APIA: FRIDAY 27 SEPTEMBER 2013: Something about the attitude of financial institutions towards mortgages on leased customary land has annoyed Prime Minister Tuilaepa Sa’ilele Malielegaoi.
In a letter dated 12th September 2013, Tuilaepa wrote to ANZ Bank (Samoa) Ltd, Westpac Bank, National Bank of Samoa, Commercial Bank of Samoa, Development Bank of Samoa and Central Bank of Samoa) regarding such mortgages.
A copy of that letter cannot be obtained.
But we do have a copy of a follow up letter dated 17 September 2013 from the Prime Minister to the financial institutions.
In the second letter Tuilaepa asks them, “Can I have your responses to my letter of 12 September 2013 on the subject matter?”
The subject matter was “REGISTRATION OF MORTGAGE OVER LEASES OF CUSTOMARY LAND.”
In the second letter Tuilaepa adds that only the interpretation of the Constitution of Samoa by Attorney General is recognized by Government as the correct one.
“Any other legal opinion which differs from the Attorney General’s opinion is rubbish,” Tuilaepa says.
“2. This Government cannot accept a situation where the development of this country via the leasing of its customary lands is being jeopardized because its Financial Institutions have erroneously adopted a flawed opinion despite the overwhelming evidence to support the Attorney General’s opinion,” he says.
“3. There are many options open to Government to achieve the overarching goal for which the Alienation of Land Act 1965 was amended, but before we do so, we welcome your reactions.”
All banks have different systems of handling mortgages on leased customary land, said Attorney General Aumua Ming Leung Wai.
Aumua said decisions by some banks are based on the opinion of whoever lawyer they talked to.
But there have been cases where leases on customary land have been used to secure loans, he said.
In his interpretation of the law if the investor fails to pay the loan, all the bank can do is grab the lease but can’t take over the land, the Attorney General said.
The banks may either sublease the land or invest in it to recover their money, he said.
Talamua approached several banks today for comment but their responses were along the lines of “Leave your number and we will get back to you.”