Tonga’s church, built in hope, collapses in debt
Sporting a 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.
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.