Private sector gravely concerned at APNU warning to Marriott financiers

-Harmon stands by his position

Grave concern has been expressed by the Private Sector Commission (PSC) over a statement by APNU executive Joseph Harmon that the coalition was putting banks on notice that it considered the Marriott Hotel project unjustified and would therefore not honour any commitments made in relation to it by the government or its partners.

In a clear sign of growing private sector disquiet over the fallout from the present configuration in Parliament and its impact on the investment climate, the PSC Chairman Ronald Webster has written to Leader of the Opposition and APNU Leader, David Granger expressing the body’s concern over the Harmon statement.

However, in a statement yesterday afternoon, Harmon stood by his position.

Joseph Harmon
Joseph Harmon

The PSC letter dated October 17th, 2013 and released yesterday came following an October 3rd APNU press conference in which Harmon stated:  “banks are now put on notice that APNU (considers) this project as  lacking economic justification, without Parliamentary approval and as presently configured not in the best interest of Guyanese”. He added “as such we, as representatives of the people of Guyana, would find difficulty honouring any commitment made by Atlantic Hotel Inc., NICIL, or the Government of Guyana in this regard”.   Harmon’s statement had followed increasing disclosures about the financing structure for the Marriott hotel. Harmon, the Shadow Minister of Works had said then that APNU had serious issues with the fact that the government holding company, NICIL will only own 33% of AHI, the company set up specifically to pilot the Marriott project, after spending approximately US$20 million, while the still unnamed investor will own 67% with their investment of US$8 million.

This equates to “jumbie economics,” lamented Harmon, “it does not make sense to me at all.”

In its letter to Granger, the PSC said it wishes to “point out that these statements have far reaching and very serious negative investment consequences for all private businesses in the country, most especially those which are seeking to access capital overseas.

“We ask that APNU appreciate that political statements of this nature, made by a senior member of the major party in opposition, impact on the political risk of every business as it can be interpreted that we are a country which cannot be trusted by an investor to honour its international obligations.

“This statement is bound to heavily impact on the future cost of capital and erode the private sector’s, indeed the country’s, access to international finance and funding”.

Both APNU and the Alliance for Change have strongly criticized the Marriott project on the grounds of feasibility, its financing structure and the lack of transparency. They are thus far not satisfied with the answers provided by the government and NICIL and are likely to continue voting against it in Parliament.

The PSC letter added “We would have thought that the leadership of APNU would fully understand that it is dangerous for any state wishing to attract investment to be known as one which does not honour its legal obligations. It should be appreciated that agreements entered into by the State transcend government.

“Further, we believe that these statements are extremely premature, as they inexplicably presume that a large regional financial institution and established banks in the syndicated loan financing for the Marriott would not have performed their due diligence and loan analysis. Such a presumption is unwarranted and can only be seen as a political threat to intimidate foreign investors and financial institutions from supporting projects sponsored by the Government.”

The PSC appears to be referring here to the proposed investment in the Marriott project by Republic Bank of Trinidad. NICIL had disclosed that both Republic Bank and the Marriott group had been provided with information on the prospective investor so that they could carry out their due diligence. This disclosure has been criticized locally as stakeholders here are still to be told who the investor is.

“The PSC finds it difficult to understand that APNU would hold any view other than that private and well established financiers should be given the space to form their own conclusion on the financial viability and legality of a major project, as is the practice on every project that a bank finances.

“Further, we believe that the legality or illegality of any contract entered into by the government of the day can only be determined by a court of law and that it is entirely improper for any political party or, for that matter, the Parliament, to publicly pronounce in a manner deliberately intended to undermine the contractual obligation of the State”, the PSC statement said.

The PSC also flayed the posture of APNU on a clutch of the government’s proposed projects.

“While the PSC recognises that the political dispensation has fundamentally changed from the past and that a minority government has been elected, we are unable to accept the logic of some of APNU’s recent decisions with regard to a number of major investment projects initiated by the government. We are, for instance, unable to determine the correlation of APNU’s unqualified opposition to projects such as the (Timehri) Airport Expan-sion, Specialty Hospital, Amaila Falls and now the Marriott Hotel, on job creation, economic development and the improved welfare of the society.

“The PSC would, therefore, like to engage the APNU in a discussion on the objectives and implications of its policies and to share our views on policies that we would like to advocate so that the private sector can continue to be confident that, regardless of whichever political party is in office, the private sector will be recognised to be the means of economic growth”,  the PSC said.

In a statement yesterday afternoon in reply to the PSC’s letter, Harmon said: “The statements I made in the press which have incurred the wrath of the PSC, concerning investment in the Marriott Hotel project are consistent with statements I have made previously on this matter. These include, but are not limited to:

 

*    The failure to disclose to A Partnership for National Unity-APNU the environmental and social impact assessment of the project.

* The fact that the National Assembly had debated and passed a motion on the Marriott, and no action was taken in relation to that motion

* The fact that the hotel construction is in an advanced stage and the country is still to be advised/ informed of the identity of any investors other than monies spent belonging to the people of Guyana.

“Maybe the Private Sector Commission can advise the nation of the investment of any of its members in this project. In the face of this continuing contempt for the people of Guyana by NICIL/Atlantic Hotel Inc., I stand by my statements and will continue to speak out on issues and reject any attempt at being muzzled.”