It would appear that the Marriott manoeuvre being done by NICIL is to have two thirds of the project equity in the hands of a friend, and then, the moment come, have the friend re-sell a large bloc of those shares for a profit that will end up being distributed out, etc.
It is the only way to comprehend the price and size of the absurdity being demonstrated.
Before we proceed the writer needs to underline that the financial engineering at work in this project normally exposes its perpetrators to legal action. There is here in France a law against abus de biens sociaux. Misuse of corporate assets. The crime consists of misusing the assets or the credit of a company for “personal” ends and profit. “Personal” here extends to the political and private network and the law has its origins in a political/commercial scandal of 1934.
We do not know if the laws of Guyana hold provisions for the protection against dilapidation of the public patrimony, but APNU and the AFC with their inutile corps of lawyers need to move to the courts to have the transfer of assets blocked pending the conclusions of a duly constituted commission of inquiry or other diligence.
A programme of lawsuits ought to be put in place to protect us from the unknowns and the misunderstandings that have grown up around the management of some important projects. It is not necessarily to say that Mr Brassington and the persons nominated to manage the acquisition and disposal of public assets are either incompetent or motivated by ill will. It is to insist that the people have the right to surveillance and consultation. The haste and dissimulation that started with the Guyana Telecom sale and continued as a standard practice born of desperation and suspicion or disdain for the people, has to end at some time. Legislative mechanisms have to be put in place or activated to ensure us our rights.
This writer has worked in the hotel sector as an owner and manager and financial consultant. Has also worked in the tourism sector in a major destination, the United States Virgin Islands, on the government side. He agrees with the government that available rooms are a key to tourism growth. But there are many ways to do it. Barbados, for example had created a public corporation to help fund and advise local investors. So, as a national venture, Marriott is also a good project. We need more first class hotel rooms. The whole tourism sector needs reviewing. We need to look at our marketing, availability of ‘air lift’ for interested visitors and rooms to put them in. Government investment is justified by occupancy rates that could be dissuasive to purely private sector investors.
The feasability study needs to say much about all of this and show how the EBIDTA (Earnings before Interest, Taxes (not applicable surely), Depreciation and Amortisation) develops over time and what would be the percentage of these revenues to be retained in the country in a sector notorious for poor revenue retention. But the pro forma financial statements should prepare us for the final real costs in terms of national debt. The projected costs should explain how it is that we are spending $50 million for a hotel that will most likely have an average daily rate of $150 -200 and an occupancy rate of perhaps 35%. Why the cost per key, at about $250 000 is in the high range in a place where construction costs per square metre are in the low range. What the fees for carrying the Marriott flag are and the type of management contract that was negotiated in terms of shareholder risk.
Usually, all this is read and analysed from the feasability study. The norms and ratios to be expected in any feasability study are well known in the industry. The feasibility study, if done, needs to be made public. The practice of treating government/public business with excessive discretion, unjustified in even the worst of times and under the most fragile of regimes, needs to be rejected.
The information we seek is almost always available in the documents submitted to the multi-lateral agencies sooner or later. It is most often too late. But, in the case of the Marriott an effort at public information/relations is being made with the help of a confirmed professional in Mr Kit Nascimento. I am sure that an information package that goes beyond platitudes, with transparent figures, as well as a project website, is in existence or in preparation.
It would be indeed sad if the PPP government, in what may very well be its final terms in office, and Mr Ramotar, in his first term and working with energy to bring substantial projects that can re-structure our economy, fail for want of effective communication.
The opposition parties are vigilant. Having learnt from Amaila Falls they will expect answers from the government. Mr Carl Greenidge has already expressed what could be his party’s lack of enthusiasm for Marriott. He says that the Georgetown port is to be given priority.
It is slow and inefficient in its customs operations and of uncertain capacity.
He is correct. Some twenty years ago the Jamaican government already worked on its ports ‒ including reducing the paper steps to get goods cleared from 35 to seven. As reported then in Larry Luxner’s ‘Caribbean Update,’ they hired Norwegian consultants to reduce paperwork and useless hassle. Given the stories coming out of Customs, it is little steps like these the government could take as it modernises the country in ways other than spending on projects presented in controversial form.
The Marriott project, at first glance, is over-priced. The costs would have been unlikely to pass any of the specialised banks working in this field.
There was, in the Caribbean at one time, a practice of offering government guarantees, plus land, for hotel projects, so important was the hotel sector felt to be. The Curaçao experience is enlightening. There, businessmen sometimes used the guarantee to raise money on the commercial market, took the money and neglected the project. We need to see exactly how the Marriott deal is done. Already, the sale of two thirds of the shares for little to an unnamed investor, reeks of something that needs to be swept out.