A former deputy governor of the National Reserve Bank of Tonga has queried why the State Retirement Fund tipped TOP10 million pa'anga (USD4.15 million) into Lulutai Airlines (L8, Tongatapu) in the absence of audited financial statements.
Writing in the Matangi Tonga digital newspaper, Samiuela Tukuafu said the amount, comprising a TOP6 million (USD2.5 million) loan and a TOP4 million (USD1.68) equity investment, was significant enough to need a board-level decision. Tukuafu said that as Lulutai Airlines has failed to submit audited accounts since the 2020/21 financial year, he did not know what financial information the retirement fund board used to make its decision.
"Audited financial statements are essential for the board of directors to make informed decisions on the conduct of a business entity," Tukuafu wrote. "With the delay in the audits of Lulutai Airlines, I do not understand where the reliable financial information used in their own due diligence came from."
He argues that former prime minister and ex-chairman of the board Siaosi ‘Ofakivahafolau Sovaleni and his fellow directors at Lulutai had a legal requirement to submit audited accounts. He says not doing so for three consecutive years was not only "a violation of the Companies Act of Tonga but also raises serious questions about the manner in which our national airline was being managed."
The airline's sole operation aircraft, a DHC-6-400, operates scheduled passenger flights to four airports around Tonga. It is the country's only scheduled domestic operator. The government established it after privately-owned Real Tonga Airlines (Tongatapu) failed, arguing that a scheduled airline was an essential public service. Tukuafu isn't so sure. He says Lulutai, which is loss-making, is primarily patronised by tourists and government officials travelling on the taxpayer's dime. The locals take boats.
Lulutai Airlines recently requested a loan of TOP7 million (USD2.9 million) from the Tongan government, saying the money is essential to keep it flying. Aside from the TOP10 million provided by the State Retirement Fund, the government has directly sunk TOP15 million (USD6.2 million) into the carrier and is not keen on providing any more.
"Lulutai is drowning," public enterprises minister Piveni Piukala told a February 28, 2025, media conference. "In a scenario where there is no 7 million pa'anga, the company must be wound up."
Tukuafu said a proposed Royal Commission to examine the alleged maladministration of Lulutai Airlines and the State Retirement Fund financing may play well politically but will make little discernible difference to the carrier's current problems.
"The cost will be high, and will the corresponding outcome of the Royal Commission help to bring those who were involved in administering Lulutai to account? I doubt it," he said. "It is vitally important to operate it commercially at a price that can cover the company's expenses and make a profit."
