27 Jul 2005

Nauru to fight legal case over return of funds

1:49 pm on 27 July 2005

The Nauru Government is to fight a legal action that may prevent it from receiving the bulk of 74 million US dollars in funds left over after the liquidation sale of Nauru assets.

Receivers realised more than 228 million US dollars from the sale of properties in Australia owned by the Nauru Phosphate Royalties Trust to meet a debt to America's General Electric Capital Corporation.

Nauru's been waiting for months to receive the remaining 74 million dollars of the total -- a payment held up while the Australian Tax Office investigated whether there was any tax owing on the amount.

Freddy Pitcher, the Minister in charge of the trust, says the ATO ruling that no tax is payable on the 74 million dollars is welcome news.

"We're extremely pleased and relieved, put it that way."

Mr Pitcher says the ATO hasn't issued any figures but has promised to release the bulk of the 74 million to Nauru within two months.

But Mr Pitcher says it's frustrating that the payment may be delayed further by the lodging of legal action by 3000 landowners who are trust beneficiaries and want the funds returned directly to them.

Mr Pitcher says there will be a court hearing in Australia on this on August the 16th and the Nauru Goverment will fight the case if there is one to answer.

Nauru's also launched a parliamentary select committee investigation into allegations of financial irregularities in the trust, which is Nauru's major asset.