PRECAUTIONS NEED TO BE TAKEN

Jul 18, 2010 Features / Columnists, Peeping Tom

Before it was sold to its present owners, the Pegasus Hotel was part of an international chain of hotels. The consortium that owned this chain eventually decided to sell it off and there could have only been one reason for this: its revenue stream was not sufficient in relation to the investment made. If the financial expectations of the owners were being met or surpassed, the shares would never have been sold.

The Princess Hotel was formerly Buddy’s International Hotel. It too had to be sold after the projected tidal wave of tourists that were to have descended upon Guyana following Cricket World Cup 2007 did not materialize. Buddy’s International Hotel began to experience serious financial stress just after it opened and had to be sold. It now operates under new ownership and is called Princess Hotel.

The Pegasus and the Princess are the two top hotels in Guyana. There are many others who are not doing well because the tourism sector is simply not having the number of hotel-staying visitors that would be necessary for these hotels to flourish.

Against this background of stagnation, there is a plan to construct a major hotel in Guyana at a site in Kingston. This is a sign of confidence in the Guyanese economy. Any investment of this nature would on paper seem very good for Guyana and this is no doubt why it is going to be welcomed in some quarters. Jobs are going to be created and Guyanese are going to be able to boast of having yet another top-class hotel. Guyana will have a five-star hotel and no doubt a beautiful building to showcase to its citizens and visitors alike.

The hotel is going to be branded by an international chain with a reputation for quality within the tourism sector. All of this sounds nice, except that the public is not being told as to who are the investors behind the project. It is hard to visualize the people at Marriott giving their consent to the branding of a hotel without carrying out a detailed feasibility of the project so that in the event of any flops, their corporate image does not suffer. They must therefore be confident in the new entity.

But there are also precautions which need to be taken, especially when dealing with hotels and casinos. Both hotels and casinos are attractive options for persons who wish to cleanse their dirty money, be it from the sale of drugs or from corruption. In fact, hotels and casinos are seen as the perfect conduits for washing dirty money, and great care therefore needs to be taken to guard against this.

This is why as much as we should welcome any major investment in the country, diligence has to be taken in ensuring that the monies that are going to be invested, whether from local or international sources, are legitimate.

The Guyana government should therefore indicate the standards that it plans to set to ensure the legitimacy of the funds to be invested in the hotel. No doubt some of the investors already identified would insist on such standards, because no one would want to have their investments placed under scrutiny because some other investor may not have been forthcoming as to the source or sources of his or her investment.

The public must be taken into confidence. There are many good men and women out there who can act as watchdogs, to guard against the wrong type of money making its ways into deals that involve large-scale investments.

We must do all that is possible to guard against this happening, because the slightest of scandals involving some illicit deal will hurt not just the project concerned, but also the country and its image.

Guyana is desperate for investment. The government is showing that it wishes to encourage investments. It is now going as far creating public-private sector partnerships. A great many projects are now being pursued following this model.

This is all good, but while we should have more investments, we have to ensure that the sources of the investments are clean and that the entities themselves are not used as means of washing illegal money.

As such, the government should seek the services of specialized companies to conduct due diligence on all prospective investors in large-scale projects in Guyana, so as to ensure that we do not find ourselves creating development havens with dirty cash.