The Grenadian by Rex Resorts
By Caribbean News Now contributor
ST GEORGE’S, Grenada -- Speaking at a recent Organisation of Eastern Caribbean States (OECS) Economic Growth Forum, held in Grenada, minister for economic development Oliver Joseph said his government should offer incentives to the private sector and seek to attract foreign direct investment to create jobs, adding that the era of government being the largest employer is coming to an end.
At the same time, however, the government of Grenada, rather than working to attract such foreign investment, is actively discouraging such investment by its own actions.
For some months the government has been seeking unilaterally to terminate a 99-year lease, which was signed in 1991, and thus effectively expropriate property occupied by the Grenadian by Rex Resorts hotel, which is leased and operated by a UK-based company.
Earlier this year a court in Grenada temporarily blocked the government’s plan to seize land occupied by the Grenadian, a 172-room hotel located on the island's southern tip.
More recently, Grenada Private Power Limited (GPP), a 50 percent shareholder of Grenada Electricity Services Ltd (Grenlec), submitted a formal demand to the government of Grenada to repurchase GPP’s shares in Grenlec.
This demand was issued, pursuant to the privatisation agreement that the government entered into with GPP and GPP’s parent company WRB Enterprises Inc. in 1994, as a result of unilateral actions taken by the government that cause serious operational impairments or economic injury to Grenlec or its private sector investors.
Meanwhile, the attempt to seize the Grenadian resort has sparked concern among international investors in Grenada’s citizenship-by-investment (CBI) program.
“It would be disastrous if this happened,” said a regional lawyer and CBI agent who did not wish to be named.
“Expropriations by governments really do affect investment decisions of developers, while the perception will affect the decisions of CBI agents and, in turn, CBI applicants. It would leave a bad smell for 20 years. Why bother with Grenada when you can have a safe ride in one of our sister islands?”
It is also understood that the British government has been called to come to the defence of the UK-based company, which operates a number of resorts around the world. There are even calls to reconsider the continuation of Grenada’s visa free travel agreement with the United Kingdom.
Regional commentator Melanius Alphonse points out that the government of Grenada appears to have no coherent national development strategy.
“A 99-year lease represents effective ownership and attempting to expropriate the property in question for no legally justifiable reason simply serves the needs of the privileged few, rather than the many,” he said.
The circumstances surrounding the government’s attempt to enforce a compulsory purchase order in respect of the Rex Resorts property have also raised a number of questions locally concerning its motives.
According to local sources, a private Canadian company, Sunwing Travel Group, the largest integrated travel company in North America, which is partially owned by a German company (TUI Group) is working with the government of Grenada to seize the fully operating hotel.
If there is such an agreement in place with Sunwing, what does that agreement contain and what financial incentives, if any, have been offered by Sunwing or any other interested party to prompt Grenada government ministers to embark on such attempted seizure?
Secondly, the cash-strapped government, as the acquirer of land, would be responsible for fair compensation and, if it is successful in its expropriation, where is the money coming from?
The Grenada government has so far declined to address these issues except to make misleading claims that have immediately been debunked.
Grenadian government officials accused the Rex Resorts property managers of failing to comply with the lease agreement and argued the resort has become run down. The government claims the property is not being operated in the people's best interest.
But Rex Resorts rejected those claims, saying the hotel is fully operational and that it has invested more than US$4 million in the last five years to renovate the property, and has committed to investing another US$12 million to further enhance the property. It also said it is up to date on all lease payments, taxes and fees owed to the government.
“Whatever the rights or wrongs of this individual case, the government is acting like a strongman,” said an investor. “People will be holding off making investments in the country until they see how this dispute turns out.”
Rex Resorts has operated the Grenadian for 25 years and last year received a certificate of excellence from TripAdvisor. This recognition distinguishes the hotel from competitors, gives guests more reason to choose the hotel, and is a testament to the quality of facilities and service provided by the hotel and its local staff.
In the meantime, the resort said it will keep operating as usual, hosting new and returning guests. One thing is certain, however, international investors will be watching this case closely as it progresses through the legal system.
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