Warren Buffett, one of the greatest business minds and investors of our time, once said, “Risk comes from not knowing what you’re doing.” 

His words serve as a clear reminder that sound decision-making is essential, especially when it comes to investments or business ventures.

This lesson feels particularly relevant as the financial struggles of Sheraton Mulifanua Beach Resort Samoa Limited (MBRS) come to light. 

The resort faces a crippling debt of $36,759,456 and is in desperate need of financial intervention.

At the center of this issue is the Samoa National Provident Fund (SNPF), a government cash cow tasked with managing the retirement savings of thousands of Samoans.

And through a Capital Subscription plan, SNPF is now positioned to potentially clear the resort’s $37 million tala debt.

The deal will leave SNPF with an 88.8 per cent stake in the resort, which is essentially broke, having incurred repeated losses over the past decade. 

And while to many this situation might seem alarming, the Minister of Finance, Lautimuia Uelese Vaai, remains confident it is under control.

Speaking to the Samoa Observer, he said, “So far their [MBRS] payments are up to date,” and described the investment as “a worthwhile investment to promote our tourism.”  

“There are always risks,” he added, “it’s just minimizing those risks.”  

While these assurances sound reasonable, surely the Minister, under whose portfolio the SNPF falls, is aware of the risks and gaps clearly outlined in the documents available.

For instance, the lack of key performance indicators (KPIs) in the Operating Service Agreement (OSP) with Sheraton as the managers of the resort makes it nearly impossible to hold the company accountable for its results.

Without a framework to measure performance, there’s no way to ensure efforts are being made to turn a profit. So how is the performance of Sheraton who manages the resort being tracked? 

Additionally, with the SNPF driving MBRS, it has been confirmed that Sheraton was never given any benchmarks to work with, leaving no way to evaluate whether the management of the resort is meeting its desired outcomes.

Adding to the risks, Marriott International, which oversees the Sheraton brand, projects near-term occupancy rates of just 45 per cent, raising serious doubts about the resort’s ability to generate meaningful revenue.

To make matters worse, the $22.5 million loan from the SNPF to the resort for CHOGM wasn’t enough, and now it seeks to clear its $37 million debt just to repay itself – a questionable move that demands realistic growth projections for a company that hasn’t shown any in the past 10 years.

But we’ll leave those risks for the Minister to consider. 

What contributors truly want to know is this: where is their say in all of this? 

With the hard-earned retirement savings of Samoans on the line, are their voices being drowned out by a select few? Or has the fund grown so large that losing a few million tala here and there is no longer seen as a concern? 

Either way, it’s clear the public is being left in the dark about critical investments that are meant to deliver the best outcomes for them.

So with that being said, let us humbly echo the wisdom of Mr. Buffett to the Minister — we surely hope you know what you’re doing.