The New York Times: 14 September 2000
FIJI: THE MAHOGANY KING'S BRIEF REIGN
Behind the cries for ethnic solidarity and indigenous Fijian supremacy was a struggle over land, money and mahogany, a competition that involved American and British as well as local business interests. Fiji's mahogany helped prompt a struggle for political power, inflicting damage to the nation's economy and political system well in excess of the riches the commodity once promised.
By JOSEPH KHAN in Suva
Behind the mahogany row, by Marianne Wilkinson (Sydney Morning Herald)
Timber's role in the insurrection, by David Robie (Gemini News)
Chaudhry govt did not fail Fijians, by David Robie (Pacific Journalism Online)
The coup leader with a surprise 'fanatical streak', by David Robie (Pacific Journalism Online)
George Speight (above) who held the Fijian cabinet hostage
for
two months, had sought
The New York Times
Section C; Page 1; Column 2; Business/Financial Desk
THE MAHOGANY KING'S BRIEF REIGN
THIS South Pacific archipelago is best known for its fine-grained white
beaches and cloudless vistas of cobalt sea. But a cockscomb range of
steep-sided
mountains divides the main island of Viti Levu, and nothing looks the same
on
the far side.
The rains come two days out of three in the southeast, dumping 10 feet a
year. Suva's hills have a rain-forest coat of green -- bamboo, palm, cocoa,
eucalyptus and, most temptingly and troubling for Fiji, more than a
hundred
thousand acres of high-grade mahogany, worth hundreds of millions of
dollars.
A coup here a few months ago toppled the government. For a relatively
bloodless political uprising in a small island nation of 830,000, the event
attracted some attention. Many accounts told of how ethnic tension involving
Fiji's natives, ethnic Melanesians, had once again exploded into a public
confrontation with Indo-Fijians, who trace their roots to indentured
laborers
the British brought here from India a century ago, when both India and Fiji
were crown colonies.
But behind the cries for ethnic solidarity and native Fijian supremacy
was a
struggle over land, money and mahogany, a competition that involved American
and
British as well as local business interests.
Like diamonds in Sierra Leone and oil in Nigeria, Fiji's mahogany
helped
prompt a struggle for political power, inflicting damage to the nation's
economy
and political system well in excess of the riches the commodity once
promised.
Fiji's struggle began with two men, who each searched for a pot of gold
and
wound up stirring a cauldron of ethnic discontent.
Marshall W. Pettit, a Seattle-area real-estate developer drawn three
years
ago to Fiji by its forests rather than its resorts, said that he aspired
to
transform the way developing nations manage their forests -- and make a tidy
profit. He also plunged into Fijian politics to fight the former
government's
opposition to his plans, though there is no evidence he backed the coup.
Pettit did, however, have ties to the Fijian who led the revolt, an
American-educated, bald-headed former government forest manager named George
Speight. The two men had once worked together to shake up the local timber
industry -- and were so close that Fiji police are investigating whether
Pettit paid bribes to Speight. Both men deny the allegations, saying the
payments were for legitimate business expenses.
When Speight stormed the parliament building and overthrew the
elected
government last May, he carried not only an AK-47 rifle but his own
blueprint
for becoming Fiji's timber king.
"Some people used the mahogany issue to raise the emotions of landowners
and
as an excuse to topple the government," said Anup Kumar, who was ousted as
minister of commerce in the coup. "They thought they could get rich from
green
gold."
Pettit, 57, is tall and silver-haired, with courtly manners and a
tendency to talk in 15-minute spurts, like a salesman wary of letting a
customer
interrupt him. He has spent most of his career financing real estate
projects in
California, Texas and Washington State.
He says that it was a missionary impulse, more than money, that prompted
him
to search for timber investments abroad. He wanted to provide poor nations
with
the capital and the technology to make the most of their forests, reducing
their
reliance on multinational companies that do not have their best interests in
mind.
"Our big companies tend to take the resources of developing countries
without
giving them any value," Pettit said in a breakfast interview near his
Seattle home. "It's the last vestige of colonialism in my opinion."
The 'Laboratory'
Pettit said he had explored doing business in Russia and Africa. But
when
a group of Fijian landowners contacted him in 1996 through a mutual friend,
he
found what he called the perfect laboratory: a poor but seemingly stable
nation
with little foreign investment, a place where a small American businessman
could
make a big splash.
But as he weighed in, Pettit found that his prospective partners were
drawing him deeply into a domestic struggle over land rights. The landowners
wanted to buy out government leases on their ancestral lands, letting them
harvest the timber and get rich turning it into veneer and furniture.
Nearly all the land in Fiji belongs to familial groups of indigenous,
ethnic Melanesians, much as crown property in England belongs to the queen.
Though land is often leased long-term for public and private uses, the
holdings
are a birthright of native Fijians, a situation that sets them apart even
from
multigeneration Indo-Fijians, who represent half the population and who
dominate
Fiji's commercial sector.
In the 1950's and 60's, the British colonial administration leased land
to
plant trees, including pine, which is a fast-growing softwood, and Honduran
mahogany, a slow-growing hardwood. The leases paid landowners only a nominal
rent -- an average of about 4 cents an acre each year -- for what was seen
as an
experiment. Many, but not all, of the leases gave landowners the rights to
share
profits if the planting proved successful.
When the pine began maturing in the 1980's, a decade after the British
left,
the new Fiji government established its own company, Fiji Pine, to
harvest
the trees. But the company mostly shredded the logs into chips and exported
the
chips to Japan at low prices, usually at a loss.
Landowners, after realizing no profit from pine, scrambled to make sure
they
made money on mahogany, which is just now ready to start cutting.
Fiji has 125,000 acres of high-grade hardwood, probably the world's
largest
stock of the species. And, unlike Brazil and other countries with a lot of
indigenous mahogany, there are no environmental limits on harvesting from
tree
farms.
Pettit agreed to help, by proposing to sell tens of millions of
dollars
in bonds to finance the development of a forest-products industry, then
repay
the bonds from the proceeds of the sales of the timber products. If carried
off,
it would have been Fiji's first bond sale of any kind. It would also have
earned Pettit millions in fees before a single tree was felled.
There were obstacles from the start. The biggest one was that Pettit
met
resistance from Fiji Pine, which had no interest in seeing landowners buy
back their property and set up a competing business.
The setback might have prompted some people to withdraw -- Pettit
said
that he considered "just getting out." Instead, he and his partners began a
private investigation into the operations of Fiji Pine, compiling a report
that claimed to show how powerful officials had used dubious accounting to
profit at landowners' expense.
And Pettit rallied landowners to do something about it.
"I told them, 'You people have to get up and take on your own system or
it
will never get fixed,' " he said.
The Alliance
Pettit, an American outsider, soon recruited an ally in his fight.
Through his local partners, he met George Speight, then the managing
director of
Fiji Heath, an insurance brokerage firm. The two discussed insurance --
any
bond deal on the trees would require an insurance package -- but also timber
politics.
Speight, in his early 40's and trained in business at Andrews
University
in Michigan, was a protege of powerful native Fijian political figures in
the
then-ruling party. Burly, boxer-chinned and full of loud charm, Mr. Speight
lived in a small apartment above JJ's, a bar and nightclub that he partly
owned
and had turned into a gossipy watering hole for local businessmen and
government
officials.
Unlike anyone else Pettit met in Suva, Speight understood
financial
markets. And unlike the Americans, Speight could communicate those
concepts
in Fijian.
"He's a godsend," Pettit wrote in a memo at the time. He committed to
a
broad arrangement with Speight, agreeing to pay his company a monthly
fee
for a variety of services, including insurance advice, office space and
consulting.
When Pettit visited Fiji, Speight became his key contact and
his
liaison with landowners. Pettit said that he and Speight developed a
shared vision for a unified timber industry, stripped of turf-conscious
bureaucrats who did not understand American finance.
Before long, Mr. Speight was hooked on timber. He was boasting to friends
that government patrons had secured him the leadership post at Fiji
Hardwood,
a new, government-owned entity set up to exploit the maturing mahogany
plantations. By late 1998, Mr. Speight was also appointed chairman of Fiji
Pine, the first step toward fulfilling his ambition to unite the timber
industry.
By early 1999, the deal of Pettit's career seemed within grasp. Speight had shaken up Fiji Pine, clearing out many bureaucrats opposed to Pettit's plan. Speight also selected Pettit's company, Timber
Resources
Management, as one of two finalists seeking to harvest the mahogany groves.
If both deals materialized, the underwriting commissions, management fees
and
long-term profit sharing to Pettit's team would total, by some
estimates,
$100 million.
In March 1999, as both deals hung in the balance, Speight submitted
an
invoice to Pettit on his own letterhead that asserted he was owed
$26,000
for rent and consulting services over several months in 1998. He specified a
personal Australian bank account for payment.
Speight had sought compensation before, but Pettit, while
acknowledging he owed some past-due bills, said he held off paying. He
disputed Speight's estimates and questioned why Speight asked to be paid to
his
own bank account instead of to Heath. Pettit also acknowledged that Speight's demand came at a difficult time -- after Speight had assumed
powerful government posts.
Despite those qualms, Pettit said he paid Speight $10,000 himself
and
arranged for one of his partners in Fiji to pay another $5,000. Those
payments, shy of what Speight had demanded, are currently under
investigation by the Fiji police.
Whether the payments might have swayed Speight to award the timber
contracts to Pettit is not known. Not long after the issue arose, the
party
that backed Speight lost parliamentary elections to a coalition headed
by
Mahendra Chaudhry. Within a short time, Speight lost his government
posts.
The Politics
Chaudhry's new government promised a quick decision on timber sales.
Even
without Speight's help, Pettit felt he had the superior bid. His
main
challenger was the Commonwealth Development Corporation, a British concern
with
a 40-year track record in Fiji. But Pettit had a much more ambitious
proposal that valued the mahogany crop at $210 million versus about $65
million
for the British company.
What Pettit apparently did not know at the time was that Chaudhry,
the first ethnic Indian prime minister in 13 years, needed the backing of
Fiji's former colonial patron in negotiations with the European Union over
export supports for sugar. Sugar is Fiji's No. 1 industry and a business
dominated by ethnic Indians; Britain could help with sugar subsidies, but
the
British wanted Commonwealth Development to get the timber concession.
Moreover,
the new Fijian government -- unlike Speight -- seemed to have an
instinctual
distrust of foreign bonds.
As promised, Chaudhry decided the matter quickly. He told the British
company that it was the "preferred bidder," subject to final talks. Pettit,
having already invested about $2 million in Fiji, sensed disaster. He
recruited the American Embassy to intervene.
After repeated diplomatic requests, Chaudhry agreed to reconsider the
American plan. He also agreed to send a group of top government officials to
visit Fahnestock & Company, the Wall Street investment bank Pettit had
signed up to underwrite the bond. The State Department paid for the trip.
The intervention appeared to work. Two of Chaudhry's cabinet members
overseeing the mahogany bid wrote a glowing report after the New York visit
that signaled strong support for the Americans.
But by late 1999, the action in Fiji had started to shift outside Suva,
to
villages scattered among the mahogany plantations. There, Chaudhry's
initial
support for the smaller British bid had inflamed landowners already fuming
about
not being consulted on land-use issues. Pettit said he hoped the
landowner
unrest would help him. After all, he had been lured to Fiji by disgruntled
landowners representing 250 village chiefs, many with both pine and mahogany
on
their land. He cultivated support, drawing up tables showing how landowners
could pocket far more from his plan than the British alternative.
At the same time, Speight was fanning landowner discontent for his
own
purposes. Stripped of his positions, he had returned to his family farm but
he
had not abandoned his plan to unite -- and run -- the timber industry. He
crisscrossed the main island, Viti Levu, mobilizing landowners to form their
own
company, with him as the head. Their demand: full control of plantations be
returned to ancestral chiefs.
Speight's plan found a receptive audience. "My response was, 'Get the
government out of this. This is my land,' " said Ratu Nd Tawakelevu, 69, the
chief of Naimasimasi Village and a mahogany landowner. MTawakelevu, whose
modest home is built on mahogany stilts, said the chiefs had named Speight
executive of a new land trust.
The Coup
Events came to a turning point last spring. Chaudhry, who had
included
projected revenues from a timber deal in the government's budget for the
year,
pushed for a decision on a foreign partner. Going into a decisive cabinet
meeting in March, Pettit believed he had won the concession. But Chaudhry surprised some members of his own administration when he swung
firmly
behind the British company, participants in the cabinet meeting said. That
set
off a dizzying succession of charges and countercharges that made mahogany
front-page news in Fiji for weeks.
Shortly after the cabinet decision, the American ambassador, Osmand
Siddique,
went public with a scathing broadside, complaining in a speech about a
"government reversal" that he called "nontransparent," and warned that
unless
the decision was revoked, American investors would flee Fiji. A local
consultant who had earlier worked for Pettit also stirred things up,
accusing the Chaudhry government of selling out landowner interests to curry
favor with the British and to protect sugar cane farmers.
To complicate matters, Fiji TV in April reported on Pettit's
payments
to Speight. Though both denied the money was a bribe, the report gave Chaudhry, who sensed a growing political threat from landowners, ammunition
to
support his mahogany decision. He accused Pettit of being a carpetbagger
with a scheme to extract grand profits from timber but no money of his own
to
invest. "You will not be able to develop the mahogany industry on hot air,"
he
scolded.
But the uproar in the capital seemed to solidify landowner opposition to Chaudhry. Some [3,000] indigenous Fijians marched through Suva in late March,
calling on the government to cease making decisions on two key land issues:
the mahogany and renewal of leases on land used to grow sugar cane.
Speight's landowner coalition was encouraging the protesters, in
language
that became overtly racist. They asserted that ethnic Indians could not be
trusted to reach crucial decisions on native land matters.
On May 19, landowners again marched on Suva, this time [10,000 strong].
While
the march degenerated into a riot that destroyed some ethnic Indian-run
businesses, Speight took over the parliament building with seven
paramilitary troops and captured Chaudhry and his cabinet. The rebels
held
them as hostages for almost two months.
The coup was haphazard, with disparate supporters and a changing list of
demands. Fijians speculate on the identity of its mastermind, often
dismissing
Speight as a front for powerful political interests. But it does seem
likely
that Speight intended to emerge from the coup as the mahogany king.
While he
kept the Chaudhry administration locked up, he ordered supporters to fan out
and
gather signatures of village chiefs on a "Deed of Sovereignty," according to
people told to do that.
The deed would have abrogated government leases and vested control over
Fiji's natural resources in a Speight-led entity. Had the army not turned
decisively against Speight in late July -- its officers eventually
arrested
him despite having earlier granted him amnesty -- his plan might have come
to
fruition, the police said.
Speight is now in prison on the tiny island of Nukulau off Suva,
surrounded by shark-infested waters and awaiting trial, charged with
treason. Pettit, who has given up all hope of reaching a timber deal in Fiji,
has
filed half a dozen lawsuits in local courts against the government to
recover
some of the money he lost. He is also waiting for the Fiji police to
decide
whether to take action on his payment to Speight.
The coup left just one physical monument in Suva. On the third night of
the
hostage-taking, Speight supporters raced down Gladstone Road in
four-wheel-drive
vehicles and threw gasoline bombs into Fiji Hardwood's headquarters.
Whether intended to cover a theft of documents or simply as a symbolic
act of
terror, the fire left the twisted tin roof of the colonial-era building
resting
precariously on a few charred timbers.
to control the country's timber operations. The
foiled
coup
led to disturbances in which the headquarters of Fiji Hardwood were
firebombed (below).
Top photo: Kris Leua; Bottom photo: Pat Craddock
Pacific Journalism Online (USP)
September 14, 2000
Business Interests Lurked Behind Fiji's Haphazard Coup
Landowner Ire Finds an Audience
An American Finds A Local Partner
Sugar Interests Are An Unseen Player
From Parliament To an Island Prison