Jagdeo is confusing himself!

Apr 14, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – Jagdeo continues to insist that there was no private investor in the Marriot Hotel. And he even went as far as saying that he is prepared to resign if evidence can be found as to any single private investor obtaining any monies in the Marriott.

Yet, he conceded earlier that his government had been seeking an equity investor and a loan for the hotel. And it was even willing to take a lower take on its return to encourage such an equity investor. These are very interesting revelations which bring back memories of the Berbice River Bridge where at one time the government was even saying that it may have to temporarily forego its return on its investment.

Why should the government have had to contemplate reducing its take on the hotel just to facilitate a private equity investor? Is this another example of how Jagdeo feels a government should be run as a business concern?

Where Jagdeo confuses himself is that he is conflating an owner with an investor. As such he insists there was no private investor in the Marriott. He has arrived at this point because as far as he is concerned the very fact that the hotel is 100% owned by the government means there is no private investor.

He is dead wrong and it shows how little he understands the lexicon of investment. An investor in a project does not necessarily have to be the owner. A project can have investors who are not shareholders.

In order to construct the hotel, the government went out for a loan, but not any ordinary loan. It went out to obtain a syndicated loan.   A syndicated loan is a loan provided by a group of lenders to a large borrower. The syndicated loan constituted an investment in the hotel.

But it was not just any investment. The syndicated investors in the Marriott Hotel enjoyed certain preferred rights.  According to the forensic audit conducted as regards the construction of the hotel, the syndicated loan of US$15.25 is ranked as having priority over NICIL which put up the bulk of the money for the hotel. Further the syndicated loan attracted generous interest rates of 9.15% and 8.65% during construction and post-construction phases respectively.

The audit found that the bank which put together the syndicated loan had a lien on the hotel via mortgages and debentures. As such the audit concluded that should the project run into financial difficulties, the bank will get preference over NICIL in terms of terms of loan repayments.

The APNU+AFC which eventually, we are told, took over the loan, reportedly was not able to ascertain the name of the persons who contributed to the syndicated loan. As such, up to now there has been no public disclosure as to who were the ‘investors’ that lent the money as part of the syndicated loan.

It is extremely disturbing that in this age when great attention is paid to source of funds that a government could enter into an arrangement for a syndicated loan and not know the identities of the parties that were lending the monies, or if it did refuses to make this public.

Surely, some law needs to be passed to ensure public disclosure of such arrangements. How can a government be part of a project in which there is 100% shareholding interest by the government but it borrows monies and do not know the identities of those who lent the money?

Now that the government is determined to sell the hotel – against what many see as better judgment – it should be asked to recover some of the sums which were provided by taxpayers or which were forgone during the construction and the operation of the hotel.

Members of the public should insist that after the hotel is valued, the government should add the following costs:  the cost of re-routing the city’s sewage lines to facilitate the construction of the hotel, the market values of the lands taken over by the government in the construction of the hotel, the total value of all fiscal concessions offered to the hotel both during and after construction. These sums should be added on to the valuation when determining the minimum sale price of the hotel.

Jagdeo has said nothing as yet about these costs. He needs to be reminded about them because these were sums provided or foregone by the taxpayers of this country and those sums need to be restored to the Treasury.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Berbice, Government, Jagdeo, Marriott, Private

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