Polynesia in Review: Issues and Events, I July I994 to 30 June I995

Reviews of American Samoa, Hawai'i, proved no risks had been taken and Tuvalu, Wallis and Futuna, and West­ all was well. He would not release ern Samoa are not included in this the report, but the New Zealand issue. minister of Foreign Affairs did. It described the Cook Islands Gov­ ernment as a gullible victim of an THE COOK ISLANDS attempted fraud perpetrated by others. "Wealth, health, and happiness with­ The author did not think Sir Geoffrey out cost or effort" might be the slogan Henry or other government officials of the year under review. The oppor­ had acted for personal gain, though tunistic "quick fix" epitomized they naively hoped the deal would approaches to problems of personal yield us$26 million in commissions and government finance, of body for the nation. and soul. The advertisements that Government assurances that the flood television screens with messages Letters of Guarantee were risk-free and of instant gratification have become with reputable financiers were false. A the basis of public policy and private Television New Zealand documentary practice, beginning with the national showed that the key players included a purse. bankrupt Irish fraudster with a prose­ The truth was particularly elusive cution for tax evasion, another man this year. Gossip about huge and shady claiming to represent a company that international deals was officially dis­ Television New Zealand found had missed until in January 1995 the Cook been deregistered since 1978, an Amer­ Islands Press revealed that the govern­ ican living in luxury in the Bahamas ment had issued Letters of Guarantee and wanted for questioning in the for US$I.1 billion, equivalent to all United States, and a former plumber government income for the next who financed various things including twenty-one years at present levels. The pornographic video. New Zealand Government feared it James Byrne, an American expert might be obligated through its associ­ on international bank fraud, told Tele­ ated state relationship with the Cook vision New Zealand he did not expect Islands, and the fact that the Cook any benefit would reach the Cook Islands dollar was tied to the New Islands from such transactions even if Zealand dollar. Eventually the Cook carried through (TVNZ Assignment, Islands Government agreed to an 25 May 1995). Tony Molloy, QC, investigation by Jerse Halliday of the noted that the Cook Islands Govern­ Reserve Bank of New Zealand. The ment had "demonstrated in other Cook Islands prime minister told an spheres recently that it has a vulnera­ anxious public that Halliday's report bility to advice that appears to be pres-

I74 POLITICAL REVIEWS· POLYNESIA 175 tigious, and perhaps it is just fairly said showed massive and blatant tax easily sucked in. They're terribly avoidance, while a prominent criminal impressed with all the jet-setting para­ lawyer, Peter Williams, described it as phernalia that goes with these things" the "biggest tax evasion scam" in New (CIP, 2S May I99S). The head of the Zealand's history. Most used European New Zealand Serious Fraud Office, Pacific, the largest "trustee company" who investigated the New Zealand (the polite term for tax-haven banks) intermediary, stated that at least some in the Cook Islands. Although some of of the people the government dealt New Zealand's leading financiers and with were known fraudsters, and that financial institutions were implicated, the Letters of Guarantee were intended the New Zealand Government was for illegitimate use in "prime bank reluctant to act. The leading names instrument fraud" (CIN, 3 June I99S). were big donors to the governing The Cook Islands Government tried to party's election funds. But pressure "protect" itself with a secret "blocked inside and outside Parliament led to a funds letter," whereby it would not judicial enquiry, which gets prime-time honor the guarantees. The Serious television coverage in New Zealand Fraud Office report spoke of the and much of the Pacific. That drama "Alice in Wonderland quality" of continues. "giving the appearance, but not the The Cook Islands Government reality, of financial substance." promised to set up its own enquiry but The Letters of Guarantee have been is not expected to unless it can protect canceled. Nothing was gained, though those to whom it is obligated. The how much the government lost in architect of the tax haven, Mr David travel, fees, and other expenses is not Lloyd, gave $6 million in I993 to pay known. It gave "insufficient attention for the national cultural center, which to the risks ... to the international rep­ the government rated as its top priority utation of the Cook Islands" and did project. Mr Trevor Clarke, former not heed warnings in its own files national head of European Pacific about the criminal reputation of those Bank, is now Prime Minister Sir Geof­ involved. Fortunately, despite pressure frey Henry's financial adviser. from "the instigators of the scam, the Winston Peters, the New Zealand safety nets held-but only just." politician who led the pressure for the Otherwise the nation could have lost enquiry, might have been discredited as its assets and incurred vast debt. "racist" or "colonialist" for criticizing The "Wine Box Affair" was another the Cook Islands, were he not Maori running media event. It began in Octo­ and Minister for Maori Affairs after ber I992 when the New Zealand Seri­ that department was caught in interna­ ous Fraud Office received a wine-box tionalloan scams. He has no sympathy full of evidence of massive tax dodges for a government that gets most of its by New Zealand companies and indi­ foreign aid from New Zealand taxpay­ viduals. The commissioner of Inland ers (Nz$I4 million a year for 20,000 Revenue castigated the ethics of those people), while creating schemes to who designed the scheme, which he defraud them of hundreds of millions. THE CONTEMPORARY PACIFIC· SPRING 1996

Mr Peters says the infamous Bank of However, in recent years, unpredict­ Credit and Commerce International, able implementation of stated policies, which dealt in "political bribes, laun­ dense regulatory processes, lack of dering money, guns, nuclear weapons confidence in the currency, and adverse and with figures such as Noriega and international publicity seem to have Marcos," and whose top executive was deterred investors of integrity and jailed for eleven years for massive attracted those lacking it. The new fraud, was involved in the Cook ostrich-farming industry and pro­ Islands "international finance center." posed investments in tourism and Cook Islands Government claims that other fields were put on hold. Reasons the tax haven is "squeaky clean" are for the 1995 decline in tourism, the no longer heard. Mr Peters' advocacy largest single industry, included "nega­ of canceling New Zealand aid to the tive publicity with respect to the econ­ Cook Islands is gaining support there, omy, currency, and the dengue as many New Zealand taxpayers feel epidemic" according to the director "ripped off" by the Cook Islands tax of tourism (elF, 25 May 1995). haven. Aid will not be canceled, Meanwhile, government enterprises although sympathy for special conces­ have not done well. There was no sions to the Cook Islands has been progress during the year on the most eroded. While this year New Zealand expensive construction project ever maintained previous levels of aid to undertaken in the country-another other South Pacific countries, and government-owned hotel. Five years increased funds for East Asia, it after construction began with Italian trimmed aid to the Cooks by 5 percent. finance and builders, it remains an Growth in gross domestic product empty shell. The most recent official in the Cook Islands was high through­ estimate of its value is understood to out the 1980s (6 to 10 percent per be one quarter of the cost to the gov­ year) but only 1.7 percent in 1993 and ernment so far. The head of the com­ 1.5 percent in 1994. In 1994-.95 it is pany that initiated the project has been likely to be negative. The main cause indicted in Italy for Mafia activities. was poor economic policy and poorer Several years ago the government economic practice. The engines of the bought the long-abandoned St Helen's economy have worked well-tourism Hospital in Wellington, New Zealand. (the biggest industry) grew during the This year it sold it at a heavy loss in past decade faster than anywhere else real terms. The government pearl­ in the Pacific. The second industry, culture farm in Manihiki is a financial marine resources, is booming on the disaster, despite heavy subsidies, while basis of pearls and tuna. Fresh fish private operators pay their own costs prices are high and demand exceeds and make profits. The government supply. Agricultural products sell well pearl venture in Suwarrow was aban­ to hotels, the local market, and for air­ doned after heavy expenditure and no freight to New Zealand and the United income. States-with producers unable to ful­ Government revenues should be fill orders. buoyant, for taxes are very high rela- POLITICAL REVIEWS· POLYNESIA 177 tive to services provided. There is a 10 $338 million in mid-I995. B List fund­ percent value added tax on all transac­ ing would have boosted government tions, plus income tax of 37 percent at debt to CI$400 million. $35,000 (about US$2I,000), as well as The main cause of government many other government charges. One overexpenditure is a public service of problem is inefficient collection. Over­ excessive size and generally low effi­ due taxes increased from CI$7.3 mil­ ciency (despite some remarkable lion (27 percent) in 1992 to $9.3 exceptions). Public announcements million (36 percent) in 1993, some of it about a freeze on hiring for the past due from government-owned commer­ two years contrast with the reality of cial enterprises. No later figures are more government employees than ever available. before. Rather than retrench the many Government borrowing has been who do very little, and constrain frivo­ the popular solution to these economic lous expenditure, the government in problems, but after certain limits were May 1995 raised the tax on diesel by reached, "regular" financiers were 83 percent, petrol by 55 percent, and reluctant to help. When overdrafts cigarettes by 45 percent, with similar from commercial banks reached raises on some other commodities. NZ$4.5 million, and the banks refused While announced reductions in the to lend more, the government found a public service remained largely unim­ temporary solution in credit from sup­ plemented, government-financed pliers. The firms have not been repaid, workers on wages did have their hours and the government is months (even reduced by one per day, and those on years) behind in paying for goods and salaries offered to accept NZ$ 500 less services. Some firms have had to pay over the next six months to avoid shorten work hours, layoff staff, or larger proposed cuts. close. The critical limelight was attracted There were also plans to stimulate by such spectacular expenditures as the economy through loan-financed chartering a plane to take a team of projects, and two confidential "wish dancers, politicians, and officials to lists" of projects were drawn up. The welcome the arrival in Tahiti of two projects to be funded were mainly non­ traditional voyaging canoes from the productive, the main one on the A List Cook Islands that were joining a trip being a new government building to the Marquesas and Hawai'i. Despite (including some premises for rent), and an outcry about that, another team on the B List, a new parliament build­ went at public expense to welcome ing. Some cI$64 million (US$43 mil­ them again in the Marquesas, and yet lion) in funding for A List projects was another to receive them in Hawai'i. It to be raised from La Deuce Credit and . was hoped there would be canoes from Finance Limited in Houston, Texas, all of Polynesia, but the only others through a Samoan intermediary. With were three from Hawai'i (with US interest, A List funding would have federal funds) and one from New lifted government debt from almost nil Zealand, neither of which brought in in I987 to CI$246 million in I994, to dance teams or politicians. This accen- THE CONTEMPORARY PACIFIC· SPRING 1996 tuated the CI$668,282 spent by the The government released an government this year on the canoes. increasing volume of unbacked cur­ Former Prime Minister Sir Tom Davis rency, which lost its value and integ­ designed and supervised both vessels rity. Exporters to the Cook Islands and commanded the larger one to insisted on tradeable currency, and the Hawai'i. There was public support for banks imposed exchange controls on the project, but not for the scale of nontrade transactions. As a result, the expenditure on "hangers-on" at a time government abandoned Cook Islands of extreme shortage of funds for medi­ currency in May 1995 and reverted to cines in hospitals, books in schools, New Zealand currency. The arrange­ and to reconnect telephones discon­ ment is common in the Pacific-Kiri­ nected from government departments bati, Nauru, and Tuvalu all use only because of nonpayment. Australian currency; the Marshall Another indication of spending Islands and the Federated States of beyond need was apparent in Decem­ Micronesia both use only US currency. ber 1994 when seven of nine govern­ Nevertheless, it was a symbolic blow ment ministers traveled internationally. because Cook Islands national cur­ Ministers take their wives at govern­ rency was an emblem of sovereignty ment expense on one trip annually­ and identity, even though its value was usually the most expensive. Govern­ tied at par to the New Zealand dollar. ment expenditure on travel for minis­ Meanwhile in the wider society, ters and officials probably absorbs a there has been a parallel move to larger share of national income than "quick fix" religions, and away from for all but a few countries in the world. the now conventional Catholic and Budget details in June 1995 showed Protestant churches. Denominations that while most other items had been that promise more, better, faster, and cut, travel by members of parliament longer-lasting results on earth and in had increased by 34 percent. heaven, are fruitful and multiply. They A full high commission (embassy) are US-derived, fundamentalist, evan­ was set up in Canberra, where a part­ gelical, and pentecostal-particularly time nondiplomatic representative the Apostolic and the Assemblies of formerly met the need. There was God. For a while, these became the debate about whether the costs were middle of a moving road, as the New merited relative to the benefits. Kingdom was born, founded by a Although less important than other woman who claimed to be Jesus overseas posts, running costs are much Christ. While fundamentalists concen­ more, about $420,000 a year plus trate on sorting out the soul, the New such capital costs as a $498,000 house Kingdom promises to fix body and for the high commissioner. Until his soul at one fell swoop. Her compound appointment he was an influential was frequented by the head of state, politician who, severely criticized by some members of cabinet, some minis­ the chief justice for misuse of power, ters of other churches, a Catholic nun, was considered unable to win his seat and hundreds of others. The Master again. (as the spirit in her body was known) POLITICAL REVIEWS· POLYNESIA occupied government quarters rent­ against allegations of being guided by free and received unofficial conces­ foreign models of consumption, behav­ sions from the government. ior, and values, or manipulated by for­ When the woman's body did not eign fraudsters. take on all the attributes of a man, as This year's crop of transient "cul­ the prophecy required, numbers ture based" medicinal remedies waned, and a new revelation explained included magic mushrooms and a that the Devil persisted in deceiving the potion made from coconut husks. people. Jesus needed support, so the Equally transient "cultural solutions" body became known as the Tokorima to social, psychological, and political (The Five), and was occupied by Jesus, problems abound. A plethora of short­ the Virgin Mary, God the Father, God cuts to personal financial prosperity the Holy Ghost, and Joseph. Yet the follows a similar pattern, with an membership kept falling. A new amazing range of fund-raising tech­ prophecy was needed. It was that the niques, from raffles to lotteries, road­ government would change. The new side collections, telethons, soliciting, prime minister would be Norman and many more by "small fry," and George, who mentioned the Tokorima massive theft, fraud, and misrepresen­ in respectful tones in his election tation by large operators. addresses. Alas, Mr George's party Although it did not become public, gained only two seats out of twenty­ the government tried to negotiate with five. The following dwindled to an New Zealand for a further "evolution" incorruptible core. The Tokorima and in the associated state relationship. the faithful few were evicted from gov­ The reason given was economic, that ernment buildings in December 1994 some aid donors will not give to the and the New Kingdom headquarters Cook Islands under its present status. shifted to the island of Aitutaki. A few This has not concerned most donors. It weeks later the Tokorima departed for constrained European aid through the Tahiti. Lome Convention to Africa, the Carib­ While Christian fundamentalists bean, and the Pacific, but only because look back to a selective interpretation the African bloc objected. of the story ofJesus, cultural funda­ The goals of this year's negotiations mentalists see solutions to today's with New Zealand were three, in the problems in the "Tangaroa Cult" a following order of priority: First, "return" to a sanitized version of membership of the Commonwealth; ancient beliefs, values, and life-ways as second, formalization of Cook Islands epitomized by the great god Tangaroa. citizenship and passports; and third, 1here is both conflict and congruence separate diplomatic accreditation. between Christian and traditional fun­ Although all 51 Commonwealth damentalists. Some leading individu­ nations are nominally equal, a country als expound both (but don't practice like India with 900 million people may much of either). Both are protective not regard a country with 20,000 reactions against external global people as really equal, although Tuvalu forces, as well as a convenient cover and Kiribati are full members. Some I80 THE CONTEMPORARY PACIFIC· SPRING I996 countries object to Cook Islands persons of Cook Islands descent who membership lest the associated state live elsewhere (and that is most of relationship compromise its indepen­ them). It would also allow the sale of dence. The Cook Islands wanted to passports to rich stateless foreigners join in time for Sir Geoffrey Henry to from such places as Hong Kong and attend the I995 Commonwealth Prime Taiwan-as is done by Tonga and the Ministers Conference, a hope not Marshall Islands. likely to be realized. The New Zealand position has long Some Commonwealth countries been that if Cook Islanders want to may object to Cook Islands member­ sever the associated state relationship, ship without modifications to its con­ they will agree immediately. However, stitution (see next two items). The the Cook Islands Government did same may still apply to the Lome Con­ not tell the people of the negotiation vention, but probably not to the because they know that the public United Nations, membership of which opposes severing a tie from which the Cook Islands is now considering. they gain so much. Also, as New Countries with much less "indepen­ Zealanders, they have free access and dence" than the Cook Islands are full full privileges in Australia as well. members of the United Nations (eg, Some 4°,000 Cook Islanders live in Monaco, San Marino, Andorra, New Zealand and about 10,000 in Liechtenstein) so the key question is Australia. Only 28 percent choose to likely to be cost rather than constitu­ stay at home. There are limits to how tional status. much cake New Zealand will allow the As a formality, Cook Islanders Cook Islands Government to eat and travel on New Zealand passports, keep at the same time. although separate citizenship is firmly New Zealand and Australia deal in place, created through a Cook with the Cook Islands diplomatically Islands Immigration and Departure as they do with all Commonwealth Act rather than a citizenship act in countries, by accrediting a high com­ order to obfuscate the reality of dual missioner to each other's capital. How­ citizenship. Any Cook Islander can ever, some countries-notably Japan­ enter New Zealand at any time with­ do not treat the Cook Islands as fully out restriction and has full rights to independent. This is a question of status vote, work, draw social security bene­ more than material gain, for Japan fits, and so forth. However, no New gives foreign aid to the Cook Islands. Zealander has comparable rights in the One of New Zealand's concerns in Cook Islands, which has not granted granting further privileges to the Cook permanent residence to any person Islands while Cook Islanders retain since 1989, despite many requests. New Zealand citizenship and rights, During that time thousands of Cook was the doubtful financial transactions Islanders moved freely to New for which the Cook Islands is getting Zealand and Australia. an undesirable reputation and for Separate passports would allow which New Zealand is at times criti­ restrictions on the entry and rights of cized. POLITICAL REVIEWS· POLYNESIA 181

In national politics, complaints announced that France would resume about the government were louder this nuclear testing. In view of the Cook year than ever since 1977-78. Loss of Islands' continuing debts to France for jobs and income, as well as media power, water, and other projects, and exposure of what had been suppressed, hope for more, the prime minister sent increased awareness and concern. Usu­ a token protest but said there would be ally in a parliamentary democracy such no public protest or boycott of the as the Cook Islands that leads to calls coming South Pacific Games in Tahiti. for the opposition to take over, but the In this he misjudged the public pulse. opposition remains weak and divided, Norman George, leader of the and few regard it as a credible alterna­ opposition Alliance Party, organized a tive government. protest. As minister of foreign affairs The government blames the media he had been wined and dined at Moru­ for the negative episodes, but the roa as an honored guest of the French media here are more restrained than in government and was very subdued most countries. Television and radio about bombs-but now that he is in news comes only through government­ opposition this was a heaven-sent owned stations, the main owners of opportunity. The public reaction was the daily newspaper are expatriates on overwhelming, with radio talk-backs, work permits that the government can letters to the newspaper, and gossip all cancel, and the weekly Cook Islands galvanized against France. The prime Press was set up by a European perma­ minister astutely shifted tack, making nent resident. Equivalent government an impassioned plea for public support actions in most OEeD countries would for a protest march, which he led in attract more aggressive media atten­ triumph, eclipsing Mr George. He tion. urged public servants to join, promis­ One defense against attacks from ing them full pay, and pleaded with media and political opponents was the church leaders, businesses, chiefs, prime minister's assertion in Parlia­ sports groups, youth groups, women's ment (where he is protected from defa­ groups, tourists, and all to join in with mation suits) that the Cook Islands their people. It was the biggest and Press and TVNZ were financed by the most unified demonstration the nation t::IA to spread propaganda as part of a has ever seen. US plot to overthrow his government. The entry of women into local poli­ Ihe prime minister knows that most tics was the highlight of the 1995 elec­ voters probably sympathized with the tions for island councilors. Previously, i.mage of him and them being under the mayor was elected by and from the attack from evil foreign sources. island councilors. Under a new law the With the year going badly for the mayor is elected by the public from government, and with deepening dis­ outside the council, and becomes ex unity and despair, the divided country officio chair of the council. At the last needed a common external enemy at election, in 1992, the only woman whom hostility could be redirected. candidate (for the island of Manihiki) Salvation came when President Chirac was not elected. In 1995, partly due 182 THE CONTEMPORARY PACIFIC· SPRING 1996 to the official who organized the errors have been made, and that qual­ elections emphasizing women's right ity, integrity, skill, efficiency, and com­ to stand, partly to a local television mitment pay better in the long run program encouraging them to stand, than the slick pseudo-solutions that and partly to indirect pressures for characterized all but the end of this more equality for women, three year. women stood for mayoral posts and two as island councilors. None suc­ ...... ceeded, although one nearly became mayor of Aitutaki. SEVERAL knowledgeable and helpful Letters of Guarantee, "shonky" persons kindly commented on the draft loans, the return of Jesus, and embez­ but wish to remain anonymous. zlement have not yet solved all the RON CROCOMBE AND problems of the Cook Islands, but MARJORIE TUAINEKORE believers in any of these and other rem­ CROCOMBE edies feel they are worth a try, and note that things might have been worse without them. While some await the References next "quick fix," the solid economic CIN, Cook Islands News.Rarotonga. Daily. growth was provided by those who devoted skill and effort to the task­ CIP, Cooks Islands Press. Rarotonga. the producers of fish, pearls, farm Weekly. produce, tourist facilities, small but Halliday, Jerse. 1995. "Report to the Min­ profitable innovations like maire fern ister of Foreign Affairs and Trade, 3 I (which supplies the Hawai'i market), March." Reserve Bank of New Zealand. local cosmetics and perfumes, hand­ Wellington. made pottery, and other proven income generators. Many local enter­ prises do well for themselves and for the community. Following the FRENCH POLYNESIA announced change of government The period under review was typical of practices, tourism was picking up political life in Tahiti. It was marked again, the ostrich industry resumed on by sporadic conflict between state and Mangaia, and an alpaca industry is territorial authorities, splits and defec­ being considered. The Cook Islands tions within and between political may also be the world's first nation to parties, two electoral campaigns, and evolve commercially viable and envi­ industrial disputes too numerous to ronmentally sound exploitation of mention. Once again, the shadow of seabed minerals, if Bechtel Corpora­ the nuclear testing center loomed large tion's assessments, planned for 1995, following President Chirac's announce­ confirm expected prospects. ment of a resumption of testing. The leaders in government now Tensions between the territory and acknowledge-verbally so far, and the state emerged in late 1994. The hopefully in practice before long-that biggest rift occurred over the state-run