‘The Truth eats Lies’
—from Marlon James’ latest epic ‘Black Leopard, Red Wolf’
The previous article stated that over $5.0 Billion of Public Money was spent in the first 6 months of 2009 during the CL Financial bailout, under that MoU. Yes, that is the same type of document which we were so loudly being told is not binding and can be completely renegotiated, in relation to Tobago Sandals.
The publication of the Tobago Sandals MoU at the end of November 2018, forced by my litigation, set those misleaders to try diverting concerns by claiming it was all open for discussion. Of course it is possible to renegotiate any contract, or MoU for that matter, but that is trite and explains nothing. Probably intentionally so, really.
The limits of renegotiation are rooted in the bargaining strength of the parties. Which means that the party with stronger leverage can in fact call for renegotiation and likely obtain improved terms. The weaker party will almost inevitably agree to renegotiation, in the course of which serious concessions will be obtained by the stronger party.
The recent episodes of Sandals shutdown/withdrawals in both Antigua and Barbuda and the Turks and Caicos Islands are crucial in understanding this ‘Carefully Crafted Confusion’. In both those cases, Sandals spent the capital to build the resort, but yet were still able to shutdown to seek further concessions. In the Tobago case, Sandals was investing no capital. Even in what I am now calling the Lok Jack Gambit (which I will get to in the next part) no Sandals capital was at risk. The point being that if Sandals was intended to have no capital at risk in Tobago, T&T would have been in a far weaker negotiating position than any of the other Caribbean countries. That is the precipice we were facing, the deep peril which our misleaders are trying to normalise.
Of course, we have had a sobering silence from the usual suspects, already under pressure from the dire truth about the MoUs agreed intentions, now from the CLF MoU – according to our political lore – ‘Facts are stubborn things’ – hence this week’s first epigraph.
The UWI hosted a seminar on Wednesday 30th January 2019, under the rubric, ‘Economic Implications of the Termination of the Sandals Project’
The panel was publicised as including Minister Stewart Young, Dr Roger Hosein, Dr Bhoendradatt Tewarie, Louis Lewis and Professor Vanus James. The session was chaired by Mr Julian Rogers of Guardian Media Limited. The surprise speaker was Arthur Lok Jack of Associated Brands and Guardian Life, and former National Chairman of the Vision 2020 Exercise, who made a number of widely-reported and frankly unsurprising statements. Lok Jack’s main points, from my reading, were –
- Sandals engaged in negotiations with our Government after a 2015 dinner at Lok Jack’s home at which both Dr Keith Rowley and Butch Stewart were guests;
- Bad publicity was not the reason for Sandals exit, it was the fault of the Opposition;
- Another reason for Sandals stance was the participation of the State…in fact, Lok Jack was reported to have said “Government has to get the hell out of private sector business.”
The first point about the private dinner is unsurprising and would explain the overall reluctance, even now, to invite other hoteliers to participate. The second point is a bemusing attempt to shutdown the pointed questions as to the impact of the intended terms in the MoU. The third point, however, is extremely interesting as it is clear that the prospect of private sector investment in the Tobago Sandals resort has been part of the public discussion for quite some time. What is bizarre and verging on offensive from Lok Jack is his brazen dismissal of the history of these matters.
Here are some relevant extracts from my previous article ‘The Tobago Hilton Story’ published on 24th April 2008 in the Business Guardian –
- “Hilton Tobago [Golf and Spa Resort] is a 198-room complex on a 20-acre site alongside the 18-hole golf course. It is owned by Vanguard Hotel Ltd—whose shareholders are reported to be the State (which owns 47 per cent, held via eTeck), Guardian Holdings Ltd, Angostura Ltd (these two companies being the developers of Tobago Plantations)—and Hilton International Ltd.
- The hotel was opened in November 2000 and it is therefore the most recent major hotel constructed in Tobago. In that respect, it could be considered a test case for the viability of the high-end tourism model which has so far eluded us in T&T.
- The Minister of Trade and Industry, Dr Keith Rowley, announced at the post-Cabinet press briefing on March 27 2008, that the State was taking several initiatives to increase its investment in the hotel. The two main expenditures being the allocation of $45 million for urgently required renovations and the purchase of the 53 per cent private-sector shareholding, so that the hotel would be wholly State-owned.
- There have been two Newsday reports referring to a price for the hotel of approximately $200 million.
- Competence and moral hazard: quite apart from repairs and maintenance aspects, one is bound to wonder what, if any, is the value added by private sector participation in this project. Dr Rowley’s statement made it clear that Hilton International was virtually “handing back” its shares for a nominal sum and further, reducing its annual management charges significantly. No such assurances were heard from our home-grown private shareholders. Instead, we were told that eTeck is engaged in negotiations to settle terms for the acquisition of the remaining private shares. It is common wisdom these days that the private sector is better than the public sector at assessing risks and allocating resources. The Tobago Hilton episode should give us all cause to pause and reconsider those beliefs.
- Repairs and renovations – Dr Rowley made it clear that the private sector partners had not fulfilled their responsibilities insofar as contributing to the ongoing maintenance of the hotel itself. Those lapses had made it necessary for the State to undertake urgent repairs in the reported sum of $45 million. The appropriate adjustments should be made to ensure that the shareholders do not benefit from their inaction in terms of repairs and maintenance.
- What was the quality of the feasibility studies done for this project? How reasonable were the underlying assumptions? Do we now understand the reason/s for the project’s failure? If yes, what were these? If not, why are we investing further? This episode leaves a cloud of doubt over the superior competence of the private sector to conceive, implement and manage complex investments…”
Hence my second epigraph, as this is surely not the last we have seen of this scheme.