The case for the Marriott Hotel

The government through the instrumentality of President Jagdeo, is about to enter the tourism sector as a major investor. At the same time, the government is getting out of the telecommunication sector, or at least one of its major investments in the sector. Of course these will be done in the name of the people of Guyana, without consultation, logic or justification. Not that President Jagdeo feels any reason or compulsion to consult with the Private Sector Commission, a large segment of the trade union movement, or with the National Assembly. One leader of the PSC had said that he supported everything done by President Jagdeo. One of the trade unionists has placed a halo over him. The many would-be leaders of the PPP/C are silent, perhaps unable to understand the implications of the personality culture and egomania which now shape economic decisions. Or perhaps they quietly relish the thought of leading a country where the people can be bribed with their own taxes; where state property can be disposed to whomsoever the government chooses; and where an opportunity to visit the Office of the President or dine at State House are now legal tender, in exchange for every scrap of transparency, decency, financial probity, the morality of the people and the soul of the nation.

At their most basic, the business decisions of the Jagdeo administration are not difficult to understand. A hydro-electricity power licence and a road contract to Fip Motilall, single sourcing of billions of dollars of drugs for the national health system and in the first instance illegal tax concessions to the Ramroops, land for hotel housing developer Buddy Shivraj all helped to support and enrich friends at the expense of taxpayers. All the aforementioned persons have many things in common, including class and their closeness to the government, and have succeeded partly because of the generosity of the government to them and the relationship they enjoy with its leader. They have no cause for complaint, and on the contrary would wish if things could just remain the same.

They might even be ‘third term-ites.’

Pegasus v Marriott
The problem for Robert Badal and his Pegasus Hotel is that he has been too independent, too courageous and too successful. Worse is that he not only succeeded in spite of the government, but has outmanoeuvred it at every interaction. That is a grievous fault and grievously must he pay for it. The government accuses Mr. Badal of improperly acquiring control of Guyana Stockfeeds Limited while Jagdeo lashes out at the poor service of the Guyana Pegasus and its water quality. But words are not enough to hurt the Pegasus so that sticks and stones must now be called into action, in the name of competition and tourism.

As Business Page recalls it, some years ago the directors of Guyana Stockfeeds Limited announced a rights issue of shares under which new shares were offered proportionately to existing shareholders. Under the terms of the offer, shares not taken up by any of the shareholders could then be offered to the other shareholders. Whatever may have been Mr Badal’s motive, such an arrangement is not unusual in equity transactions, and indeed was a mechanism often used by Banks DIH Limited. At the time of the rights issue, the government was not interested in further involvement in direct private sector investment and did not take up the shares to which it was entitled. Had the government taken up its allocation the shareholding would have remained unchanged. Mr Badal took up the shares and consolidated his control and management of the company.

No one knows whether the government considered the option of taking up the shares which were effectively offered at a discount, and then making a profit by selling them. No one knows too why the government did not honour its own White Paper on privatisation and ensure that 10% of the company’s shares were reserved for its employees. What we do know is that now that those failures have backfired and now that the President’s friends have failed in their bid to buy the Pegasus, it is time to take up the old fire rage and go after Mr Badal. Ironically, the charge led by the President is taken up by NICIL, the company with one of the worst governance records in the country. For more than a decade it has failed to meet its statutory obligations to file annual reports. It is a closed shop, more tightly secured than Stockfeeds can ever hope to be, despite being a taxpayer-owned company. It is a vehicle for siphoning off state assets, selling them and using public money without parliamentary approval. It operates with all the characteristics of a slush fund under the control of a handful of persons with no demonstrated commitment to accountability and the law under which they operate.

But they are powerful and can act with impunity, which perhaps is the subliminal message of their email address – punit! Having failed to file reports annually with the Registrar of Companies for all those years without suffering the statutory sanctions by the Registrar, NICIL and its CEO Winston Brassington and Deputy CEO Marcia Nadir-Sharma were able in one day last September to file and have incorporated the Atlantic Hotel Inc, which to some rings a troubling chord with the Queen’s Atlantic Inc, the company for which NICIL and the government were prepared to change the concessions laws of the country. From all appearances, Atlantic Hotel Inc will be the owner of the proposed Marriott-run Hotel that will challenge Pegasus for clientele. While Mr Jagdeo would wish us to believe that the project is a government-private sector partnership, the incorporator and sole director of AHI is Winston Brassington, the Company Secretary is Marcia Nadir-Sharma who is also its legal officer. The government, it seems, thinks it entirely appropriate for the state to operate like the most secretive private company and sees no contradiction or irony of calling out Mr Badal on governance.

Mr Ramesh Dookhoo, Chairman of the Private Sector Commission, an organisation dedicated to the promotion of the private sector was able in one breath to support the government’s decision to get involved in the tourism sector while calling for more but unspecified information. There was sufficient ambiguity in Mr Dookhoo’s statement to leave everyone guessing without incurring the displeasure of the government, one of the apparent overriding if unstated goals of the PSC.

Poor service
Over the past couple of weeks I have witnessed the poor standard of service by the country’s tour operators and domestic airlines. It is shocking to see how they treat their customers. They accept bookings for flights and then cancel because they do not have enough passengers to make the flight economic. No one visiting Guyana for a few days wants to experience the wait at Timehri while the operator decides whether or not to bother with the flight. If any person wishes to guarantee a flight to Kaieteur, then they had better charter the plane from one of these very service providers who enjoy lucrative space at national facilities financed by the taxpayers of the country.

A decade after the launch of the Tourism Authority visitors and residents alike find it impossible to access basic information on where to go, how to get there, what it will cost and what may be the facilities and amenities that are available. Visitors’ security and safety are vital considerations but it does not seem that this is evident to the government. One cannot but help noticing too that absent from all of the discussion and exchanges about the need for hotels is the Minister of Tourism Manniram Prashad, a long-time friend of the President. Mr Prashad was for several years a director of the Guyana Pegasus and both his political role and well as his experience with the Pegasus would have qualified him to make an informed contribution.

Irrational and illogical
But when decisions are taken on grounds that are as irrational and illogical as they are in the case of Amaila and the new hotel, standard policy formulation and experience become irrelevant and counter-productive to the motives that drive the decisions in the first place. No longer is there a natural role and obligation on the government to provide the infrastructure for the development of the sector, and for the private sector to invest in hardware, jobs and services, and to pay taxes to fund development. It is, like the case of the withdrawal of government ads from the Stabroek News, act first and justify later. The cheerleading band stands at the ready – all set to go. By the time the falsity of the reason is exposed, it is no longer important, and in any case, new and perhaps more sinister motives will have driven more blatantly irrational actions that arouse more but fleeting interest. And so the cycle goes on, despite changes, as in the case of the PSC.

In the days leading up to the Cricket World Cup the government successfully pushed the private sector into hotel property development. The efforts were so successful that there in now over-capacity in the sector. That makes the case for new plant hard to sell, so the President wants to figuratively knock down what exists and invent reasons for a special class of hotel. It seems logical that if such a need existed, the private sector would have responded. They have the flexibility and the profit motive. They know that in tourism the product that is sold is first the country. If someone tells you he is going on holiday s/he tells you the country of destination, not the hotel. Let us first sell Guyana and its rich eco-tourism potential in our many falls and waterways, our mountains and valleys, our flora and fauna. Put money and imagination into the Tourism Authority and the soft infrastructure in the sector. Those will be strong incentives for the private sector to invest in new plant.

Let us recall that the President justified the introduction of casinos as the need to attract tourists. Let him now tell us how many new tourists actually visit Guyana because of the casino and how many are Guyanese who hold foreign passports. But no, we have moved on and the spurious reasons are now irrelevant. It may not be too late for the Economic Services Sector Committee to request that the government present its case for its investment in the hotel.

Mr Dookhoo probably wants the government to present the nation with a financial justification for the [mis]/use of taxpayers’ money for the financial adventures of the President. If so, he needs to be more direct. But the PSC needs to ask a more fundamental question: what is the government’s policy with respect to entering into direct competition with businesses generally and Guyanese businesses in particular. Today it is hotels, tomorrow it is telecommunication, the next day it is agro-industry, etc. The environment becomes increasingly uncertain.

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