THE following is a statement issued by AHI Inc., outlining the major categories of challenges to the Marriott Hotel Project that served to deter, delay, and jeopardise the private financing for the project:
PARLIAMENTARY ATTACKS TO STOP THE PROJECT
Following a motion submitted to the National Assembly in August 2012 by Mr. Khemraj Ramjattan entitled: “Public monies in the Marriott Hotel be halted until approval by the National Assembly,” the motion was debated on December 17, 2012.
MP Ramjattan sought to attack the hotel project and the role played by NICIL:
“NICIL has been, literally a slush fund for deals involving the powers that be and their favourites and friends. This company, headed by those members of the sultanate and controlled there with active encouragement of Government has diverted billions of taxpayers’ dollars away from the Consolidated Fund and therefore away from parliamentary scrutiny.”
“This use of NICIL by Government as an instrument for spending then through a sub-instrument called AHI to do so in that very irregular way is corruption in broad daylight. Taxpayers monies which are in NICIL’s accounts are going to be used to substantially underwrite the financing of this proposed hotel project.”
“The foregoing issues are compounded by a lack of viability as I mentioned. Many investments in the local hotel industry have gone bust because of low occupancy as well as the perennial issues of crime, unreliable and uncompetitive electricity, a dirty city, poor drainage which would retard any development for local tourism even amongst Guyanese who are longing to come back home, more less than foreign tourist.”
Hon. Minister Irfaan Ali:
“…the Hon. Member Mr. Ramjattan’s sole intention in bringing this Motion to the National Assembly is to present a blockade on the development of this country; and the private sector has been loud in its endorsement of this project. For a matter of fact, a group of hoteliers endorse this project but we still see the Hon. Member Mr. Ramjattan and the AFC, especially, on a prolonged campaign to block this development. It is not any secret that this prolonged approach by the AFC, in particular, is driven by self-interest, cemented in protectionism and they are doing it the great American tradition way, that is, by lobbying”
Prime Minister, Samuel Hinds:
“The question comes down to choice of development by the Government, yes, I would agree that maybe APNU would not have invested in the Marriott, the AFC would not have invested in the Marriott, but that is not the issue here, the issue is the Government has made the judgment that an investment in the Marriott is a key investment for this country … one hotel alone of the order of the Pegasus is not enough for the tourism sector that is being developed in Guyana
Mr. Speaker the two issues on this matter here are procedures and processes of NICIL particularly with the Marriott, I notice that they reserve Clause now Number 1 speaks to NICIL in its entirety, it takes the opportunity to close or wanted to close down NICIL in its entirety, it has deviated from the subject of the debate here, which is about the Marriott Hotel project. The second thing of this debate is on the choice of investment procedure, it is a Government choice and we accept that APNU would have done something else and the AFC would have done something else but we could only honestly do what is our judgment. We cannot do APNU’s judgment or we cannot do AFC’s judgment.”
It is noteworthy to review the Hansard transcript of the debate that spans over 50 pages for the full debate. Suffice to say that the resolution resulting from the motion by the Opposition is not legally binding on the Government, however, as would be expected, the motion and related actions of the Opposition on the matter would give any serious investor reason to pause.
A PLETHORA OF OPPOSITION CRITICISM
The Opposition criticism of the Marriott project, particularly post 2011, has served to strongly discourage and then delay, private investment in the project. It is likely that in the recent history of Guyana, no project has ever been subjected to such a sustained and targeted attack by both the leaders of AFC and APNU and their various members. This criticism has been despite substantial information being laid before the Parliament on the project, invitations to the Opposition for briefings on the project similar to what was done for the Amaila Falls project, debates organised by Government on alleged corruption and inviting the Opposition to participate, debates in Parliament, and numerous Press Releases and press conferences by Government officials on the project.
The overall theme of the Opposition has been largely targeted at scaring away potential investors and raising the risk profile of the project. A number of these statements have been directly targeted at threatening investors, to the point, that the Private Sector Commission had to step in and condemn the Opposition statements on private investment.
At times, the nature of the attacks as reported, have been scandalous and outrageous. Warnings to investors, suggestions of money laundering, fraud and corruption, illegalities, project will be halted, project not being financially feasible, have all been levelled against the project and potential investors.
It is therefore not surprising that the time taken to conclude the investment is a lot longer than planned for RBL and the GoG. RBL had early on in the syndication indicated that subscriber interest in the secured fixed rate bonds to be issued for the debt financing exceeded the US$27 M required; however, over time, the roadblocks thrown up by the Opposition and special interest groups caused potential subscribers to withdraw or decline further consideration. This was further compounded by the failure of the Opposition controlled Parliament to pass the AML Bill and the likelihood of Guyana being blacklisted.
LEGAL ACTIONS IN THE GUYANA COURTS
At least 3 legal actions have been filed against AHI or the Marriott project, as follows
1. Guyana Pegasus vs AHI (Action #242-W of 2012) filed on 2012-06-20
This matter is still ongoing although an interim solution has been found whereby AHI has built drainage on the Marriott property for the Guyana Pegasus.
2. Desmond Trotman vs AHI, NICIL (Action #137-S/2014) filed on 2013-07-05
Action #137-S/2014 was filed in July 2013. On February 17, 2014, this action was withdrawn following the withdrawal by NICIL of the lease .
3. Desmond Trotman et al vs AHI, Registrar of Deeds [(1) Actions #263w/2014, (2) 518W/2014, (3) 520W/2014, (4) 521W/2014)]. The first action was filed on the 5th of Dec 2014 while the other 3 were filed on the 12 December, 2014).
The four actions filed in December 2014 are on-going and have resulted in a delay to the registration of the mortgage for the property owned and leased to AHI.
It should be noted that given that long leases and mortgages and debentures have to be published, that the press and all interested parties can view these notices.
It is clear that the actions of Mr. Trotman over the last two years have been deliberate and calculated to delay, if not derail, any private investment into the project.
COMPETITOR ATTACKS
Although the PSC and other hoteliers have generally supported the Marriott project, Mr. Robert Badal owner of the Guyana Pegasus Hotel has condemned the Marriott project, both in the courts, and in the public media.
PLIANT, OFTEN BIASED AND NEGATIVE SECTIONS OF THE MEDIA
There has been a general absence of objectivity, balance, and fairness, on the part of certain media houses.
Investors increased perception of Guyana risks due to failure of the Opposition controlled Parliament to pass the Anti-Money Laundering (AML) Legislation
As a result of the CFATF and FATF review of Guyana and the various statements of blacklisting, both potential lenders and investors have been scared away from Guyana. Specifically, one large regional bank, was prepared to invest a large sum in the fixed rate bonds, and cited the AML issues as the reason it could not proceed.
The private investor, ACE Investments Limited, became extremely concerned about the potential risks of operating a casino in a jurisdiction about to be internationally black-listed and the resulting impact on the reputation on their officers, who are officers of publicly traded companies in Hong Kong. This concern led both ACE and NICIL, to enter into discussions with Marriott about operating the casino and other parts of the Entertainment Complex resulting in an agreement with Marriott, who currently operate 6 casinos worldwide, to agree to operate the Entertainment Complex including the casino on a similar arrangement as the hotel. This action will ensure that Marriott‘s international reputation and experience will be brought to bear to ensure the very highest standards of operation for the casino and Entertainment Complex.
The above is despite an active and serous effort on the part of the Government and major civic organisation to seek to achieve passage of the AML Bill as chronicled below.
i. The Original AML/ CFT Act was passed in the National Assembly and subsequently assented to, by then President, Bharrat Jagdeo, on August 14, 2009.
ii. The Act was fully supported by the PPP, PNC and AFC (no objections or abstentions were made by any of the Parliamentarians in attendance).
iii. In 2011 a number of recommendations were made to bring Guyana into compliance with CFATF and presented to Parliament by Government.
iv. On May 7, 2013, the Opposition requested the amendments be examined by a Special Select Committee of the National Assembly.
v. The Committee held 16 meetings ending on October 22, 2013 which the Opposition boycotted.
vi. The Opposition did not submit ANY amendments to the Committee, all amendments to the bill, the core of the committee’s work, were done solely by Government.
vii. The Amendments were presented to Parliament on November 7, 2013 and were subsequently voted down by the one seat majority Opposition. This led Guyana to be backlisted by CFATF.
viii. Government re-tabled the Bill on Dec 12, 2013.
ix. The bill was again sent to the Special Select Committee for review and consideration with the understanding that FATF (the parent body of CFATF) would review and make a decision Guyana would be blacklisted at their plenary meeting held on February 13 and 14, 2014.
x. The Committee determined that the amendments to the bill would be ready by Monday February 10.
xi. One week before the February 10 deadline the Opposition walked out of the meetings and later, once again boycotted the Committee meeting.
xii. AFC representative Kemraj Ramjattan boycotted the Committee meeting altogether.
xiii. Up to that point there were no written submissions of proposed amendments to the Bill by the Opposition.
xiv. At 9 PM, the night before the Bill was scheduled to be put before the National Assembly for a final vote, APNU, while still in committee drafted their Amendments.
xv. The Amendments by the Opposition do not comply with FATF requirements, are, in some cases, a contradiction to the principle Act of 2009, and in cases where there is no contradiction, only applies to the principal Act and not the Amendment Bill.
The following organisations released statements in favour of passing the AML legislation:
i. ABCE Diplomatic Corp.
ii. Public Service Commission
iii. Georgetown Chamber of Commerce and Industry
iv. Guyana Bankers Association
v. Guyana Manufacturing Services Association
vi. Guyana Insurance Association
vii. Aircraft Owners Association of Guyana
AHI Press Releases, Press Conferences and Information publication
Throughout the process of designing and building the Marriott project, the Government has been open and transparent, recognising at times, that the project was still under development or that certain aspects of it were of commercially sensitive nature.
In June 2010, Marriott publicly announced it would be embarking on a hotel in Guyana. In December 2011, there was a public sod-turning event. In February 2012, Mr. Ramjattan asked a series of questions on the project [(Notice paper #12, (Q9, Opp9) published in Parliament on 15th Feb 2012]. On 15th March of 2012, the Minister of Finance issued a full reply (the facts of which remain materially accurate to this day) and released a series of project related documents including the construction contract, copies of the tax agreements covering all of the incentives for the project, and copies of the lease agreements for the land.
Additionally, the Government convened a series of debates in 2012 on major issues including the Marriott and invited the Opposition to participate.
Further, on a number of occasions, the Government offered to do a closed door briefing on the Marriott project similar to what was being done on the Marriott over the 2012-2013 period.
The Opposition never took up the Government on this offer.
PROGRESS DESPITE ATTACKS ON THE PROJECT
It should be noted that despite all of the attacks on the project, the following have been achieved:
a) The Marriott brand has been secured;
b) The hotel is being built in line with budget and to Marriott standards and will open in April 2015;
c) The hotel is underway in employing approximately 230 Guyanese persons picked from a total of over 3000 applications, in an extremely open and transparent process;
d) A private equity investor has been found and an agreement executed with this investor; the investor was cleared by both Marriott and Republic Bank and announced publicly in 2014;
e) US$27 debt financing committed and all legal documentation executed to allow disbursement; of this US$15.25 M disbursed by certain of the investors in the debt syndicate;
f) Following the fallout from the failure to pass the AML Bill, Marriott has agreed to be the operator of the Entertainment Complex;
g) Based on the Feasibility Study and the full compliance of Marriott with applicable tax laws, AHI is poised to be the largest taxpayer in the hotel and hospitality sector.
CONCLUSION:
The delay in injection of the debt financing and equity financing can be directly linked to the opposition led legal action that has prevented the mortgage security from being registered. Once these matters are concluded, it is expected that the remainder of the financing will be concluded.
The organised and sustained attack on the Marriott project and the prospective investors have increased the risks for private sector participation. Opposition and media attacks have sought to discourage, delay, obstruct, and prevent, the flow of any private investment into the project. At the same time, the same parties have attacked the investment NICIL is making into the project, and the interim funding, which was only necessitated by the direct obstruction of opposition legal actions to prevent the security being put in place.
Given that all of the corporate investors have Boards of Directors that have to operate in a diligence manner when it comes to investment; the legal actions have called for considerable legal reviews and opinions on the project. Some investors have progressed and injected their funds in the interim; other are still reviewing the legal issues.
Suffice to say, the Opposition actions to stop the Marriott project will not prevent the hotel from opening. The hotel will open in April of this year. However, it cannot be lost that the Opposition attacks on all major projects such as the Berbice Bridge, Amaila Falls, Marriott project, etc. will give any private investor, including local financial institutions, reasons for pause, when investing in any project that has Government involvement.
In essence, our investment climate will be scarred for some time as a result of these actions.
[AHI STATEMENT, MARCH 2015: CHALLENGES FACING THE MARRIOTT HOTEL PROJECT]
