Holness, Vaz reject OCG's claims

Wednesday, May 01, 2019

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Prime Minister Andrew Holness and minister without portfolio in the Ministry of Economic Growth and Job Creation Daryl Vaz have rejected a claim by the Office of the Contractor General (OCG) that they were involved in the negotiations which culminated with prime beachfront property in St Ann being sold at a fraction of the lowest independent valuation.

Holness was responding to the OCG's report of its investigation into the sale of Rooms on the Beach and beach lands by the Urban Development Corporation (UDC) to Puerto Caribe Properties Limited.

According to the OCG, ministerial interference caused the UDC to sell the properties for US$7.2 million, although it had initially set a sale price of US$9.3 million and had received independent valuations which gave a cumulative lowest value of US$11.8 million.

Responding to the OCG's report, which was tabled in Parliament yesterday, Holness, in correspondence to the Integrity Commission, which has since assumed the role of the OCG and two other anti-corruption agencies, said while he met with representatives of Moon Palace, this was about their plans, including a desire to purchase the properties.

“There was, in fact, no negotiation, or specific agreement reached to the price or otherwise,” said Holness.

He said while the Cabinet approved the final sale, it considered the comments of the Ministry of Finance and made its decision based on the wider context and implications.

“The elected representatives of the people, in keeping with fiscal responsibility, good governance of the people's affairs, and in pursuance of the mandate given to the people of Jamaica to grow the economy … took a decision that it (the Cabinet) felt was in keeping with its mandate that would see the full utilisation of public assets, the creation of employment and ultimately the creation of value for the economy … greater than the disputed amount,” argued Holness.

“Policy does recognise that there are strategic opportunities and special advantages for which the Government must exercise discretion in the interest of the people. We welcome any scrutiny of the exercise of our discretion, but such scrutiny cannot be one-dimensional or unbalanced,” added Holness.

He said there were factors, including a long-term lease of the property which would detract from the valuation pricing being achieved.

The prime minister further argued that the divestment would redound to the greater benefit of the country.

“The people of Jamaica will benefit significantly from this transaction. No policy or law was breached and the Government took the necessary steps to protect the people's interest in the asset,” said Holness.

He was supported by Vaz who said, despite concerns from the OCG about the discount given to Puerto Caribe Properties Limited on the sale price for Rooms on the Beach, the deal was in the interest of the people of Jamaica and the Government would quickly record revenue gains on the investment.

“Revenue gain arising from the investment was projected to amount to approximately US$30 million in taxes over a three-year period,” said Vaz.

“The potential revenue and other gains projected for the Government over a reasonably short period of time far exceeds, and is in no way comparable, to the incentive the UDC provided to the investor to conclude the crucial investment which was earmarked to create thousands of jobs while securing the long-talked-about upgrade and redevelopment of sections of Ocho Rios,” added Vaz.

He noted that the UDC has indicated to him that it settled on the sale price for several reasons, including that the project involved the construction of a five-star hotel along one of Jamaica's key tourism belts.

In addition, the project involved an investment valued at US$225 million in the first phase and US$270 million in the second phase.

According to Vaz, the investment was earmarked to create 2,200 direct jobs during the first construction phase and 600 permanent jobs. In the second phase it is projected to create an additional 1,500 jobs during the construction phase and 3,000 indirect jobs.

“The Government of Jamaica is projected to receive more than US$9 million in revenue during the first year of the concluded investment, US$10 million during the second year, and approximately US$11 million in revenue during the third year,” added Vaz.

He further noted that, as part of the deal, the investor had committed to, and has started pumping US$1 million into the nourishment of a significant section of the Government-owned beach where the public would have full access, and will spend millions of US dollars to redevelop Ocho Rios.

Vaz said, based on the information supplied to him by the UDC, he strongly rejects as false and disingenuous suggestions by the OCG that the deal arrived at was a travesty and not in the interest of both the Government and by extension the people of Jamaica

“This crucial investment has strategic importance to the people of St Ann and the crucial tourism sector in that section of the island. It is trite business knowledge that a valuation is a consideration, but cannot be the only decisive factor in a negotiation regarding a multi-dimensional strategic investment which will bring in hundreds of millions of dollars in foreign exchange, employ thousands of our people, and fast-track major development which has been talked about for many years but not put into action.”

According to Vaz, he now has “reason to be concerned about the future of the crucial investment given the unreasonable and naive conclusions arrived at by the former contractor general and the vulgar politicking by a representative of the Opposition who used the cover of Parliament to make false innuendos”.

— Arthur Hall

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