GUYANA: The Marriott Hotel was saved by the oil industry – Opinion

When the APNU+AFC coalition government assumed office in 2015, it unearthed a number of disconcerting facts about the hotel. These concerns emerged from a forensic audit and review of the Marriott Hotel project.          

Guyana Marriott Hotel Georgetown

The forensic audit and review disclosed that the original plan was to have control of the hotel assigned to a grouping called ACE which would inject a mere 12 percent of the equity, after the construction of the hotel. This was an amazing disclosure: which entity is allowed such control with such limited contribution and, of all things, after the conclusion of the project.

The Vice President may wish now to edify the nation as to why this plan was shelved. He should also use the opportunity to explain the change in the original arrangements which would have seen the hotel being built by a USA-based individual.

Hotels are supposed to be constructed by the private sector. So why then did the government have to bear the bulk of the estimated US$63M for the construction of the hotel?
According to the forensic audit, the government invested US$49.042M of that sum while US$15.25M was injected via a loan by syndicated investors under the umbrella of Republic Bank Trinidad and Tobago. The government by injecting so much money was effectively crowding out private investment.

In addition, the government provided waiver of taxes, bankrolled the costs of rerouting the sewage lines, provided land and was responsible for the removal of a nearby structure.
The forensic audit and review noted that the Marriott Hotel project was shrouded in secrecy. No wonder, to date, the people of Guyana are unaware of the identities of the syndicated investors and whether any due diligence was done on them. It is also not clear whether any member of the local economic oligarchy or any politician formed part of the syndicate which lent the project US$15.25M.

The loan came at a high premium. The interest during construction was said to be 9.15 percent during the construction phase and 8.65 percent after construction. These are very generous rates. Instead of offering these high rates to syndicated investors, the monies could have been borrowed locally and at a lesser rate. This is especially considering the high liquidity within the banking system.

The APNU+AFC failed to press for the identity of the syndicated investors. It could have used the amendments to the Anti-Money Laundering and the Countering of Terrorism Act in order to make it mandatory for the identities of all syndicated investors to be made known.

But it did not. As such onto now, the public is unaware of those who form part of the syndicate which enjoyed preference shares which would have allowed them to benefit from the first proceeds should the hotel run bust.

There was a strong possibility of this happening. The forensic audit noted that there was a serious risk of default on the US$15.25 M loan. But the fortuitous discovery of oil is what saved the Marriott, not Jagdeo and his government.

We learnt a few weeks ago that the Marriott Hotel is booked right through to the end of next year. ExxonMobil is its main customer. But guess who will end up fetching the tab for the luxurious accommodation being provided to oil employees at the Marriott?

Yes, it is the taxpayers of Guyana since this expense will be reclaimed by Exxon under the Production Sharing Agreement (PSA). The PSA does not exclude hotel accommodation as a recoverable cost.

Without the patronage of the oil companies, the Marriott would have been in deep financial distress. And so it is the taxpayers of Guyana who have to repay the cost of the hotel accommodation of the oil employees that are effectively bankrolling the Marriott. Without this, the hotel would have found itself in deep debt and would have to have been liquidated. The preferred investors would receive their returns and be compensated, leaving the people of Guyana to absorb the losses. And who knows some lucky crony would have gotten a US$63M hotel at a knock-off price.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of Kaieteur News.)

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Comments

  • brandli62  On 01/02/2022 at 3:55 pm

    President Ali claimed in his recent New Year’s Address, which was largely an embarrassment with false hoods and unnecessary accusations, that his administration was transparent and accountable. To start, how about starting with releasing the details of the Marriott deal? He failed already on the claim of being an inclusive government as evidenced by the complete lack of any consultation with national stakeholder on the NRF bill. Consultations occurred only with experts from Ghana, who have no internationally recognised track record in running a successful sovereign wealth fund.

    • theonly  On 01/06/2022 at 6:08 pm

      How do you know what IRFAT said is false, or you just trying to cause more TROUBLE.

      • brandli62  On 01/07/2022 at 4:50 am

        Theonly: A transparent government as promised by President Ali would:

        1) circulate an important bill, such as the NRF bill, among all stakeholders in advance of tabling them in parliament;

        2) they would give the opposition, NGO and the public sufficient time to analyse the proposed changes to the existing laws;

        3) they would consider changes to the bill, where it makes sense; and

        4) they would in able a proper debate in parliament; and

        5) they would pass the final bill in a proper vote.

        Now you please tell me, why I am a trouble maker for pointing out the obvious facts? Many Guyanese feel very similar about recent events. Just have a look at all the opinions voiced in the national media.

  • wally n  On 01/02/2022 at 4:11 pm

    and what about Climate Change.?…OK….Lets build it on the beach…mumbo jumbo all the time

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