Multi-bil­lion­aire gets World Bank loan to build ho­tel

The Washington Times Weekly - - National - BY CHUCK NEUBAUER

One of the world’s rich­est men and a mem­ber of the Saudi royal fam­ily has re­ceived ap­proval for a $26 mil­lion loan from a branch of the World Bank to build a lux­ury ho­tel in Ghana, a West African nation with a de­vel­op­ing econ­omy but where 40 per­cent of the peo­ple live in poverty.

Prince Al-Waleed bin Talal, also known as Prince Walid, is a nephew of Saudi Ara­bian King Ab­dul­lah bin Ab­dul-Aziz. With a net worth of $19.6 bil­lion, ac­cord­ing to Forbes mag­a­zine, he is the 26th rich­est per­son in the world.

Yet his com­pany was able to bor­row $26 mil­lion to build a five-star ho­tel in Ac­cra, the cap­i­tal and largest city in Ghana, from the In­ter­na­tional Fi­nance Corp. (IFC), part of the World Bank Group, un­der a pro­gram to en­cour­age pri­vate de­vel­op­ment in de­vel­op­ing na­tions.

The IFC, whose largest share­holder is the United States, ap­proved the loan in De­cem­ber to KHI Ghana Ltd., a 100 per­centowned sub­sidiary of Prince Walid’s com­pany, King­dom Ho­tel In­vest­ments (KHI), for the de­vel­op­ment of the five-star Moven­pick Am­bas­sador Ho­tel in Ac­cra. The for­mal loan com­mit­ment pa­pers were signed in Fe­bru­ary, and the IFC is ex­pected to dis­burse the funds for the nine-year loan soon.

The $103 mil­lion ho­tel with 259 rooms will be along one of Ac­cra’s ma­jor thor­ough­fares and ad­ja­cent to sev­eral large com­mer­cial de­vel­op­ments in the city’s cen­tral busi­ness district. The site was oc­cu­pied by the Am­bas­sador Ho­tel, a gift from the United King­dom to Ghana in recog­ni­tion of the coun­try’s in­de­pen­dence in 1957. The ho­tel closed in the early 1980s.

The IFC also helped ar­range an­other $20 mil­lion for the pro­ject from a syn­di­cate of com­mer­cial len­ders, the agency said.

Des­mond Dodd, IFC spokesman in Africa, said the bank is sup­port­ing “a pro­ject with strong de­vel­op­men­tal im­pact in Ghana.”

He said the low-in­come coun­try needs bet­ter in­fra­struc­ture to at­tract more in­vestors and cre­ate jobs and that KHI Ghana Ltd. ap­proached the IFC for the money at a time when global fi­nan­cial mar­kets were in tur­moil and not mak­ing loans.

“This pro­ject will di­rectly cre­ate jobs re­lated to the con­struc­tion and the even­tual op­er­a­tion of the prop­erty,” said Mr. Dodd. “The ho­tel will have large in­di­rect im­pact as well. The ho­tel is ex­pected to source al­most all of their food and non­food pur­chases lo­cally, thereby pro­vid­ing in­creased busi­ness op­por­tu­ni­ties to a wide range of lo­cal sup­pli­ers and sub­con­trac­tors.”

Mr. Dodd said while Africa has not been on the map of global in­vestors for many years, the IFC is help­ing to change that.

When asked how the IFC jus­ti­fies a loan to one of the world’s rich­est men, Mr. Dodd said the agency pro­vides fi­nanc­ing to pri­vate projects that have large de­vel­op­ment im­pact in the host coun­try, and that such pri­vate­sec­tor projects re­quire spon­sors with the ca­pac­ity to pro­vide cap­i­tal and man­age­ment.

He said Prince Walid and other in­vestors can choose where they put their money and the “IFC’s role is to en­sure that in­vestors that want to do busi­ness in some of the world’s poor­est coun­tries can make in­vest­ments with high stan­dards.”

Crit­ics ques­tion whether a mul­ti­mil­lion-dol­lar loan to a com­pany owned by a bil­lion­aire to build a lux­ury ho­tel in Ghana would pro­vide much help for poor Ghana­ians.

Sen. Pa­trick J. Leahy, Ver­mont Demo­crat and chair­man of the Se­nate Ju­di­ciary Com­mit­tee, has asked the Trea­sury Depart­ment for in­for­ma­tion from the IFC about the loan. The re­quest was made in his role as chair­man of the Se­nate Ap­pro­pri­a­tions sub­com­mit­tee on state, for­eign op­er­a­tions and re­lated agen­cies, which has ju­ris­dic­tion over the IFC and the World Bank.

“The loan, the pro­ject and the pro­ject par­tic­i­pants give rise to ob­vi­ous ques­tions, and Sen. Leahy is ask­ing for the an­swers,” said Leahy spokesman David Carle. “He agrees that crit­ics of this pro­ject raise some valid points that should be ex­am­ined fur­ther.”

Bruce Rich, a Wash­ing­ton­based pub­lic in­ter­est at­tor­ney who has served as se­nior coun­sel on in­ter­na­tional is­sues for ma­jor en­vi­ron­men­tal or­ga­ni­za­tions, de­scribed the IFC loan for a lux­ury ho­tel in Ghana as “par­tic­u­larly grotesque.” He said the World Bank says its man­date is poverty al­le­vi­a­tion and that it claims to be a leader in help­ing the poor.

“Un­for­tu­nately, the IFC has fi­nanced nu­mer­ous four-and five- star ho­tels in the world’s poorer coun­tries for years de­spite a long record of in­ter­na­tional and U.S. bi­par­ti­san con­gres­sional crit­i­cism of such mis­use of scarce de­vel­op­ment as­sis­tance,” Mr. Rich said.

“This kind of loan is noth­ing else but the worst cor­po­rate wel­fare. Prince Walid and his com­pany can cer­tainly find credit from pri­vate in­ter­na­tional banks, if this is an eco­nom­i­cally vi­able pro­ject,” he said, adding that the World Bank and the IFC last year sought a large cap­i­tal in­crease from the U.S. and other na­tions to be used in part for “tar­get­ing the poor and vul­ner­a­ble, es­pe­cially in sub-Sa­ha­ran Africa.”

“Prince Walid and the pa­trons of a lux­ury in­ter­na­tional ho­tel ap­pear to be what the IFC views as the ‘poor and vul­ner­a­ble’ de­serv­ing of in­ter­na­tional cor­po­rate wel­fare,” he said.

David Hunter, a law pro­fes­sor at Amer­i­can Univer­sity who has stud­ied the World Bank, also ques­tioned how the loan car­ried out the IFC’s goal of help­ing the poor.

“Where is the value added for the poor?” asked Mr. Hunter, who said a lux­ury ho­tel would only cre­ate some tem­po­rary con­struc­tion jobs and low-pay­ing ser­vice po­si­tions and that all the ho­tel’s prof­its would go over­seas. “It is a pretty weak form of de­vel­op­ment.”


The loan of $26 mil­lion from a World Bank branch to Saudi Prince Al-Waleed bin Talal for a luxur y ho­tel in Ghana has drawn crit­i­cism.

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