Guyana Marriott Hotel’s owner, Atlantic Hotel Inc (AHI) and its parent company NICIL have violated this country’s laws by failure to present financial statements for over seven years and should face penalties, among them being struck off the Register of Companies, former Auditor General Anand Goolsarran says.
And even as the blackout on the financials continues, government remains mum on the expressions of interest it received for the sale of the hotel, which Goolsarran points out should not be, given that it is a state entity which requires public and transparent procedures for asset disposals.
“Since these companies (AHI and NICIL) were incorporated under the Companies Act 1991, they have breached several of the requirements of the Act, including Sections 107, 154 and 346 that require the following: (i) the audited accounts to be presented to the shareholders at the annual general meeting at least once every calendar year but not later than 15 months after the holding of the last meeting; (ii) annual returns to be submitted to the Registrar of Companies within 42 days of the holding of such meetings; and (iii) the audited accounts to be presented to the Minister within six months of the close of the financial year and for those audited accounts to be laid in the Assembly within nine months of the close of the financial year,” the former Auditor General explained.
“There are also penalties for non-compliance with these requirements, in addition to the risk of being struck off the Register of Companies for failure to submit annual returns,” he added.
In mid-December, government, through state holding company, National Industrial and Commercial Investments Limited (NICIL), announced that it was seeking expressions of interest (EoIs) for the sale of its shares in the Guyana Marriott Hotel. NICIL said that the pre-qualification notice was for the purpose of shortlisting the parties who have the necessary financial capability. Critics have seen this as a means of determining who the hotel should be sold to.
Applications for pre-qualification had to include the following: financial capability in terms of net worth, audited financial statements for the last three financial years, net worth of a minimum of US$250 million and a letter of financial capability from a recognised financial institution to acquire NICIL’s shares in AHI for the Guyana Marriott Hotel. While audited financial statements are being sought from the interested parties, the hotel has no recent ones.
The deadline for submissions was last Tuesday, January 10th 2022.
The hotel was controversially built with state and other funds and had been unable to service a key loan which the state has had to take over. The hotel had its origins under the last Jagdeo administration. Financials for the hotel have not been made available to the public for a number of years even though the hotel opened in 2015.
Arrears
Goolsarran pointed out that while he is aware that government has decided to sell the Marriott Hotel, it is unclear how such sale processes can go through when the companies are in arrears, in terms of financial reporting and auditing.
In the case of AHI, based on an enquiry from the Stabroek News, Auditor General Deodat Sharma had stated that the audits for the years 2016-2021 were ongoing and that delays were being experienced in accessing the relevant documents from NICIL.
He also sought to blame the delays on the forensic audit that was conducted in 2015. In relation to NICIL, there was no evidence that the accounts were audited beyond 2013. As of September 2022, the date of the Auditor General’s report for 2021, the position remained the same and efforts to contact the Auditor General have proven futile.
At one time he had said that he would have his staff update him and he in turn update this newspaper on the issue. He asked that a WhatsApp message be sent but never replied to the questions sent by the Sunday Stabroek. Since that time, all calls from this newspaper’s reporters are automatically forwarded to voicemail.
Appropriate time
Last week Tuesday was the deadline for EOIs for prequalification for the sale of the Guyana Marriott Hotel. Submissions were to be made to NICIL’s Head Office.
This newspaper last week reached out to Head of NICIL, Radha Krishna Sharma, to ask about submissions received. He asked if the reporter was the same person that had contacted him last year on the Marriott Hotel issue and had reported that he was agitated when questioned. The reporter answered in the affirmative. Sharma did not address the question but went on to point out that he was a respectful person, and as such it would be wrong to have the words respectful and agitated in the same reportage on him. Told that the two had no nexus, he said that his secretary was listening and that he had no comment to make. “At this time I would not like to comment.”
Pressed on if it was because he was described as agitated, he repeated his stance. Told that it was a public and taxpayers issue and probed on what time he meant when he answered, he said, “At the appropriate time, I am sure we will release that information.” He did not take further questions on what constituted “the appropriate time.”
Last year, when contacted, the NICIL Head had also said that he did not want to comment in relation to the Marriott’s financials. And when asked if he was not concerned about the affairs of its subsidiary, he responded, “I have treated your questions with respect and answered that I do not want to answer. Let us not go further than that.”
Goolsarran said that as regards the proposed sale of the Marriott Hotel, the recommendation of a forensic audit he had conducted back in 2015, was that the government should take urgent measures to dispose of the hotel. However, the operational and other circumstances have changed and now have to be re-assessed.
“This was in view of the following: (i) the less-than-desired rate of occupancy at the time; (ii) the profitability of the hotel hinging on the operations of the casino which was never completed; (iii) the significant losses the hotel was incurring, after taking into account the fees that were payable to Marriott International for managing the hotel’s operations; and (iv) the requirement to service the loan of US$17.307 million taken from the Republic Bank of Trinidad and Tobago. In order to avoid default in servicing the loan, the Government decided to take over the debt which is now reflected in the public debt statement. As of 31 December 2021, the amount owing to the Republic Bank was US$14.129 million,” he related.
“Since 2016, the financial performance and state of affairs of the hotel should have improved in view of the influx of foreigners to service the oil industry. However, without the benefit of sight of the audited accounts of AHI, it could not be determined whether the hotel has been turning in a profit, and what are its assets and liabilities,” he added.
Guyana’s Privatisation Policy Framework Paper of 1993 sets out the procedures to be followed in relation to the privatisation of a State-owned/controlled entity ( https://finance.gov.gy/wp-content/uploads/2017/06/privastisation-policy-framework-paper_2.pdf)
While these procedures still remain valid, Goolsarran noted that the Procurement Act of 2003 provides additional measures and guidelines.
These cater for the involvement of the National Procurement and Tender Administration Board in relation to: “(i) the opening of expressions of interest (EOIs); (ii) the appointment of a Technical Evaluation Committee to assess the EOIs against the advertised criteria to be used in conducting the evaluation; and (iii) recommending to the Cabinet which EOI is considered the best evaluated offer, having regard to those criteria. It is not clear if these procedures were followed.”
