Dear Editor,
Your public interest article, “No annual return records for Marriott under APNU+AFC” [Stabroek News, March 20, 2021] was both timely and informative., even if the headline gave the mistaken impression that that state of affairs has been corrected since the PPP/C returned to office, in August 2020. Apparently, this matter is so concerning that it warranted an immediate follow-up article in the form of an Editorial comment [See SN, March 21, 2022].
I would like to use this opportunity to bring some context to the issue under consideration, in the process correcting the negative implications the article’s headline may have cast on the Coalition government. In doing so, this response is informed by my memory as well as consultations with the former Chairman of Atlantic Hotel Inc., (AHI), the owners of the Marriot Hotel.
The new Board of directors of AHI was constituted in early 2016. One of the first issues dealt with was the Audit Report for the year ended December 31, 2014. The Audit Report had a number of queries, which prompted the Board to undertake a comprehensive review of the operations of the hotel. Some of the queries were:
1. Incomplete Asset Register. A special team was retained to itemize all the assets of the hotel, a task that had to be done without inconveniencing the guests.
2. Non-verification of the attic stock, comprising spares and other elements required for the timely repairs of the hotel’s equipment. These assets were in the possession of the Chinese Contractor. As will be recalled, legal proceedings – which were protracted – had to be instituted to get the Chinese Contractor to vacate the Entertainment Complex where the stock was located.
3. There were numerous defects that were identified by the Supervising Engineering firm that prevented the proper handing over of the facility. This contributed to the lengthy delay in issuing the Completion Certificate.
4. Protracted negotiations with the Chinese Contractor over sums owed. During this time, they occupied the Entertainment Complex.
In light of the Audit queries, the Board took the decision to formally contract NICIL, the parent company of AHI, to provide Accounting and Administrative services to enable better and efficient management of the hotel.
Having dealt with the Audit queries, the Accounts for the years ending December 31, 2015 and December 31, 2016, respectively, were submitted to the Audit Office. For reasons only the Audit Office can clarify, the audits did not commence in an expeditious manner; they remained outstanding as at December 31, 2019 during which time the Accounts for years ending December 31, 2017 and December 31, 2018 were also submitted to the Audit Office. By letter dated December 18, 2019 enquiries were made of the Audit Office about the outstanding audits. This was in addition to several oral queries. On August 20, 2020, the Audit Office confirmed receipt of the Financial Statements for the years 2017, 2018 and 2019 and requested electronic copies of several documents to assist with the audit. This request was channelled to NICIL to provide the necessary documentation.
As the above indicate, every effort was made to get the accounts for the years 2015-2019 audited, in spite of the enumerated and other challenges. Neither the Board of AHI, nor the Coalition government, can be blamed for the audited accounts remaining outstanding and being presented to Parliament. Indeed, problems and difficulties seem to persist, since the audited accounts for the years post August 2, 2020 are still outstanding.
I also take the opportunity to share some information on two other points that were raised in the article. First, in the absence of audited accounts, it is unclear whether the hotel has been able to turn a profit. As I indicated in 2017, profitability was heavily dependent on a functioning and profitable Entertainment Complex, inclusive of a casino. The continued absence of the Complex makes it doubtful that the hotel is profitable. On the positive side, however, the 80% average occupancy of the hotel, and the removal of the Republic Bank Limited (RBL) loan, from among its liabilities, would have mitigated the losses. At the time of the Board’s replacement, in August 2020, AHI had cash in hand in excess of $1 billion.
The second issue relates to whether the Marriott Hotel “has been able to start repayments on its loan, due since 2017.” I must admit that I was very surprised that the writer seemed unaware of the developments in that matter, since it was covered by SN, among other media. Briefly, in 2017, AHI defaulted on its payment of the RBL loan and requested the assistance of NICIL, the guarantor. Unable to assist, NICIL turned to the government for assistance. The Coalition government stepped in and saved the hotel from being acquired by RBL. The loan was removed from the books of AHI and taken to the books of Central Government, to be serviced as a direct charge on the Consolidated Fund. The loan of US$17,306,964.12 was restructured on the following terms: period extended from 13 years to 15 years, interest rate lowered from 8.6527% to 6.28%. This resulted in lower annual payments of US$463,791.04 and an overall saving of US$173,261.96. The new agreement was tabled in Parliament in 2017.
In the interest of transparency and accountability, the current Board of AHI should give a similar update relating to the state of the audit of the Accounts for the outstanding years.
Sincerely,
Winston Jordan
Former Minister of Finance