The Tongan ferry Princess Ashika, which sank and killed 74 people last August, has been replaced using $2.5 million of New Zealand government money.

Princess Ashika's captain has been charged for knowingly sailing an unseaworthy vessel and a former New Zealand businessman who bought the Princess Ashika ferry for Tonga has been arrested on charges of forgery and knowingly using forged documents. An inquiry into the tragedy is due to report back soon.

Foreign Minister Murray McCully announced today that replacement ship the Ajang Subuh had arrived to Tonga from Malaysia.

New Zealand and Australia will jointly fund the ferry for an interim 12-month period, each providing $2.5 million. The Government of Tonga will cover local costs such as fuel and vessel maintenance, Mr McCully said.

"Following the Princess Ashika tragedy, New Zealand and Australia undertook to help the Tongan Government find and fund an interim ferry service," he said.

"Sea travel between islands is a vital lifeline in Tonga, and is the primary method for transporting supplies and produce. Many Tongan families rely on ferry services for their livelihoods and to maintain contact with friends and family."

A royal commission of inquiry into the August 5 sinking began in November and is expected to report back at the end of this month.

Up to 74 people - many of them women and children - were killed when the 37-year-old ship sank in Tongan waters late on the night of August 5.

The 54 survivors, all men, said they had only about a minute's warning when the captain announced they were approaching rough waters.

A series of crashing waves smashed into the side of the ferry - causing cargo inside to move to one side - and it lurched abruptly and began to sink.

The women or children were asleep in the passenger cabin below deck.
John Jonesse, a former Napier schoolteacher who ran companies in Christchurch before becoming chief executive of the Shipping Corporation of Polynesia, has been charged for forgery and knowingly using forged documents.

Jonesse denied the allegations. Jonesse has said in relation to his recommendation to buy the Ashika that he acted responsibly, and the engines had been well maintained.

He accepted there were holes in the hull but said he was not aware the vessel had sailed with them.

Tongan director of ports Bill Johnson has agreed with inquiry counsel that he was negligent in not sending surveyors to Fiji to check the 37-year-old ferry before a decision was made to buy it.

The captain, Maka Tuputupu, has been charged with five counts of knowingly sailing an unseaworthy vessel.