Former Auditor General Anand Goolsarran says the APNU+AFC government erred in not selling the Marriott Hotel and the current PPP/C administration should dispose of it and ease the burden on taxpayers who are footing the bill on a loan default incurred by the entity.
Meanwhile, a seven-year blackout on the financials for the hotel continues with even the Office of the Auditor General unable to shed light in relation to questions asked by this newspaper.
Sunday Stabroek previously reported that there were no annual returns at the registry for the Marriott Hotel for the five years the APNU+AFC Coalition was in government. That article prompted a response from former Minister of Finance, Winston Jordan, who said that neither the Board of Atlantic Hotel Inc (AHI) nor the Coalition government could be blamed for the audited accounts of Marriott Hotel remaining outstanding. Jordan also revealed in his letter that the Coalition government saved the Guyana Marriott Hotel from being acquired by Trinidad-based Republic Bank Limited (RBL) after a loan default and the inability of AHI, the special purpose company set up for the hotel, and its parent company, the state holding company, NICIL to assist. Jordan also disclosed that the RBL loan had been removed from AHI’s books and the government had taken on the burden of servicing it.
Goolsarran told Sunday Stabroek, “The least that can be said is that it was a reckless decision for the (PPP/C) Government to construct and operate the hotel. In the final analysis, it is the taxpayers, both present and future, who have to bear the financial burden of discharging the indebtedness to the Republic Bank.”
Goolsarran weighed in on the current status of the more than US$56 million hotel, which the then government had to bail out in 2017 with state resources because it could not service its loan.
“Since the indebtedness to the Bank has been removed from the books of AHI has the hotel been turning out a profit? If so, what contribution has it been making to assist the Treasury to service the loan?” Goolsarran questioned as he called on those responsible to make the financial records of the hotel public.
Echoing a position he held after conducting an audit of the hotel project back in 2015, Goolsarran says that with a number of branded hotels slated to be built here, selling the Marriott now would be most financially prudent.
“I am still of the view that the hotel should be privatized. This is especially so, considering that several other internationally branded hotels are being constructed in and around the city, not to mention the recently completed expansion of the Pegasus Hotel. These developments are likely to see a lowering of occupancy rates at the Marriott Hotel, which in turn will have an adverse effect on its profitability and financial viability,” he told the Sunday Stabroek.
“… A government should not be in the business of owning and operating hotels, which should be left to the private sector that are better equipped to deal with the risks and rewards associated with that industry. That apart, it seems unreasonable, indeed unfair, for taxpayers to bear the cost of servicing the indebtedness to Republic Bank, including the repayment of the loan”, Goolsarran added.
As questions continue over the viability of the hotel and its financials, Auditor General Deodat Sharma has thus far not provided any information to this newspaper.
This newspaper last week Tuesday reached out to Sharma who said that he could not offhand remember what documents were sent to him regarding AHI but he did know that he received some.
Sharma asked to be contacted on Wednesday around 10 am as he would have then been able to gather all the information from the Audit Office on the company.
When he was contacted he said that his secretary needed more time and he should be contacted on Thursday.
When this newspaper called on Thursday his mobile phone was turned off. His office said that he was out of the jurisdiction.
It is unclear why annual financial statements for the hotel from 2015 onwards are yet to be tabled in Parliament.
Unless
Jordan had told the media in 2017 that government had taken over the servicing of the loan. However, there was no formal disclosure of a default incurred by Marriott’s parent company, AHI, and that acquisition by RBL had almost occurred. Jordan also did not clearly explain then that government had taken over the entire servicing of the loan. He did point out that the amount due at the time was some US$748,000, and that unless AHI was able to assume the debt, government was burdened with paying US$1.1 million every six months for the next 13 years.
“Even if it [the Marriott] does well, it would not be able to pay its debt. Remember it is the entertainment part that is going make it …that is not being done so for the time being now unless we just say ‘take the asset’, it is the government which has to come in now. That is an unbudgeted expense, where are we going to find the money? We have to find the money otherwise we lose the asset,” he had said.
Goolsarran says that he is perplexed and it remains unclear why the recommendation [to sell the Marriott Hotel], contained in the 2015 forensic audit report on the hotel, was not followed.
“That report had referred to the serious risk of default in the repayment of principal and interest, should the hotel continue to make losses due to the less than desirable occupancy rate. In the circumstances, it would be necessary for the loan to be paid off at the earliest opportunity. This is especially so, considering that the Republic Bank has a lien on the hotel and surrounding area via debenture and mortgages. The report therefore recommended that the Government proceed without delay to advertise for the sale of the hotel,” he said. The former Auditor General noted that Jordan had said that if the price was right, the then Government was willing to rid itself of the Marriott Hotel. “Let me put it this way, if government gets a credible offer or buyer, it will divest itself of the hotel,” Jordan had said. He indicated that the Government had made it clear on several occasions that it had no intentions of being competitively involved in the hotel industry, and that a Cabinet sub-committee was looking at the issue.
Persist
In his letter to Stabroek News last Monday, Jordan contended that every effort was made during the term of the APNU+AFC administration to have the accounts for the years 2015-2019, audited in spite of a host of 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”, he wrote.
“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.”
He continued, “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 channeled to NICIL to provide the necessary documentation.”
On the question of the viability of the hotel’s operations, Jordan said that in the absence of audited accounts, it was unclear whether the Guyana Marriott had been able to turn a profit. He however said that with the removal of the RBL loan from the hotel’s books and higher occupancy, the situation had been ameliorated, and at the time of the Board’s replacement in August 2020, AHI had cash in excess of $1b on hand.
Immediately
Chairman of AHI, Devindra Kissoon, was asked by Sunday Stabroek last week about the current cash on hand at the hotel. Kissoon responded saying that he would have to look at the hotel’s records and get back to this newspaper with that information. Up to press time, there was no response from Kissoon. He was also asked if he knew that RBL sought to take over Marriott after the default and gave the same answer that he had to check as he was at the time in Court. He said that that since he became Chairman, he had requested the hotel’s annual financial reports from 2015 but learned that they had not been prepared. It is for this reason he wrote the Auditor General “immediately to request the process be completed for all years.” Kissoon also did confirm that the year 2016 Report was completed but was not passed as the Board has not been reconstituted. For the years 2017 onwards, according to him, they are “ongoing”.
No comment
The Sunday Stabroek also reached out to current Head of NICIL, Radha Krishna Sharma, given that his agency is the parent company of AHI. Sharma, however, said that he would not comment. Asked if he was not concerned about the affairs of its subsidiary, an agitated Sharma responded, “I have treated your questions with respect and answered that I do not want to answer. Let us not go further than that.”
Six months
Goolsarran says that the Auditor General’s report for 2018 indicates that AHI’s accounts for 2015 were completed and the one for 2019 indicates the same for the year 2016. If this is so, he pointed out that they should have been laid in the National Assembly.
“An examination of the Auditor General’s report for 2018 indicates that the audit of AHI’s accounts for 2015 was completed and the related report issued. Similarly, his 2019 report indicated that the audit of the 2016 accounts was also completed and the related report issued. These audited accounts are required to be laid in the National Assembly within six months of the close of the financial year, but it is not clear whether this was done,” he said.
Built under the PPP/C administration with the state’s money in addition to the RBL loan, the Marriott Hotel project was highly controversial and is now seen as a test of the government’s decision-making.
