Govt, Beal defend deal Guyana to explore other options - Hinds By William Walker Stabroek News October 25, 2000 Beal Aerospace and the Government of Guyana are strongly defending the propriety of the Beal Agreement following the sudden shutdown of the US$100 million satellite launching venture. A statement yesterday from the Office of the Prime Minister Sam Hinds said: "Government entered into the agreement with the full knowledge and understanding that the commercial international space industry is a high risk, competitive business and that failure to realise the potential of the agreement was a real possibility... Criticism of the agreement for not providing sufficient returns to Guyana from an allegedly high profit market were obviously grossly misinformed." Hinds went on to say that the $11 million contingency sum approved by the National Assembly was used in part "to correct a deliberate campaign of misinformation mounted by the political opposition intended to undermine the investment." Vice-President of Beal Aerospace Technologies, David Spoede, told Stabroek News from his Texas office yesterday that critics who said the government was foolish to negotiate with Beal were doing the government a disservice for its efforts in trying to attract a major high-tech investment. "The worst thing for a foreign investor is to become a political issue." Companies watch closely the political environment, he noted. "The opposition to the agreement was a big negative in Guyana and if at some point it had not been resolved the agreement could have been stopped. No company likes having lawsuits and protests directed against it," Spoede added. While not wishing to comment on Guyanese politics, he said that in America the parties realise that there were times when differences must be subjugated for the good of the country. Beal felt well treated by the government and the failure to realise the spaceport was a loss to Beal and a potential loss to the people of Guyana. This did not negate the wisdom of the government to go with the project, he said. Ultimately Guyana was now in a better position to attract future investments than before it had ever heard of Beal. He could not cite another company that was looking to launch satellites from a location in South America. Prime Minster Hinds said: "While the government was obviously disappointed at the failure of the Beal Agreement to deliver its potential, it is not discouraged and will continue to actively explore the unique possibility which Guyana offers for entry into the international commercial space market.... " Spoede said the description by Opposition Leader Desmond Hoyte of Beal as a "fly by night company" was preposterous and relied on misconceptions about the risky nature of space-based ventures and indeed all business plans. He maintained that Beal's project to build a high-reliability, low-cost rocket was essentially sound. It was the internal pressures of overrun costs and the external influence of government subsidised launches by NASA that thwarted the programme. Even at Beal's September announcement to layoff 85 workers, the company founder and banker Andrew Beal said he was committed to the Guyana project for a further 24 months. But the announcement of US subsidies to NASA of $290 million, was "the straw that broke the camel's back." It was a position, Spoede recalled, Beal had taken consistently for over a year, when in meetings with Dan Goldin administrator for NASA, Andrew Beal had said a government subsidized programme would drive out private ventures. The Prime Minister's statement noted the growing number of financial failures of new entries into the space market business caused in part by a 35% excess capacity in launch services. The statement confirmed that under the agreement the government would reimburse the US$75,000 which Beal had paid for the 25,000-acre primary and remote sites. It noted that the payment for lease of the easement area was not due until next February. A cadastral survey of the primary and remote sites was completed at a cost of US$95,584 payable by Beal of which US$81,246 has been paid. Meanwhile, the shock in Guyana over the collapse of the projected US$100 millionn investment, barely registered in Beal's home town of Frisco, Texas. The local newspaper--the Frisco Enterprise--had on its website, a lead story on the need for more school crossing guards and made no mention of the closure. A Dallas Morning News article did acknowledge the development, noting the recent layoffs "because of troubles in getting its rocket business going." It quoted Goldin as saying: "Congress has recognised that the revolution has taken hold at NASA and that our faster, better, cheaper way of doing business has allowed us to do more for less, with spectacular mission success while increasing productivity." According to the article: "Eight employees will remain on the payroll to close down the company's 160,000 sq ft office building in Frisco and its test site in McGregor near Waco... Beal conducted two successful tests, one involving the third stage engine in 1998 and the other involving the second stage engine in March..." The article also noted that "nothing was ever built in Guyana... after Venezuela complained that the satellite launching centre would threaten its national security. Mr Beal said the company could overcome those obstacles but the US government's decision was insurmountable." Spoede said the protests by Venezuela to the project in the Essequibo region had zero influence on the shutdown. According to Space Views, an internet magazine on the space industry, the engine of the huge BA-2C rocket Beal was developing would have been the largest since the Saturn V Apollo missions. The expendable rocket would have been simpler and thus cheaper and would have gone after the lucrative geosynchronous communications satellite market. The website noted that Andrew Beal funded the project through profits from his Dallas-based bank. Spoede said Andrew Beal's other holdings were unaffected by the closure and Beal Bank remained the most profitable bank in America. Follow the goings-on in Guyana in Guyana Today