MOON PALACE COULD WALK AWAY FROM US$7.2-MILLION LAND DEAL
Moon Palace could walk away from Us$7.2-million land deal and planned multi-billion project in Jamaica
THE attorney who represented Puerto Caribe Properties Limited has reacted with dismay to speculations fuelled by the recent report from the former Office of the Contractor General (OCG) into its purchase of beachfront properties in Ocho Rios, St Ann, from the Urban Development Corporation (UDC).
Attorney-at-law Hugh Hart has also warned that the company, which operates Moon Palace Jamaica Grande Hotel, could walk away from the Us$7.2-million deal and its planned multi-billion dollar investment in Jamaica.
“If there is any suggestion that they had anything to do with a shady deal they are not going to be involved,” Hart told the Jamaica Observer.
“They are very straight people. They have been in business for many years and have already spent a lot of money in Jamaica. They are prepared to expand their business in Jamaica but if people want, for political purposes, to put any kind of slant on it, from their point of view they would just clear out,” Hart said.
“There is a clause in the agreement that if they do not start construction within a certain time the UDC can take back that land and return the money they paid without interest. So you find that is what they will probably do if there is any suggestion of a shady deal,” added Hart.
He said at the time the negotiations started with the UDC, Moon Palace was also considering expansion on a huge piece of land it owns in the Dominican Republic, which had been acquired for the construction of a large hotel.
“The question was which one would they build first and the decision was that if they complete the transaction here before the end of that financial year then they could put that entire budget into one project — so they would build Jamaica first, then the Dom Rep. Now, I don’t know, but we will see what happens,” declared Hart.
The attorney argued that divestment by the Government at less than the current market value, and without advertising, is specifically permitted if the divestment is for strategic purposes as determined by government policy, or if a hotel needs to expand and the only available land is State-owned land.
According to Hart, the decision by the UDC to sell the property for what the OCG said was approximately US$4.6 million below the lowest cumulative valuation figures, and approximately US$6.3 million below the highest cumulative valuation figure was acceptable, based on the significant benefits the investment would bring to Jamaica through its construction and operation.
Hart further noted that Moon Palace had to enter into a separate agreement with the entity which held a lease on the property and the right of first refusal, once it was being sold.
“Moon Palace agreed that the lessee could remain in occupation without the payment of rent, resulting in a cost to Moon Palace of approximately US$500,000 per annum for approximately three years. Thus, the cost to Moon Palace was not only US$7.2 million but about US$8.7 million,” said Hart.
He said the decision by the UDC to sell the property for below the US$9.3 million, which it initially asked for, was in the best interest of Jamaica.
In a report tabled in Parliament last Tuesday, the OCG, which has since been merged with other anti-corruption agencies to form the Integrity Commission, noted that the UDC sold the prime beachfront properties in St Ann for well below their value, following what it described as a “farcical negotiation process” impacted by Cabinet member Daryl Vaz and other State agencies.
According to the OCG, through the negotiation process the UDC surrendered its position of strength to negotiate a price close to the market value, and instead did the complete opposite in the name of attracting an investment.
“This had the effect of depriving the country of revenue, and the integrity of the revenue was not protected. Further, the surrendering the position of strength in the negotiation process has made a farce of the negotiating process whereby the market price was unjustifiably discounted,” said the OCG.
Vaz has rejected the OCG’S claim, saying it was misguided and did not take into effect the hundreds of jobs and the billions of dollars in revenue the country would earn through the massive investments by Moon Palace.
The Integrity Commission also distanced itself from the report, which it noted was prepared before it was established.
According to the commission, when it received the initial version of the report the commissioners agreed unanimously that the validity of certain of the substantive allegations was doubtful and could be open to serious questions if read by objective persons”.
Former Contractor General Dirk Harrison, who made amendments to the initial report, has since declared that he stands behind the final version which was tabled in Parliament.