…Says Brassington is running desperate
“The government would be making a foolish mistake continuing this project without consultation with stakeholders”
By Abena Rockcliffe
All that has been spent so far on the construction of the Marriott branded Hotel is taxpayers’ dollars, so the government has a responsibility to inform the nation about all major developments with this project.
That is the contention of economist Professor Clive Thomas, who told Kaieteur News, yesterday, that it is only right that the deal made between Atlantic Hotel Inc (AHI) and Republic Bank be made public as soon as possible.
Professor Thomas’s reasoning is that “Government is spending my money on this project, so it has a major duty to be accountable to me and likewise all taxpaying Guyanese.”
On Sunday, Kaieteur News reported that the Marriott Hotel and adjoining state lands were mortgaged or pawned to Republic Bank in exchange for US$29M.
Initially, Republic Bank was to be the lead lender of the US$28M syndicated loan (a loan offered by a group of lenders) to AHI, but investors were apparently not forthcoming.
AHI was set up as a Special Purpose Vehicle to oversee the Marriott and is essentially being controlled by the National Industrial and Commercial Investments Limited (NICIL).
In addition to the hotel, which it mortgaged for US$27M it has mortgaged the neighbouring land that once accommodated the Government Analyst Food and Drug Department for US$2M.
The accumulated loan for the two assets is just US$1M more than what was supposed to be sourced through Republic Bank as a syndicate.
According to the Official Gazette published on November 22, last, the lease will last for a term of 99 years.
The mortgage of the state land stipulates “all future building and erections that may hereafter be constructed or erected,”
Professor Thomas, who is one of Guyana’s more recognized economists, said that something is terribly wrong with the deal between Republic Bank and AHI, as that company (AHI) does not have the ability to just pawn state lands.
He said that it is obvious that Winston Brassington, who is the head of NICIL and AHI, is running desperate, simply because no one is willing to invest with a Government that is facing a no-confidence Motion which it tried to abort by proroguing Parliament.
The Economist noted that any wise investor would want to wait and assess the political climate, irrespective of personal feelings towards Government.
Thomas said that that even though it is imperative that the public knows the details of the deal made between Brassington and Republic Bank, there is much more that Guyanese must insist be dealt with. He said that Government needs to be pushed towards making the best decision regarding this project.
The Economist said that one of the most fundamental rules in business and finance is to always cut losses in cases like this, where one can see that major profits will not be made.
Pointing out that the Marriott project was flawed from the beginning as it would be difficult to be successful, based on the utilization capacity in the hotel sector; Thomas said that deep thought must be put into whether the project should continue.
The economist said that there is no use in the government continuing along the line that it has taken with hope that “things will turn around.” There is a very real possibility that things may not turn around.
He said, “The government would be making a foolish mistake continuing this project without consultation with stakeholders.” Thomas added that it is not enough that the government says that the Marriott will be successful, it must be proven.
The economist said that a system must be set up where it will be evaluated and proven that Marriott will make more economic sense than alternative investments.
The Professor said that a good investment is the best use of resources and Guyana must ensure not just a return, but the best return.
It is clear that the question of whether Marriott is worth going forward with should not be answered by the government alone, Professor Thomas said.
The economist suggested that the issue be put before the National Assembly, whenever it is reconvened, and that body should decide whether it is the best use of resources and an agreement to move forward should be made.
He said that this should be after politics is set aside and all heads go together for a fruitful agreement based on the evaluation of all other alternatives.
Professor Thomas said that the evidence now presented for the failure of this project is also evidence of a wider breakdown.
“Fundamentally, my view is that all NICIL’s operations are illegal. It is operating as a slush fund and beyond what is expected of a state institution.”
He said that the most important task is to bring NICIL under the control of the National Assembly and stop the financial lawlessness and abuse of state resources.
Professor Thomas said that as it stands, it is very difficult to exercise control over what is taking place at NICIL.
He said that there must be lawful compromise on the way NICIL operates since any entity that is utilizing public resources cannot be private and must therefore come under scrutiny and be answerable to the public.
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