THE forensic auditors assigned to investigate the controversial Sandals Whitehouse Hotel project from inception to completion have concluded “there is value for money” in the south-coast hotel, according to Colin Campbell, the information and development minister.

Campbell told journalists at yesterday’s post-Cabinet press briefing at Jamaica House that the team also felt the construction of the hotel was of the “highest quality”.

The team was assigned by former Prime Minister P J Patterson to audit the construction of the hotel, after it became bogged down in controversy over a US$41 million overrun and a quarrel between the three partners – the state-run Urban Development Corporation (UDC), the National Investment Bank of Jamaica (NIBJ) and Gorstew, the holding company for Sandals, manager of the hotel.

Gorstew sued the UDC and NIBJ for damages, contending that the hotel was handed over later than agreed and at a quality which hurt the Sandals name and forced it to refund huge sums of money to the early guests.

Gorstew also contested the claim that there was value for money, noting that the Whitehouse hotel was modeled off the ultra chic Beaches Turks and Caicos, while the contractor-general had compared it with Beaches Negril, a lesser hotel.

But the team apparently disagreed.

“The audit report concludes that there is no doubt that the hotel is not only a valuable asset to the south coast development programme, but is an asset to the tourist industry and Jamaica,” Campbell said.

The minister gave journalists selected portions of the report from the $28 million audit which was triggered by concerns raised by the Opposition Jamaica Labour Party (JLP) about the US$41 million overrun on the hotel, which was built in Patterson’s East Westmoreland constituency.

The full report is to be tabled in the House of Representatives by Prime Minister Portia Simpson Miller later today. Copies of the report were not available to the media, but the minister confirmed that the full report was reviewed by the Cabinet yesterday, following last Monday’s perusal of a summary.

Campbell said that the forensic audit report made it clear that the originally projected cost of US$60 million was totally inadequate for the kind of hotel that the parties intended to create. The original budget was in the order of US$80.6 million, based upon the Beaches Negril concept. However, it was determined that that cost was too high and, eventually, it was reduced to US$60 million based upon a recommendation from a company known as Capital Options Limited, New Kingston.

He said that the auditors reported that “it was clear that this figure (US$60 million) bore no relationship to the size and specification of the proposed hotel as was conceptualised and proposed by the architects in May 2000”, and “if the US$60 million budget was to be adopted, then this would have required a substantial reduction in the scope of the project”.

He said that additionally, the auditors had concluded that the net effect was that the additional costs would result in a project costing in the region of US$97 million.

“…The project incurred some costs due to management deficits, that is, cost for elements such as interest charges, additional fees due to the extended contract period, additional preliminaries and from fluctuations in the cost of labour and material,” Campbell said.

Insofar as the servicing of the debt was concerned, “they have determined that it is the responsibility of the project company, Ackendown, which is jointly owned by the three partners.

“The income from the company is derived from the lease payments made by the lessees. So far the hotel has enjoyed record occupancy. Since the lease payments are calculated on the basis of the occupancy, there is every reason to believe that if the level of occupancy continues, the company will be able to service the debt without any recourse to shareholdings,” Campbell told reporters.

He said that the only element of uncertainty reported by the auditors was caused by the fact that Gorstew had brought a claim against the other two shareholders which, he said, “was based upon the particular construction of the heads of agreement document for their version of the facts”.

“It is the contention of the UDC that the Gorstew construction of the contract is fallacious and that their version is incorrect. If Gorstew persists in its claim, the UDC says it will resist with every legal resource it can muster.”

The committee comprised Desmond Hayle, president of the Jamaica Institute of Architects; Robert Wan, former president of Jamaica Institute of Quantity Surveyors; Calvin Roache, former president of the Jamaica Institute of Quantity Surveyors; Grace Ashley, former president of the Jamaica Institution of Engineers; and Dr Allan Kirton, former permanent secretary, as its secretary.