Auditor General Deodat Sharma says that auditing of the financials of Atlantic Hotel Inc (AHI) for the years 2016 to 2021 is ongoing but his office is not to be blamed for the seven-year blackout as the process was delayed because the documents it had requested from the National Industrial and Commercial Investments Limited (NICIL) were not forthcoming.
“We are at about 2017. In the 2020 report you would be able to see that under NICIL. It [the process] was delayed and it was delayed under NICIL’s part not producing the information for the queries that we had,” Sharma told the Stabroek News.
“We would have sent queries and they took a long time to answer and rectify those. I could remember one of the issues was the assets register and the accountant at Marriott was to put all of those together. They took a while to settle those queries. We only had years 2015 and 2016 if you didn’t close 15 and 16 you can’t move on. That was the issue there. 2015 and 2016 took quite a while,” he added.
Sharma explained that from 2015, the process of auditing for the special purposes company that NICIL set up for the Marriott Hotel – AHI – hit a snag because the APNU+AFC government had requested that a forensic audit be completed.
“The audit was done through NICIL. It is a joint company arrangement. They had to prepare the accounts and they delayed the issuing of it for quite some while.”
That audit was undertaken by former Auditor General, Anand Goolsarran, who had advised that the Marriott Hotel be sold.
This newspaper reached out to current head of NICIL, Radha Krishna Sharma, given that his agency is the parent company of AHI. Sharma, however, said that he would not comment. Asked if he was not concerned about the affairs of its subsidiary, an agitated Sharma responded, “I have treated your questions with respect and answered that I do not want to answer. Let us not go further than that.”
In his accountability column in today’s Stabroek News, Goolsarran commented on the state of financial reporting.
“As regards the status of the audit of AHI, an examination of the Auditor General’s report for 2018 indicates that the audit of AHI’s accounts for 2015 was completed and the related report issued. Similarly, his 2019 report indicated that the audit of the 2016 accounts was also completed and the related report issued. These audited accounts are required to be laid in the National Assembly within six months of the close of the financial year, but it is not clear whether this was done”.
The Sunday Stabroek has previously reported that there were no annual returns at the registry for the Marriott Hotel for the five years the APNU+AFC Coalition was in government. That article prompted a response from former Minister of Finance, Winston Jordan, who said that neither the board of Atlantic Hotel Inc nor the Coalition government could be blamed for the audited accounts of Marriott Hotel remaining outstanding. Jordan also revealed in his letter that the Coalition government saved the Guyana Marriott Hotel from being acquired by Trinidad-based Republic Bank Limited (RBL) after a loan default and the inability of AHI, the special purpose company set up for the hotel, and its parent company, the state holding company, NICIL, to assist. Jordan also disclosed that the RBL loan had been removed from AHI’s books and the government had taken on the burden of servicing it.
Jordan had told the media in 2017 that government had taken over the servicing of the loan. However, there was no formal disclosure of a default incurred by Marriott’s parent company, AHI, and that acquisition by RBL had almost occurred. Jordan also did not clearly explain then that government had taken over the entire servicing of the loan. However, he did point out that the amount due at the time was some US$748,000, and unless AHI was able to assume the debt, government was burdened with paying US$1.1 million every six months for the next 13 years.
“Even if it [the Marriott] does well, it would not be able to pay its debt. Remember it is the entertainment part that is going make it… that is not being done so for the time being now unless we just say ‘take the asset’, it is the government which has to come in now. That is an unbudgeted expense, where are we going to find the money? We have to find the money otherwise we lose the asset,” he had said.
Goolsarran weighed in and said the APNU+AFC government erred in not selling the Marriott Hotel and the current PPP/C administration should
dispose of it and ease the burden on taxpayers who are footing the bill on a loan default incurred by the entity.
The least that can be said is that it was a reckless decision for the [PPP/C] government to construct and operate the hotel. In the final analysis, it is the taxpayers, both present and future, who have to bear the financial burden of discharging the indebtedness to the Republic Bank.”
On the status of the more than US$56 million hotel, which the then government had to bail out in 2017 with state resources because it could not service its loan, the former AG said that it made no financial sense in government continuing to subsidize it.
“Since the indebtedness to the Bank has been removed from the books of AHI has the hotel been turning out a profit? If so, what contribution has it been making to assist the Treasury to service the loan?” Goolsarran questioned as he called on those responsible to make the financial records of the hotel public.
Echoing a position he held after conducting an audit of the hotel project back in 2015, Goolsarran says that with a number of branded hotels slated to be built here, selling the Marriott now would be most financially prudent.
“I am still of the view that the hotel should be privatized. This is especially so, considering that several other internationally branded hotels are being constructed in and around the city, not to mention the recently completed expansion of the Pegasus Hotel. These developments are likely to see a lowering of occupancy rates at the Marriott Hotel, which in turn will have an adverse effect on its profitability and financial viability,” he said.
“… A government should not be in the business of owning and operating hotels, which should be left to the private sector that are better equipped to deal with the risks and rewards associated with that industry. That apart, it seems unreasonable, indeed unfair, for taxpayers to bear the cost of servicing the indebtedness to Republic Bank, including the repayment of the loan,” Goolsarran added.
