Govt agreed to facilitate casino at Buddy's before hotel built
Stabroek News
March 4, 2007
A move to make possible the operation of a casino was one of the terms agreed to by the government for the establishment of the Buddy's International Hotel and Resort.
According to the Memorandum of Understanding (MOU) between the Guyana Government and Buddy's International Hotel, part of the state's obligation was to "facilitate the company's request to operate a casino on the said hotel premises" as far as permitted by the country's laws.
Stabroek News has obtained a copy of the MOU, signed by Guyana Office for Investment (GO-Invest) CEO Geofrey Da Silva and the hotel's Managing Director Omprakash 'Buddy' Shivraj. All the pages of the document are initialled by both Da Silva and Shivraj. Although the date of the document is unclear, the government only passed legislation to legalise hotel casinos after mid-January this year, suggesting that the request had been made some time before. Despite criticism from a large cross-section of society, the government used its parliamentary majority to pass the controversial Prevention of Gambling (Amendment) Act to allow for casinos in new hotels or resort complexes with a minimum of 150 rooms and a minimum rating prescribed by regulations. In response to allegations that the move was specifically linked to the construction of the Buddy's International Hotel for the 2007 ICC Cricket World Cup, government spokesmen including President Bharrat Jagdeo denied the claim, insisting that it was meant to attract investment by large hotels to invest the country.
The 250-room hotel and resort was built at an estimated cost of between US$10 million and US$12 million. It occupies a plot of about 3.2 hectares at Tract 'BS' Block 2, Public Road, Providence, just north of the Guyana National Stadium. The Guyana Government advanced approximately $165.7 million of public funds to secure the rooms for the CWC matches and provide bridge financing for the project.
There has been much public speculation over the terms and conditions of the agreement, which has been shrouded in secrecy. The MOU includes a "non-disclosure" clause, which stipulates that information contained in the document would not be disclosed to any third party without the written consent of the signatories.
Among the government's other obligations under the agreement, is the provision of a corporate tax-holiday to the company for a period of not more than five years, beginning from the first year of commercial operation. It also agreed, to the extent permitted by law, to grant customs duty, consumption tax and purchase-tax exemptions on machinery, equipment, raw materials, fixtures and fittings and vehicles specific to the project subject to the company's compliance to application procedures. Additionally, on completion of construction of the hotel and the commencement of operations, government agreed to "sell the said plot of land at eight million Guyana dollars (G$7M) [sic] per acre." Another important undertaking was to facilitate meetings with agencies such as the Environmental Protection Agency (EPA), the Deeds Registry, Public Health Authorities, the Ministry of Labour, the Ministry of Home Affairs, the Central Housing and Planning Authority, and any other related agency or organisation to ensure the relevant approvals would be granted. Further, the government agreed to ensure that all legal permits would be "approved within a reasonable time frame after the date of the signing of [the] MOU."
Similarly, the company agreed to obtain the relevant permission/ approvals necessary for the establishment of the enterprise and to comply with all the requirements for construction and operation. And there is a specific provision that it "comply with all statutory requirements in relation to environmental controls and the prevention of pollution."
However, critics have noted that the project was permitted to proceed in violation of the country's environmental laws. No Environmental Impact Assessment was done by the EPA, which later admitted that it was only doing a study on the operational impact of the hotel. The glaring disregard of the law was considered to be the result of the administration's direct promotion of the project.
Based on the business proposal submitted to GO-Invest, Buddy's International was formed with the primary objective of establishing and operating an international hotel at the Cricket Stadium Site. In their proposal for government support, company officials told Go-Invest that the hotel would contribute to the development of the hotel and entertainment industry and the overall tourism and hospitality sector of the economy.
The proposal of Buddy's International, as detailed in the MOU, envisaged the construction of a hotel to international standards to the level of Four-Star or higher, with all the relevant auxiliary structures and buildings necessary for continuous operation.
The company was required to provide financing in all areas other than those that have been designated as Government of Guyana responsibilities and this included a minimum investment of US$8M over the project implementation period. It agreed to provide managerial leadership for the operations of the facility and to hire and train local staff so that knowledge would be transferred to the local population. However, one proviso allows for the employment of non-Guyanese to a maximum of 15% of the hotel's employees, in managerial, technical and professional areas.
The company was required to work with suitable institutions and organisations to provide support in areas such as training and technical and infrastructural maintenance. Additionally, it agreed to seek to acquire goods, equipment and services required for its operations as far as possible from competitive local manufacturers. It was also required to create a minimum of 75 new jobs during construction and subsequent operation according to its proposal.
There are still many unanswered questions about the agreement between the government and Buddy's International as well as the Casique Hotel that is located nearby, including how the investors were chosen.
The secrecy surrounding the process fuelled much of the related public concern, particularly when it seemed that Buddy's might not meet the deadline to be ready for the CWC games and that funding was a problem. The swift passage of the casino gambling legislation at the start of the year also fed speculation about the terms of the agreement.