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SANDALS SCAM? By Eugene A. Reynald

posted 24 Aug 2018, 08:58 by Gerry Kangalee   [ updated 24 Aug 2018, 09:16 ]
Sandals Antigua
Here is some food for thought.

The little information we have on the proposed Sandals Hotel in Tobago indicates it is supposed to cost the citizens of T&T around TT$ 3.5 billion.

No reliable breakdown of this cost has been made public by the Prime Minister so we do not know whether the hundreds of millions of dollars which will have to be spent by the State on electricity, potable water supply, airport, waste water treatment, roads and many other state funded inputs, have been included in the 3.5 billion.

The figure almost certainly will not include the medium and long term maintenance cost for the completed facility which can run at about 40 million dollars per year and be increasing annually. I am also sure that there are no guaranteed returns to the state, so such returns can range anywhere from zero to whatever – after Sandals extracts their management fees, mark-ups on all items procured through its buying houses, “off take” by way of transfer pricing, etc. all in US currency and paid to invisible parties in offshore accounts.

What is a sure bet is that many of the costs to be borne by the State will not be factored into any Feasibility Study/Business Plan (FS/BPs) it “may” have prepared for the Sandals Hotel. I say “may” because it is the normal practice of Government to exclude such costs and even not do FS/BPs.

It should be remembered that the cost for items made necessary by the Point Lisas Project - such as the Caroni Arena Dam and the Desalination Plant, which should have been carried totally by the Project were not.

Successive Cabinets even misrepresent/miscalculate the cost of projects done in Trinidad which is why there are always overruns on such projects. For instance no one knows what it really cost the State to build a low income house in Trinidad. The figures they give are usually out by at least 50 per cent or even as much as 400 per cent, as is the case with Victoria Keyes.

Given the aforementioned one can bet that the 3.5 billion estimated for Sandals will escalate to closer to 5 billion on completion. The
Tobago Hospital moved from 135 million to well over 700 million on completion – a 500 per cent increase. I will however be conservative and assume a 30 per cent in the case of Sandals which would take it to about 4.55 billion and work with that.

Hotels built in Trinidad and Tobago under the direction of Cabinet only survive because of patronage and/or subventions from the State and the many organisations under its control and influence. Tourism normally makes up a small part of the revenues of such Hotels.

The population of Tobago is about 60,000 which translate to, say, about 12,000 households. If the 4.55 billion dollars to be spent by Cabinet on the Sandals Hotel is distributed to residents of Tobago, each man, woman and child will receive about 76,000 dollars. In the case of households each would receive about 341,000 dollars. That is a simple mathematical calculation that even Rowley and Stuart Young can do.

If it is invested at say 6% it will yield about $273 million per annum (if some is not stolen but that applies to everything Cabinet does). From this sum each family can get about $23,000 per annum or around $2000 per month - every single month. This sum can provide the food requirements for the average Tobago household and even leave some change for leisure.

A fraction of the 4.55 billion dollars - if intelligently and honestly spent by Cabinet, (unlikely I know but even if they do steal some it is still possible) can also transform the entire island of Tobago into one whose total energy requirement is had from wind and solar. This alone will be a huge tourism attraction and a model for other like-minded and progressive countries.

A real eco tourism industry could be established around this that could attract persons and institutions in research and development involved in seeking ways to create a cleaner and “better” world and much of this can come with financing in the form of foreign currency and be self sustaining. The many benefits to the citizens of Tobago and Trinidad are obvious (and too many to detail here).

It will certainly not be in the form of the low paying jobs which is all that Hotels have to offer – together with, of course, high levels of waste/pollution. All of this could even have been started by using the hundred or so million dollars (most of it in foreign currency) that was recently allocated for upgrading the generating plant in Tobago. The aforementioned – and there are a lot more, are just a few of the alternatives to the Sandals project and they will use just a part of the money Cabinet plans to spend on the project.

The PM also speaks of investment in the project by the private sector which I take to mean local firms partnering with Government in the project. This is like expecting those persons he appointed to advise him on diversifying the economy partnering with the State on the projects they come up with.

If these guys had any ideas for diversification from which they could make money they would keep it to themselves and not seek to partner with Government on such. I would therefore be very suspicious of whatever recommendations they make to the State that will require funding from the State/the people. I hope and expect that Rowley would insist that whatever they come up with are forex earning projects and that they take the risk and invest in it themselves – with the State being at best a “facilitator”.

As a friend of mine who sat on several private sector Boards (including that of a major Bank) told me years ago, the culture and habits of the Public Sector are incompatible with those of the Private Sector. Representatives of Texaco also told me the same thing when they ran from the joint venture they had with the State in Trinmar. They said Trinmar had the potential to be very profitable but the involvement of the State would not enable such potential to be realised. They have of course been proven right. The writing was on the wall for Petrotrin then – and that was some fifteen years or more ago when Rowley and Imbert were in the Cabinet.

There is a lot more but to those with minds I need say no more than the Sandals is either a mega scam or a project for the mindless and the fact that Cabinet can even be thinking about it tells us something about the persons with influence therein.

The next piece of madness came from Richard Young and was actually supported in an Editorial of the Trinidad Guardian. Their idea was one of building a bridge between Trinidad and Tobago. The idea is sheer madness and my first inclination is to advise both parties to check the depth of the sea between these islands and return with a detailed description of the technology they would be using to overcome that challenge. That alone should silence them both.

But I would prefer to have some fun at their cost and challenge them to put their money where their mouths are and finance a feasibility study to build the bridge. This is what my colleague and I did when we floated the idea of a Barrier Island and Two Causeways in the Gulf of Paria.

As two normal citizens with far less financial and other resources than Mr. Young and the owners of The Trinidad Guardian, we prepared
a comprehensive feasibility study for the project at our own cost. The project proved to be quite feasible but we could not get the necessary support from Cabinet. Manning liked the idea it but Imbert preferred the Rapid Rail Project, the Point Fortin Highway and a widened Western Main Road…and we know what happened to those three.

We will never know the real cost of the latter and most of the hundreds of millions of dollars of public funds spent on the first and the second went instead into someone’s pocket because they just never happened.

Mr Young and the owners of the Guardian have the required influence with and access to Cabinet to have the latter go along with their hare brained scheme but I hope that ethics will trump the ungodly and they will do as I am suggesting – which is in keeping with what Scotiabank had Mr. Young do when he was a Banker. I also hope their feasibility study is made public, as we did with ours, because I am sure that at some stage the public funds/patrimony will have to be sought.

It is ethical - and should be insisted on by Rowley and those in his Cabinet, that business people put their money where their mouths are and not seek access to public funds to finance schemes that bring benefits to them and their friends and family in Cabinet while the risks and losses associated with such are carried by the public.