“….. OF MOA’s, MOU’s AND BUSH DEALS!”

Let me begin my column this week with a direct excerpt from a public apology delivered over radio and submitted in a signed statement by the Chief Minister, Hubert B. Hughes in 1999. I am moved to include this excerpt because I continue to be concerned about the large volume of lies, half-truths and innuendos, which the Chief Minister propagates regularly in an effort to shore up the rapidly deteriorating image of his Government. I will quote that statement here in part, as follows:

“I Hubert Hughes of South Hill, in the island of Anguilla, hereby wholeheartedly and sincerely apologise to the Honorable Victor F. Banks, Member for Valley South and the Honorable Osbourne Fleming, leader of the Opposition and Member for East End Constituency for any embarrassment, loss of right or pain that I have caused them by the statements I made on Radio Anguilla on Friday 2nd July, 1999 over Radio Anguilla and to the members of the press on the said day.

I wish to fully and unconditionally withdraw all allegations I made against the personal characters of Mr. Victor F. Banks and Mr. Osbourne Fleming, for the avoidance of any doubt I wish to categorically state that I have no records, or any evidence and or knowledge that either Mr. Osbourne Fleming or Mr. Victor F. Banks are guilty of any misconduct, corrupt practices or any criminal wrong doings.”

After stating thirteen specific points on which he admits to lying the CM then concludes with the following statement:

“I deeply regret any pain that I may have caused Mr. Banks or Mr. Fleming as well as their families and their constituencies. I apologise to them for any damage or hurt that I have caused them as a result of the statements I made on July 2nd, 1999 over Radio Anguilla. I deeply regret making these statements, which are untrue and I do apologise for them. I understand that any future repetition of these statements in any form or like status will result in immediate Court action. Thank You!”

You may be interested in knowing that on that occasion Mr. Hughes, in addition to his public apology paid our legal fees, the amount presented being EC$ 20,000. We took no funds from Mr. Hughes --- he paid our lawyers. One would expect that this would cause Mr. Hughes to be more responsible --- but yet again on 28th July 2000 he went on Radio Anguilla and made similar statements against me. I then proceeded to file Suit No. 30 of 2000 in the High Court against Mr. Hughes. Again our lawyers negotiated and he paid my legal fees to the tune of US$3,000 and I requested that he make a contribution to the Anguilla Community Foundation on my behalf. I left it up to his discretion and he made a contribution of EC$ 1,000.

The reason why I am belaboring these incidents is because Mr. Hughes continues to believe that he can continue to denigrate his opponents in the sanctuary of the House of Assembly with the same old lies he perpetuates. And on occasion at his press conferences he comes perilously close to making libelous statements by using the shelter of legal language, which apparently his lawyers have advised. This week in his press conference he used the opportunity to insult Permanent Secretaries in a roundabout manner and on the other hand praise them by implying that unlike the past Government he values their expertise. All of this in an apparent effort to deflect attention away from real issues with both the Flag Project and Viceroy, which clearly indicate that things are not going right. Furthermore, he carefully skirts with slander by suggesting that two ministers in the past Government signed MOA’s “in the bush” while he has utilized technical staff in the public service for such negotiations. We are taking legal advice on that statement. However, I must point out the lies and hypocrisy in his presentation in light of the situation with the Government today.

This Government boasted during and after the election campaign of their adherence to the principles of transparency and good governance. I have pointed out the selectiveness of that claim in several of my columns and press statements and must do so again as I speak to the Viceroy and the Flag/Temenos negotiations. Let me also encourage you to reflect on the whole discussion of MOA’s and MOU’s and I will demonstrate that there is no substantive difference to the legal weighting of any of these once they bear the Chief Minister’s signature. In fact, an almost irrefutable case can be made for their legality even if the Chief Minister has not been duly authorized to sign by Executive Council.

Lets start with Viceroy! We were very happy two weeks ago to hear that the Viceroy deal was consummated. In fact, in my column I listed it as good news and an opportunity for the Chief Minister and his colleagues to turn things around while we wait for the rest of the world. At the time I made an estimate that based on the sale price we would get a windfall revenue of over EC$50 million. I had calculated that figure on a sale price of US$165 million with a mandatory 5% transfer tax and a reasonably negotiated Alien Land Holding Licence fee of around 8%. Unfortunately, the lack of transparency by certain members of the Government have come back to haunt us. And as a consequence it is being estimated that we may lose as much as EC$19 million in revenue.

Let me explain! In my article of September 24th, 2010 entitled: “So Shall It Be In The End” I mentioned that on Friday July 30th, 2010 in a press conference reported in the Anguillian, the Chief Minister and his son the Parliamentary Secretary, Haydn Hughes reported that an MOU was signed for the sale of Viceroy with Starwood Capital Group and the new buyer would be paying US$40 million in taxes to the Government. I made the following statement in my article: “What was most ironic about this press statement is that whereas the AUM politicos in the recent election campaign had been accusing the former Government of conducting their negotiations in secret here are they now presenting an MOU negotiated by HAYDN alone! In fact after this press statement a number of Ministers of the Government denied having any knowledge of the transaction and in particular the MOU. Transparency Indeed!”

The other interesting thing about the MOU was that it was written on Starwood Capital Group letterhead, signed by the Chief Minister and witnessed by a senior official in the Ministry of Finance. And the final clause, below the terms and above the signatures, reads as follows: “Understood, Authorized and Agreed.” In my article I extracted four specific clauses from the MOU, which the CM purports to have been negotiated by the Parliamentary Secretary, and commented on them. For the purposes of this discussion I will only deal with the first one as follows: “He fixed the value of the real estate for the purposes of calculation of the various stamp duty and alien land holding license fees as not to exceed US$105 million. My comment: Revenue will be lost if the value exceeds US$105. Even if that were considered to be unlikely, given the circumstances of the sale it would have been a better deal to set a minimum rather than a maximum.”

Someone said to me yesterday: “You mussa got goat mouth!” The reason for this comment of course is that I predicted that the terms of “Haydn’s Negotiated MOU” could result in the Government losing money. In fact, close to EC$19 million has been lost by this particular clause. So instead of the Chief Minister’s boast in the press conference that he had appointed his son to “redeem some of the taxes lost under the previous MOA” --- the opposite is the case.

Fast forwarding to the present, we now find ourselves in a situation where this same unauthorized MOU has restricted the Government’s negotiating capacity despite the fact that they subsequently used the Tourism Investment Committee (TIC) established by the AUF Government to rectify the blunders. Interestingly, in his recent press conference the Chief Minister ironically accused the same AUF Government (all of whose MOA’s were approved by EXCO and negotiated with the TIC) of signing MOU’s in “the bush”. One could legitimately ask the question where was the July 27th 2010, MOU with Starwood Capital Group (SCG) and the Government of Anguilla (GOA) signed and negotiated? Since a number of Ministers of the AUM Government denied having any knowledge of the transaction. Could “in the bush” be a plausible answer?

Lets now look at the Temenos Resort & Golf Course. The rumors have been rampant over the past week regarding the breakdown in negotiations between the GOA and Mr. Rizzuto, the owner of Cuisinart Resort & Spa on the MOU for moving forward on its acquisition of Temenos Resort (Also called the Flag Project) some two months ago. Mr. Rizzuto has been a longstanding and respected developer on the island and while many of us were concerned about the low auction price we were happy with the fact that the Chief Minister who is normally tough on expatriate developers seemed almost to be in a “love affair” with Mr. Rizzuto. In my article of June 17th entitled: “And wid a lotta sauce!” I said : “The point that must be made is that the sale of the Golf Course Project at any price is just the beginning of the process. The Government must now negotiate a business plan with the developer that is contingent on the appropriate responses to the issues raised above as well as others. It must be remembered that Mr. Rizzuto has acquired an asset legally free and clear of all encumbrances. He is not obliged to recognize any of the other creditors. However, Government must use its leverage along with moral suasion to achieve the best outcomes for its people. The Chief Minister must adopt the “wait and see” approach that “the victory is not yet ours!” He should be careful not to shout: “Mission accomplished!” Let the Salamander experience, be his guide!”

Again the comment: “You mussa got goat mouth!” There have been no documents presented to substantiate the positive statements regarding Mr. Rizzuto’s agreement to conditions, which the Chief Minister has been boasting about. However, a number of members of the Government have assured their supporters that Mr. Rizzuto had agreed to providing US$5 million to Anguillian creditors; had agreed to build a four star hotel; and would start construction in three months. It has been my stated position that Mr. Rizzuto did not become an extremely rich man by being careless with his investments and I have questioned the CM’s contention that he had agreed to all his terms. What seems clear from the rumors is that Mr. Rizzuto has decided that his letter of November 15, 2010 to the Chief Minister was based on certain assurances, which have changed given the nature of the global economy and the fact that he has now acquired the property in a public auction free and clear of all encumbrances.

Because of the lack of documentation I will not venture to discuss what appears to be a clear “break down” in the relationship between the Chief Minister and Mr. Rizzuto. However, I will extract one statement from Mr. Rizzuto’s letter to the CM on November 15, 2010, which may be instructive. It reads as follows: “I have taken your word and promise and I am investing in people to move quickly on this project but I am hearing a lot of different rumors which I like to discard and hope that I have been awarded the project. …… I will be in Anguilla from December 1 – 6, 2010 and hopefully we can sign an agreement at this time and get started.”

It is apparent from his letter that Mr. Rizzuto was given certain assurances by the Chief Minister which gave him a level of confidence that he could be awarded the project in short order and on the Chief Minister’s say so. What were those assurances and when were they made? How should one interpret the other aspects of the letter, which clearly indicate that the CM does not understand the importance of “arms length negotiations” in the face of a transaction, which could have legal ramifications for the Government of Anguilla? At the end of the day the Chief Minister must take some responsibility in particular for the fact that at such a low price, so few investors from an original field of sixty–four, purported to have an interest, only a few came to the auction table. Why such a lack of confidence in Anguilla as a jurisdiction for investment? Does this have anything to do with the CM’s style, approach and attitude? Or is it a response to a growing reputation for incompetence and lack of transparency in the governance process over the last eighteen months? What did the CM say about “bush deals”? Where was the TIC in all of this?

I started off by making the point that the Chief Minister has an established reputation for lying. And by his own admission! I then went on to explain that whether we call them MOA’s, MOU’s or “bush deals”, agreements between investors and Government must be honoured. So whatever the Chief Minister concocts to cover his incompetence --- the people of Anguilla are still waiting for substantive solutions to their plight. Chief Minister, it is time to stop trying to fool Anguillians by silly talk of MOA’s, MOU’s and “Bush Deals”! It is time Chief Minister, to stop the rhetoric and lies! Anguillians are fed up!

Victor F. Banks

Sachasses Estate

August 16, 2011