Tonga’s church, built in hope, faith and pride, collapses in debt

SPORTINGa black homburg and a silver-topped cane, the newly crowned King George Tupou V of Tonga looked every bit as grand as the $10 million church he had crossed the Pacific to open.

Reverend Sione Pinomi ... fears for his ''poor church''. Photo: Wolter Peeters

Three years later the expansive Free Wesleyan Church of Tonga in Australia still stands in an estate of factories and warehouses near Rooty Hill in Sydney but the pride of the Polynesian community is cloaked in shame and debt.

Owing $21 million, the Methodist church is set to collapse amid a confusion of parties, including 20,000 Tongans, Westpac and a Bankstown paint company with a sideline in short-term finance.

The church went into voluntary administration this month and into receivership this week, with the debt secured against church properties around the country.

The bulk of it – $18 million – is split between Westpac and an industrial paint business, Phoenix Lacquers & Paints, which lent the church $950,000 less than four years ago.

When the loan was not repaid after six months, during which time the interest rate was 5 per cent a month, a penalty was imposed and the interest rate increased to 6 per cent – or 72 per cent a year, the paint company said. The debt has now snowballed to more than $9 million.

The church’s plight is also a sensitive issue for Westpac, a major bank in Tonga. It has not received any payments on its loan of about $7 million for at least two years. The loan is now almost $9 million.

If the creditors and the Westpac-appointed administrator cannot agree on a way to restructure the debt, the building – modelled on a cathedral outside Tonga’s capital, Nuku’alofa – will be put up for sale. So too may other church properties in Victoria and Queensland.

”The poor church … is the one that’s going to be really, really crucified,” said its spokesman, the Reverend Sione Pinomi.

He hoped a trust fund registered in the Cayman Islands would donate $10 million to help the church stay afloat.

Mr Pinomi said the annual money-donating festival, known as Misinale, had not been enough to cover operating costs of $300,000 a year for the past two years.

But available funds have never really matched costs. Although the Tongan-Australian community of 20,000 raised $3 million to help fund the construction, the money ran out in the final weeks before its opening in 2008.

When Westpac refused to extend its loan to cover the cost of the interior, Mr Pinomi said the church turned to private finance. A mortgage broker in Sydney, overseen by the church’s solicitor, approached Phoenix Lacquers & Paints for a short-term loan.

The owner of Phoenix, Desmond Lee, said the broker was paid $60,000 to $70,000 and the loan covered the church’s fittings. Mr Lee denied the 72 per cent annual interest rate was predatory. He said this week he was willing to accept $1.4 million if the church could restructure its debt.

”They understood that the interest rate was high but they entered into it because they needed to have the church finished,” he said.

Mr Pinomi said the 2000 Tongan-Australians who greeted the monarch in their traditional dress that October day knew about the loan from Phoenix.

But he said the members of the church’s executive committee – who were signed on as personal guarantors – had not really considered the ramifications of the high monthly interest rate, or their inability to raise donations to pay it back quickly.

”We thought about it when we looked at it after but it was too late,” he said. ”The loan has already been done.”

The honorary consul to Tonga, Louise Waterhouse, said the church was the cornerstone of the community in Australia. ”It would be an absolute tragedy if it were lost to the Tongan people.”

But it is unclear how much the community knows about its desperate situation, even now.

Tongan-born James Latu, a Uniting Church minister at Petersham, said the church was such a priority in Tongan culture the community would endure personal hardships to try to fund it.

”The talk is that the place is paid off by someone else but they’re not too sure,” he said.

“If you rely on the members alone they can’t afford to have a place like that, because it’s most likely the place would [cost] about $14 million, that’s the talk. And they can’t afford it.”

The administrator, Stephen Parbery of PPB, said ”you’d have to say there must have been a degree of financial naivety” on the part of the church’s leadership in some of its dealings.

Accompanied by his representative, the former Wallaby Daniel Manu, Mr Parbery said he met 60 to 70 parishioners last week to outline the situation – and received a standing ovation. ”I think there was a relief from them … that someone independent had come in to try to assist” in saving the church.

But the reception was far from warm last week at the first meeting of creditors.

Phoenix, which since late 2010 has delayed a Supreme Court action to wind up the church – is seeking to replace PPB, which it claims is not acting independently.

Westpac said the church’s ability to service its loan was assessed before it was approved. A bank-appointed receiver would work with PPB to ensure the church stayed open during the administration process.

Leesha Mckenny (Sydney Morning Herald)

 click here . large grow kit . http://revistadesaude.com/somatodrol/