “

Singh says he expects a response from the Attorney General’s Office within a month and has also forwarded a copy of his letter, along with supporting documents, to the Acting Commissioner of the Fiji Independent Commission against Corruption.