Any buyer of Marriott will have to pay far more than US$51M - Chris Ram

Any buyer of Marriott will have to pay far more than US$51M – Chris Ram

Mar 13, 2013 News

– Hotel granted concessions worth millions

Any plans to sell the Marriott-branded hotel currently under construction in Kingston will have to include it being valued far in excess than the US$51M it is now reportedly costing.

Chris Ram

A number of undisclosed concessions, including duty free allowances, have been granted in relation to the project, which in dollar terms will push the final price way above the US$51M price tag.
Under the country’s investment regulations, investors can apply through the Guyana Office For Investments (Go-Invest) for special conditions, including a waiver on taxes for a specific time; duty free concessions on vehicles and building materials and a host of other benefits.
Government has recently said it is the intention to sell it once it is completed.
Writing in his Sunday business column in the Stabroek News, accountant/lawyer Christopher Ram argued that at first glance, the hotel whose construction is being managed by a government-owned company, would have to be valued much more than the actual amounts paid to the contractor.
“And surely those concessions which Mr. (Winston) Brassington has negotiated from Go-Invest have a huge value which must be factored in any price. The selling price of the shares in the hotel should therefore exceed the actual cost giving rise to a huge profit. Of course, Director Brassington will argue, quite incorrectly, that the profit belongs to the company and can only be distributed by way of dividends.”
Brassington is the head of the Atlantic Hotel Inc. (AHI), the government-owned company.
He has been under fire for his handling of more than 100 transactions including privatizations and sale of state properties through the National Industrial and Commercial Investments Limited (NICIL), the parent company of AHI, which is also owned by government.
Within the last decade, the administration has been steadily using NICIL to conduct investments and other privatizations that have largely found disfavour with the Opposition which now has a one-seat majority in the National Assembly, the body which has to approve how public funds are spent.
However, government has been arguing that since NICIL is a company, its transactions do not have to be approved by Members of Parliament of both sides of the House.
According to Ram, a harsh critic of the administration, NICIL’s tabling of its accounts may be reflecting a lower value for the hotel going up which ultimately would have implications for any investors/purchasers.
“If we divert for a moment and look at the financial statements of Atlantic Hotel Inc. as at December 31, 2011, we see the flawed accounts signed by Mr Brassington and given a clean audit opinion by the Audit Office. Only the Guyana dollar equivalent of the payment to the contractor has been recorded in the accounts,” Ram said in his business column.
The construction of the hotel has been running into several speed bumps since being announced by former President Bharrat Jagdeo two years ago.

Winston Brassington

In the first place, there were questions why government was investing valuable taxpayers’ dollars in what is considered a private sector project.
In late 2011, government released US$10M ($2B) to the hotel’s contractor, Shanghai Construction Group, despite no clear idea who the investors would be. To date, the government still has not finalized the investors. Yet billions have been poured into the project.
News that only Chinese labourers were hired in the project also sparked protests and saw government coming out with a number of strange statements in its defence, such as there were no skilled labourers in Guyana to undertake a project of such magnitude; there was a language barrier and that the contractor had the discretion to hire its own labour force.
Recently, there were disclosures that government went ahead and hired a New York-based engineering firm despite knowing that it had been blacklisted from participating in certain school projects in that state after a court matter that found them guilty. Its main executives were forced to resign.
Brassington has said that he knew all along about the consultant’s court issues but did not indicate whether it was a problem.