Property Matters – Tobago Sandals MoU, part two

The previous article examined the clauses of the Tobago Sandals MoU and I took the position that those provisions were entirely in favour of Sandals, which was investing none of the capital. What is more, the MoU offers unspecified incentives and exemptions to Sandals, as well as a free hand in terms of purchasing and employment. Incredible, but true. This is where we are.

This article will examine the MoU further, starting with the question of just why was it released at this advanced stage after 9 months of claiming that its contents were secret and that disclosure would damage the ongoing negotiations.

tobagosandals-mouhandover
Sandals MoU handover

It could be that the Cabinet, acting in the public interest and in the face of my litigation, decided to release the MoU as a tangible show of transparency. On the other hand, it could be that the ongoing negotiations have now settled to the point that the release of the MoU was literally immaterial to the desired outcome. That second version seems to me to be the more likely one, given the mid-December date disclosed for signing the real contracts. If that is really the case, we are witness to a sobering moment in terms of the implications of this Public Private Partnership.

Having considered this matter carefully, I am declaring that this Sandals MoU is deeply detrimental and not in the public interest. I have no doubt that some eminent and well-paid attorneys have vetted the MoU but that is usual in these kinds of matters. My focus, as always, is on the ‘Underlying Commercial Arrangements‘.

This table summarises the main points used by the promoters of this project, with correctives –

OFFICIAL VERSION REALITY
This is a Tried and Tested Model – just like Trinidad Hilton, Magdalena Grand, Hyatt Regency No proper details have ever been published on the performance of those hotels, so what is really being claimed? I am not aware that those establishments obtained tax/duty/work-permit concessions, after the State built those properties in Public Land…is that what is being claimed here?
Local employment is an important gain from this project. Sandals has the ‘sole discretion’ to select its employees, while the State has to swiftly grant as many work permits as required.
Local Suppliers and Contractors will benefit from the economic activity at this project. Sandals has to ‘give preference to’ local suppliers, on condition that their requirements are available in adequate quantity and quality, all at competitive pricing.
Even if certain tax/duty/work-permit concessions are granted that will be to the public’s benefit, since the project is publicly-owned, with Sandals only being the Management Company. Even if the Management Agreement allows for a split of revenues/profits/turnover, the permitted transfer-pricing arrangements with Sandals means that those figures will likely be manipulated so that our return from the investment is minimised. Which is why we need to insist on open-book accounting as an approach for this project.
At the end of the day, the entire property will be a State-owned asset. While that is true, the actual value of the asset will be dependent on its income, which is in turn dependent on the terms of the Management and Technical Services Agreements.

This entire arrangement is as bogus as it is rickety. So much so that an urgent issue is pushed to the front – Given the sheer wretchedness of these terms for our country, what can we do to rescue this situation? Is it that we are merely at MoU stage and all these matters are just ‘still under discussion‘? If that is the case, there is still time to change direction and improve our position in this matter, if we proceed at all. After all, the MoU is not legally binding and merely sets out intentions, not so? If, on the other hand, our country is now so committed to this Tobago Sandals project that any shift would be either impossible or financially crippling, I think we need to be told. We need a clear, official statement as to whether there is any room to maneuver at this stage. Nothing else will do, in my view.

One surprising omission from the MoU was that there was no mention of the collateral infrastructure such as improved water and electricity supply or the airport expansion.

In relation to Antigua & Barbuda, see below, it is sobering to reflect that although Sandals invested the capital in that resort, it was still possible for them to pressure the government of that small country into granting more and more concessions. In a situation in which Sandals has invested zero dollars and we have shown such eagerness in the very opening stages, I would be surprised if we were not subjected to such pressures and requests. To my mind, the only question would be whether we, the public, would ever know what new arrangement has been crafted.

Finally, I would note that T&T’s Tourism policy does not fit at all neatly with this huge project.

ADDENDUM: The Antigua & Barbuda impasse

On 30th June 2017, the Antigua & Barbuda PM, Gaston Browne addressed the Parliament to detail that country’s long-term experience of dealing with Sandals. It is a riveting presentation which explains some of the areas we need to bear in mind. Indeed, it seems to show what was behind those detrimental clauses set out in the MoU, all intended to shield Sandals from any future decision by our Parliament to levy new taxes or duties.

 

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2 thoughts on “Property Matters – Tobago Sandals MoU, part two

  1. They seem to be operating like predators with the government acting as the ever willing carcass…..pity the taxpayers of T&T – you, me, all of us and who knows generations to come.

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