Head of the National Industrial and Commercial Investments Limited (NICIL) Winston Brassington said on Monday that the Marriott Hotel is covering all of its operating costs with no financial assistance.
He was asked questions as to the financial relationship between NICIL and the Marriott to date at a press conference he held at the Privatisation Unit’s boardroom in Kingston, as regards the $1 billion transferred from the former Guyana National Co-operative Bank to NICIL and earmarked for the hotel’s construction.
Brassington responded that contrary to reports in the Kaieteur News the $1 billion was not held in a secret account and in fact was transferred into NICIL’s regular bank account. The revelation was made by the state-sanctioned forensic auditor of NICIL, former Auditor General Anand Goolsarran in his audit report.
“There was never any attempt to deceive the auditors. It was sitting in the NICIL’s accounts which was audited each year,” Brassington said, adding that audited opinions were issued reflecting to creditors there was nothing secret.
He said, “Nothing in Mr Goolsarran’s report uses the words secret account. For the record, $1 billion was advanced from GNCB to NICIL on the authority of the Office of the President for intended investment of the Marriott project. This sum was deposited into NICIL’s regular bank account and was not kept in any state or special or secret account. NICIL’s financial statements properly and consistently show the $1 billion was an amount due to GNCB.”
Brassington said that in 2015 the money was returned as it was not needed, owing to the Marriott construction being completed up to a point and the US$15.25 million being received from Republic Bank Ltd of Trinidad as part of the US$27 million debt financing.
Brassington maintained that the money was never transferred to Atlantic Hotel Inc (AHI), the special interest company created to build the Marriott. He noted that the money was kept in NICIL’s account and as such the holding company was not required to answer where funding was from, as funding was from multiple sources.
He said that any future questions in relation to AHI needed to be directed to the new board as he would not be privy to the information that could be presented by the new board.
In relation to NICIL, he stated, “Let me be clear, we are not putting in any money into the Marriott for operating expenses. They are funding and vireing all of their operation expenditures out of their operating revenue.”
Brassington additionally said that last month the hotel enjoyed an occupancy rate of 67% but could not speak to the profit potential.
He said the Marriott’s revenues were in line with what had been projected.
The forensic audit report by Goolsarran had said that in the first two and a half months of commercial operations, the hotel made a “house” loss of approximately G$60 million, with an occupancy rate of 29.8%. The hotel opened on April 16 this year.
A review of the Marriott’s consolidated profit and loss statement as of June 30, 2015, indicated that the loss was mainly due to the less-than-anticipated income from rooms (16.9% below budget), coupled with the high cost of utilities (73.9% higher than budget). The occupancy rate during this period was 29.8%.
In response, the hotel’s special purpose company, AHI commented in Goolsarran’s report that “on the basis of management information, the hotel is performing in accordance with budget and is projected to make an EBITDA (Earnings Before Interest, Taxation and Depreciation and Amortisation) of about US$100K or more by year end (latest estimate). At this time, the hotel, like any new project, would take some time to ramp up to optimal operations. Utility costs were substantially reduced although there is still a dispute.”
The forensic audit by Goolsarran also revealed that NICIL’s investment in the Marriott Hotel was US$41.6 million, above the US$36 million publicly stated by Brassington previously.
In March, Brassington, told reporters during a tour of the hotel that NICIL had injected an additional US$16 million into the Marriott Hotel having already invested US$20 million to jumpstart the project.
He had said that once the legal challenges are concluded, the money would be reimbursed.
Brassington had emphasised that the funds are “not derived from taxes” and the money is from proceeds of the sale of properties owned by NICIL or dividends from NICIL investments.
However, according to the forensic audit report, for the period 2007 to 2012 amounts totalling $7.320 billion were transferred from various government agencies to NICIL to effect payment for works undertaken on behalf of the government. Among these were sums for the Marriott Hotel. The Guyana Forestry Commission transferred $300 million, GNCB $1 billion and the Guyana Water Inc $353 million to NICIL for the hotel.