NO STRANGE OCCURANCE THAT WE ARE IN DECLINE ‘Actions have consequences’

anguillian
By anguillian January 9, 2017 12:30

 

 

 

Anguilla is a small, micro economy which is solely reliant on inward flow of people and capital. Our manufacturing is limited to Tropical Treats, Anguilla Aluminum, Paradise Island and a few small enterprises. Our export sector is very small. Some may claim that our biggest export today is people however, the economy was built post revolution on the back of Offshore Financial services, both a domestic and offshore banking sector and hospitality driven construction. Prior to Cul De Sac/Malliouhana, the industry including the restaurant sector was solely owned by Anguillian belongers. In 1984, the Malliouhana hotel opened its doors and radically changed Anguilla’s hospitality sector and arguably, Anguilla.

Cap Juluca followed and in December 1999, following hurricane Lenny, the Cuisinart Resort and Spa opened its doors. I have omitted the many investments by locals in this industry during the period 1959 – 2015.

Between 2002 and July 2008, ten (10) Memorandums of Understanding (MOAs) were signed between the Anguilla United Front (AUF) government and major investors. To note, only one, Barnes Bay Development (Viceroy), made it to completion with the aforementioned BBD filing for bankruptcy soon thereafter. It was bought by Starwood Capital in late 2010 and today stands as Four Seasons Anguilla.

The decline in the economy and tourism industry is due to a number of decisions made by the Executive Council and subsequently, Parliament. To note, according to the Constitution, the Executive Council (ExCo) of Anguilla is chaired by the Governor and is comprised of not more than four (4) ministers of government including the Chief Minister. The members of ExCo that made the decision to take away the National Bank of Anguilla (NBA) and the Caribbean Commercial Bank (CCB), while disenfranchising over 1,150 offshore depositors of hundreds of millions of dollars in deposits were, Hon. Victor Banks, Hon. Cora Richardson-Hodge (former director of NBA), Hon. Curtis Richardson and Hon. Evans McNeil Rogers. Attorney general Hon. Rupert Jones and Deputy Governor, Hon. Stanley Reid attended these sittings but there is no evidence as to how they voted. Parliamentary Secretary, Hon. Cardigan Connor also attended a number of these sittings but had no vote however, the Parliamentary Secretary, the 2nd Nominated Member, Hon. Terry Harrigan and the Hon. Evalie Bradley all supported the actions of the ExCo in Parliament and voted in favour. No wonder Ms. Helen Hatton, Chair of the Anguilla Financial Services Commission (FSC) has said that the financial services of Anguilla has been dealt a death blow by the actions of the Anguilla United Front administration. This blow have had far reaching implications for the young people of Anguilla who are desirous of entering business, attending University and College or seeking financing for homes and have devastated Anguilla’s international reputation abroad. Articles in some of the most important financial publications such as the Nasdaq and Bloomberg and the Cayman Financial review paints a dismal picture and the government of Anguilla seems oblivious to the damage that is being caused. For more see below articles;

http://www.wsj.com/articles/caribbean-commercial-investment-bank-seeks-u-s-bankruptcy-protection-1479918622

http://m.nasdaq.com/article/anguilla-private-bank-struggles-for-answers-on-funds-20160624-00479

https://www.bloomberg.com/news/articles/2016-06-23/anguilla-private-bank-seeks-to-shield-client-names-in-bankruptcy

Anguilla’s indigenous banking crisis: An in-depth analysis and lessons for the region

There is no doubt that the economy of Anguilla grew exponentially between the latter part of 2004 and the 2007. It was driven by a global real estate market that saw financial institutions such as Lehman Brothers lead the way in lending for the sort of real estate projects that were being developed in Anguilla. They subsequently went bankrupt. Others global players who invested heavily in the real estate bubble, such as Hypo and Alliance & Leicester, Merrill Lynch, Freddie Mac, Fannie Mae, HBOS, Royal Bank of Scotland, Bradford & Bingley, Fortis and AIG almost went belly up. Only bailouts by the US and UK governments saved them during the now famous Troubled Asset Relief Program (TARP). The notion of the AUF that their policies created the so-called boom of 2004 – 2007 is wholly false and was merely petty politics as there are no policy changes that can be found to prove this notorious falsehood.

In the interest of time and attention span, I will not go into what caused the collapse in Anguilla and how the AUF administration created the environment for our own demise. I will address that at a future time but it’s safe to say, the escalation in the cost of living and the emolument bill of the government of Anguilla was a significant contributing factor. During the quote on quote boom, the economy was being driven solely on real estate and construction, work permit fees, stamp and custom duty which were clearly unsustainable.

We know by 2008 and 2009, tourism numbers were in rapid decline, air lift disappeared, construction was nonexistent, government reserve fund was at zero, we had a collapsing banking sector with no foreign direct investment and inadequate service port to port (St. Maarten/Anguilla) and we were mired in bankruptcy and record recurrent deficits.

As mentioned earlier, only BBD (Viceroy) made it to completion but not without significant cost overruns and what many considered to be slave labour. In 2008, the single largest project on island came to an abrupt close. Over 1,000 people lost their jobs. Dozens of local contractors lost millions and many never received a penny wiping them out. An article published in the globally recognized Wall Street Journal by Kris Hudson entitled ‘Paradise Lost for Wealthy Novice’ placed Anguilla in a bad light. The article stated that part of the problem of the failure of the project on Anguilla was that of governmental interference. When the AUF was contacted to elaborate, they refused to do so. https://innvestor.wordpress.com/category/hotel-foreclosure/page/12/

Anguilla went into a deep recession that lasted from 2008 to 2012 with no assistance either technical or financial from Her Majesty’s Government other than the insistence to reduce staffing and increase and implement taxes. But by 2014 under the prudent and deliberate management of the Anguilla United Movement (AUM) government, Anguilla recorded construction growth of over 38% and a real growth rate amongst the highest in the world at 6.73% with a declining national debt of just over EC$210 million dollars and a reserve fund of over EC$31 million dollars. It would be remiss of me not to mention that under we were also able to revitalize airlift into Anguilla with Air Sunshine, Cape Air, Tradewind Aviation and Seaborne Airline and a foray into the small boutique cruise ship industry.

As we enter 2017, we are reminded of how quickly the decline has occurred since the changing of government in April 2015. Despite a number of new product offerings that were brought on board by the AUM government namely, Kishti, Auberge in Meads Bay, Manoah and Zemi Beach in Shoal Bay, Solaire in Lockrum and the Reef by Cusinart, tourism numbers are again in decline. Air lift is once again leaving including LIAT and Cape Air.

The policy decision by the AUF government to disenfranchise over 1,150 depositors of the banks have had far reaching implications to both our visitor arrivals and our economic outlook. There is no confidence by investors in our financial institutions and the real investment prospects for them. Our national debt ballooned to over EC$420 million in just one year and a most misguided, ill-advised and desperate government has resorted to giving over seventeen (17) million dollars in tax relief in an attempt to attract a sale of a privately run hotel, Cap Juluca – a sale that Chief Minister Banks announced would be completed by May 9th 2016. He has promised that major construction will begin at Altamer and Cap Juluca before April 1, 2017 while the owner of Altamer makes it clear that his only intention is to eventually refurbish the existing three (3) villas and Cap Juluca has yet not changed hands.

I do not know why the Chief Minister and his administration would make such a reckless and misleading promise when he and his government know this is absolutely unrealistic and borders on the impossible. They know better but when you consider on April 20th 2015, the AUF promised the people of Anguilla and immediate boom on coming to office, you would understand. Ministers Curtis Richardson and Cora Richardson-Hodge promised great things for the people of Anguilla for 2016 including numerous job opportunities. Minister Richardson can be quoted as saying to the people of Anguilla, “NO MORE CRUMBS!” We have not gotten any crumbs but all the people have gotten were thirteen (13) new or increased taxes and retention of the single biggest campaign promise by the AUF, the Interim Stabilization Levy (ISL/LEVY).

As we enter 2017, we must now realize that it is going to be a tough going for all of us. The best preparation is anticipation of the future. Let us prepare ourselves as it’s going to be a tough year and some of our activists and heroes including the father of the Nation, Hon. James Ronald Webster, the Hon. Albert (Belto) Hughes, Whaldama (Ras B) Brooks, Iwandai Gumbs will not join us in 2017. Even close associate and friend of our Chief Minister, Sir K. Dwight Venner has made his exit. Unfettered and unsupervised management of Tourism and, the lack of real destination marketing have left many Anguillians underemployed and neither the Parliamentary Secretary nor the Minister of Finance seem to care one iota while the Chair of the Anguilla Tourist Board is declaring that ANGUILLA IS BACK!

By now we should come to the realization that the promise of a boom have at best, earned 100 Pinocchios. There was never a chance of a boom that we seem to have in 2006/7 as the world has radically changed since the great recession that began in 2008. Any chance of even some meaningful foreign investment was killed by the failed banking resolution, along with the many bad decisions taken by this unfortunate administration, supported by Her Majesty’s appointed Governor and Ex Officio members. I have to say though; they that still have three (3) years to live up to their contractual agreement with the people of Anguilla.

In case they have forgotten, I will give our beloved government a gentle reminder of their most important promises other than removing the levy and Minister Richardson’s favorite of having a commercial transatlantic international airport with direct flights from Anguilla to London and from Anguilla to New York before April 2020;

Full employment including a minimum wage
Improve air access and expansion of the Air and passenger ports
Build a port in Corito and implement a national bus service
Support local investors to create wealth and provide support for young entrepreneurs
Strengthen public finances by generating surpluses, building reserves and limiting loans/borrowing
Increasing the role of the Anguilla development Board (ADB) and strengthening the overall financial system with local ownership in the commercial banking sector
Achieve 8% annual economic growth
Expand social benefits for the unemployed, children, the elderly and the disabled
Implement a national Health Insurance System
Reduce violent crime; reduce gun related crime, reduce violence among the youth and strengthen family life.

I have just listed but a few of the promises that were made. There are many more promises, some of them were to be realized within the first 12 months of assuming office. There are three years left and I am still holding out hope and praying that the government will get it right.

Hopefully our government can get to work to realize the mandate they have boasted of and appear to have been given, and fulfil the promises that were made instead of spending so much time off island and fighting with their boards.

With that said, bring on 2017 as we remember the reason for the revolution almost 50 years ago which said and I quote, “We are out to build a new Anguilla”, an Anguilla where each and every one of us have every opportunity at success instead of our Chief Minister’s theory that we must have a RICH class and a POOR class in order to grow.

God bless Anguilla

R.I.P. to the father of the nation, the Rt. Honourable James Ronald Webster!

(Published without editing by The Anguillian newspaper.)

anguillian
By anguillian January 9, 2017 12:30

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