Privatisation Unit defends possible sale to Gerry Gouveia

Nov 12, 2009 News

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The Government of Guyana and the Privatisation Unit and NICIL yesterday responded to the Kaieteur News article entitled “Controversy looms over Duke Lodge neighbour.”
“Kaieteur News’ statement, suggesting that the sale to Mr.(Anthony) Reid was a front to selling the property to Roraima Airways Inc., and attributed to El Dorado Trading, has been denied strongly by this bidder in a letter to the PU dated yesterday.
“This bidder has further indicated that legal action has been threatened against KN for this libelous statement, if it is not corrected.  The Privatisation Unit is also considering this course of action against KN as this statement once again suggests that its tender was not proper,” the Privatisation Unit stated yesterday.
In a statement issued through the Government Information Agency (GINA), the Privatisation Unit stated the property called the Office of Empowerment was advertised for sale from May 31, 2009 to June 16, 2009. Five bids were received and a recommendation was made by NICIL to sell to the highest bidder, Mr. Anthony Reid.
On July 27, 2009, Cabinet approved the sale of Lot 52 or 93B Duke Street, Kingston to Anthony Reid for the sum of $63 million plus VAT.
“A Notice of Award was dispatched to Anthony Reid in late July notifying him of Cabinet’s Decision.  On the 10th August 2009 Anthony Reid issued a letter withdrawing his bid, leaving the next highest bid of G$49.5 M from El Dorado Trading.”
According to the statement, a firm principle stated in all GoG/NICIL/PU advertisements for property sales is that ”Government is not bound to accept the highest or any bid.”
“This point is reiterated in all tender packages purchased by potential buyers/investors as well as other terms regarding the award of tender where the sale does not materialize, the statement added.
“In any tender, Government is not bound to sell or sell to the highest bidder or any bidder; as such a second ranked bidder has no automatic right to succeed the number one ranked bid, if the number one bidder does not conclude a purchase or withdraws their tender (as is the case here).”
According to the statement, where Government opts to sell a property to a party other that the highest bidder, it either does so due to price being one of a number of criteria or it adopts a position, that the sale price shall be no less than the highest available bid price and development benefits accompany the sale to maximize the economic benefits to the country.
In early 2009, Government considered a similar case with the sale of Herdmanston House to Michael George, who was the second highest bidder.  Although the second ranked bidder by price, Cabinet approved the sale to Michael George at a price no less than the highest bid price, having regard to the developmental considerations.
These included that: Michael George operates a hospitality business immediately next to Herdmanston and wished to expand this business; considerable investment will be expended to upgrade the Herdmanston property to that of a boutique hotel; the expanded business would create an expansion of employment; the business would add to the growing tourism and hospitality industry.
In a statement, the Privatisation Unit stated that it has in the past been accused of sometimes looking only for the best price and ignoring development benefits.  “It is well known that the hospitality industry offers many development benefits including investment and employment of a large number of persons.
“The case of Roraima Duke Lodge is no different from Herdmanston Lodge. Roraima currently employs in excess of 20 persons at the Duke Lodge location, next to the Office of Empowerment.
Should the government conclude a sale with Roraima, it will be on the basis of a price no less than the highest available price (currently G$49.5 M from El Dorado Trading) and after consideration of the development benefits of an expanded Duke Lodge operating in the hospitality sector, according to the statement.
Also, it was stated, the government would not lose any income from the sale while at the same time promoting the expansion of the hospitality industry and employment.  This approach is not inconsistent with the tender documents issued and precedents established such as the recent sale of Herdmanston.
In 2007 when the sale of Duke Lodge was advertised, Roraima bid the highest price of $140 million (plus VAT) from a total of nine bids.  Cabinet approved this sale in 2008 and the sale was subsequently concluded.  The sale was based on a public tender, it was stated.
The statement noted that Kaieteur News has on a number of occasions suggested that the sale was not transparent.
Yesterday, Publisher Glenn Lall said that it is his view that the second highest bid would have been ignored in favour of Capt Gerry Gouveia. The statement was incorrectly attributed to El; Dorado Trading,he said.

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