Fresh Water Bay, a place that was renamed Paradise Beach by
Cunard Lines and mothballed by Sandals, is now referred to as the Four Seasons
project by all and sundry. A private company, Cinnamon 88 purchased the
property from Sandals and launched an ambitious and highly leveraged hotel and
villa development complex that ran into financial difficulties and suspended
construction activities three years ago.
The Four Seasons project as it has been dubbed has now become
one of the most controversial of projects. It is a venture that seems to be as
firmly impaled upon the shoals of a financial reef as is the Concordia on the
isle of Giglio.
What started as a privately funded venture for profit by the
promoters, Mike Pemberton and Robin Paterson, collapsed and
eventually morphed into a project controlled by the Barbados government under
circumstances that are not clear to this day. After three years, there is a
growing perception that the venture has become a quagmire that is a growing
financial drain on the government that it can ill afford.
First the government guaranteed a loan of BDS 120 million
that was supposed to restart construction and put the project back on track.
This proved to be insufficient to even meet the outstanding payables of the
venture and after the money was disbursed to partially satisfy the claims of
contractors and suppliers, in a remarkable display of corporate welfare, the venture
remained in limbo.
Needless to say the initial investors who had paid up to 40%
deposit on their multimillion dollar homes became seriously agitated and began
to threaten legal action to recover their money. The lead promoter for the
reconfigured project, Mr. Avinash Persaud, denied that there was any legal
action being taken but persistent reports in the Irish and British newspapers
contradict this.
Last year, in a last ditch maneuver, the Barbados National
Insurance Board was asked to invest BDS 60 million in the project to put the
project back on track and to buttress the argument for support from the Inter American
Development Bank in the form of a BDS 180 million loan. The initial response
from the NIS investment committee was that the investment carried too high a
risk for its pension fund and declined the invitation to participate in the
venture.
Subsequently, under pressure from the government, there are
reports that the investment committee has reconsidered the risk and that the
NIS Board will meet next week to reconsider their position on the matter. In
the mean time in an astonishing display of clairvoyance, the Minister of
Finance has announced that the NIS Board has agreed to the loan.
One wonders what has changed in the past few weeks to alter
the risk factors for the NIS. Certainly it cannot be the claims piling up in
the Supreme Court, the most recent of which is the one lodged by Mr. Aidan Heavey. Nor can it be the investment climate in Europe as the
Euro Zone grapples with the continuing Greek crisis and the financial problems
of Italy, Spain and Portugal.
One would have thought that after the Clico
experience, we would have learnt the lesson that pension funds should not be
used as venture capital.
The public of Barbados are being treated to a
display of murkiness and obfuscation in this whole debacle. Mr. Persaud has
sought to indicate that criticism of the financing of the project with public
funds is purely political but there are legions of professional and business
people who think that this is a disaster in the making.
The National Insurance Board has an obligation
to the workers that contribute to the NIS pension fund to invest the
contributions in stable and reliable investments. The criteria for this are
well established. They should stay within the long established parameters of
prudence and be prepared to resign rather than acquiesce to political pressure
to do otherwise.
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