“Who we gonna run to?”

For clarification it is not my intention “to make two wrongs a right”. It remains a breach of the “oath of confidentiality”, applicable to all members of EXCO, to take classified information out of the Chambers. But the issues contained in the statement, being widely circulated, are issues which I have reported on and questioned as recently as September 2, 2011 in my article: “Woosh!”So my faithful readers would have heard me raise these issues ad nauseam. I do not know whether The Anguillian newspaper will carry the statement since it is not an official release from the Governor, therefore I have no choice but to quote it in its entirety for ease of reference and to highlight the unimpeachable truths it contains. The statement reads as follows:

We have just agreed to authorize the Chief Minister to sign a supplementary MoU with Starwood Capital. I have no problem with the substance of the decision — indeed EXCO had little alternative but to take it. But there are some troubling issues of governance lying behind it on which I should like to make a statement.

Last summer the Chief Minister and the Parliamentary Secretary announced to the press that they had concluded anMoUwith Starwood in respect of the latter’s purchase of the debt secured on the Viceroy resort. In fact this “MoU” had been concluded without authorization from EXCO, without the benefit of the advice of the Tourism Investment Committee (TIC) and without having been seen or negotiated by the Attorney General’s (AG’s) chambers. Only one senior public officer was consulted, who failed to inform her colleagues until after the event.

The Chief Minister would have been well aware, from his previous term as Chief Minister, of the correct procedures to follow; and he should have ensured that the Parliamentary Secretary was also aware of them. No MoU should have been signed until it had been seen and negotiated by the TIC with the participation of the AG’s chambers. And EXCO should have taken the final decision.

Given that the Chief Minister was aware of the correct procedures to follow, it seems likely that this incident was part of a wider pattern of his attempting to bypass the correct procedures of Government — as in the case of the near disaster of the Social Security loan, and an attempt to dismiss the Board of ANGLEC. In this case, the consequences of the Chief Minister’s and Parliamentary Secretary’s conduct were serious. The TIC eventually negotiated a valid MoU with Starwood, and it was duly signed. But the negotiating dynamic was made exceptionally difficult by the concessions the Chief Minister and the Parliamentary Secretary had already made. These concessions limited the amount that Starwood were to pay the Treasury whatever the actual price of the debt note. Whilst it is impossible to be certain how the negotiations would have otherwise turned out, it is clear that the ill-considered conduct of the Chief Minister and the Parliamentary Secretary have cost the people of Anguilla up to EC$18 million, a loss we can ill afford.

I trust the Chief Minister will follow the correct procedures in future and ensure that his Minister and other advisers do likewise.”

Diehard AUM supporters have derived a false sense of comfort by saying that this document is a contrivance of the “meddling opposition”. My response is: “Does that mean that the comments made are not factual?” All such doubters need to do is simply look up the Government Media Report of July 30th, 2010. It is in The Anguillian!The other point these diehards have raised is that the Governor is trying to embarrass the Chief Minister. My response is: “Does this mean that the Chief Minister is above the law and the need to practice good governance?” First of all the Governor did not make the statement publicly and, secondly, he had sound grounds to admonish the Chief Minister and his colleagues to abide by the laws, rules and procedures that have been established to guarantee good governance for the people they have been elected to serve.

I have said in my column, and on various media, that anything that I say about the political situation in Anguilla I publish under my own name. I do not and will not use the cowardly route of anonymous “blog entries” and other social media where very often, as obtained in the last election campaign, the intent is to mislead and distort the truth. I have been commenting in my column on these issues for more than a year. In this context, I could go back as recent as a few weeks to show the consistency of my views of the Government’s behaviour and the damage it is causing. However, I will go back even further to my article of a year ago (almost to the day), when I commented on and predicted, the likely outcome of the manner in which the Chief Minister and his colleagueswere conducting the affairs of state. My article appeared in The Anguillian of September 24, 2010 and was entitled: “So Shall It Be In The End”. Here are some excerpts from that article:-

The Scenario

“On Friday July 30th, 2010 The Anguillian carried an article based on a press conference held by the Chief Minister, Hon. Hubert B. Hughes, and his son the Parliamentary Secretary, Haydn Hughes. The press conference was actually held on Tuesday July 28th and as a consequence the news had already been circulated on the various broadcast media that Viceroy Resort was sold to an investment group, Starwood Capital Group (SCG); an MOU was signed; the new buyer would be paying US$ 40 million in taxes; and the Government would be receiving 9% Alien Land Holding Licence fees on every villa sold.

Understanding the long process of negotiations associated with such deals many persons were stunned by this announcement. And especially so when the Parliamentary Secretary, Haydn Hughes, stated: “Last week the property was up for sale this week it has been sold.” The Chief Minister further stated that the Parliamentary Secretary was given the task to redeem some of the taxes lost under the previous MOA. We have more or less quashed the MOA and have formulated an MOU.”

What was most ironic about this press statement is that whereas the AUM politicos in the recent election campaign had been accusing the former Government of conducting their negotiations in secret, here are they now presenting an MOU negotiated by HAYDN alone! In fact after this press statement a number of Ministers of the Government denied having any knowledge of the transaction and in particular the MOU. Transparency Indeed!”

AUF Good Governance Practices

“The past AUF Government had a very organized system for dealing with the negotiation of Memorandum of Agreements. A first draft would be produced by senior technical officials on a committee called the Tourism Investment Committee (TIC); followed by a presentation by that committee to Ministers of Government; then the preparation of a negotiating stance to be agreed in Executive Council. Once the first negotiating stance has been agreed more discussions with the investor takes place and that process is repeated several times until a final document is ready to be presented to Executive Council for final approval before signature.

“This process could take considerable time if there are significant points of difference between the Government and the Developer. And very often the Government would hire consultants from the United States or elsewhere to provide advice in cases where there are legal and commercial issues/practices not familiar to our jurisdiction. In fact the methodology for negotiating with foreign investors during the past AUF Administration was considered to be a best practice in the OECS region.”

AUM Mockery of Good Governance

“I said in my column last week that the Chief Minister and his colleagues strongly believed that the rules are for everyone but them. It is the kind of behaviour strongly associated with persons who have sociopathic tendencies. And I say this in the context of the arrogance of the Chief Minister after so strongly accusing the past Government of closed negotiations to be boasting in his press conference that he had appointed his son to “redeem some of the taxes lost under the previous MOA.” He did not appoint the trained economist, Deputy Chief Minister, Hon. Edison Baird, nor a committee of Senior Technical Officials seized of the intellectual memory to deal with the Viceroy MOA; — he appointed his son!”

My Predictions& Comments

“Many of us believed that MOU that they purported to have signed was an innocuous document. However, we later discovered that the MOU was actually signed on July 27, 2010 on Starwood Capital letterhead by the Chief Minister and witnessed by a Senior Government Official. That is the same MOU in which the Chief Minister instructed the Parliamentary Secretary to redeem supposedly “lost taxes” and giveaways by the past government. HAYDN actually did quite the opposite as follows:

• He fixed the value of the real estate for the purposes of calculation of the various stamp duty and alien land holding license fees as not to exceed US$105 million. My comment: Revenue will be lost if the value exceeds US$105. Even if that were considered to be unlikely, given the circumstances of the sale it would have been a better deal to set a minimum rather than a maximum.

• He increased the number of exemptions for refurbishment to six times in twenty years rather than four times as in the original MOA. My comment: Is this how we redeem lost revenue from taxes?

• He removed the payment of the Resort Resident Asset Levy in most cases. This is an ongoing stream of revenue established in the original MOA for the life of the project that in time would exceed all up front payments. My Comment: He has sacrificed revenue for future generations for upfront windfalls. Obviously, simply to make the Government look good in the short term.

• He removed the section dealing with increases every five years of the annual levies payable by condominium owners and fixed the rate at no more than US$ 6.50. Mycomment: Again! Is this how we redeem lost revenue from taxes?”

My Conclusion

“What the Parliamentary Secretary did by having the Chief Minister sign this seriously flawed MOU had to impact the efforts of the TIC in eventually negotiating the MOU now being proposed to be presented to the House in a few days. The fact is that even though the document did not go to EXCO or the House it could have been argued to be legally binding given the fact that it contained the Chief Minister’s signature witnessed by a senior civil servant. This reality may have taken away a considerable amount of the TIC’s leverage in negotiating a more favourable agreement. While I am confident that what they have worked on will be a considerable improvement on the travesty that the Parl. Sec. negotiated — they will not be fully satisfied with the outcome.”

It is quite possible that many persons read my articles with some “sceptism”, given the fact that I am the Leader of the AUF — so I feel vindicated by “the purported statement” of the Governor, which has captured the essence of many of the issues I have been raising. Hopefully, once the integrity of the statement has been established people will look more critically at our leadership. In fact it is a fair question to ask whether this is the kind of leadership we want when we become an independent nation. And an even more troubling question in the face of such a reality: “Who we gonna run to?”

Victor F. Banks
Sachasses Estate