Fiji economist Wadan Narsey has described a loan by the Fiji National Provident Fund to Air Pacific as incredibly risky.
The Fund is lending 113 million US dollars for initial funding to buy three new Airbus jets due for delivery in 2013.
In comments published on the blog Coup Four and a Half, Dr Narsey says the FNPF has no business going into risky investments like loans to financially troubled enterprises like Air Pacific.
He says this is especially so when the collateral will not cover the loan if there is a default.
Dr Narsey says the fund's management and board have no capability to assess whether the proposed investment is sound in an incredibly complex and competitive aviation market.
Dr Narsey says the Fund receives 16 percent of the total wages and salary bill of the country and is being used as a cash cow by the interim government.
"The fund last year wrote down 178 million US dollars from members funds for failed investment projects ."
Fund owners are facing massive cuts to their pensions under proposed reforms.