Sandals and the exploitation of Caribbean governments and people: An Antigua-Barbuda case study – Part One

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Prime Minister Gaston Browne (L) and Gordon ‘Butch’ Stewart

By Caribbean News Now contributor

ST JOHN’S, Antigua — On December 5, 2016, the government of Antigua and Barbuda and various Sandals Resorts entities signed a “Deed of Release and Settlement of Claim” under which the government agreed to accept the payment of EC$1 in full satisfaction of unpaid Antigua and Barbuda sales tax (ABST) totaling EC$101,424,448.54 (US$37.5 million) up to December 31, 2016.

A recent article in the Jamaica Observer (owned and controlled by Gordon ‘Butch’ Stewart, also the owner of Sandals), in an attempt to justify claimed economic benefit for Antigua and Barbuda, set out a lengthy, unsubstantiated list of local purchases by or for the resort.

What the article in question failed to mention was that any such purchases have effectively been paid for and more — not by Sandals, but by the people of Antigua and Barbuda themselves out of the $101 million in ABST that should have been paid by Sandals but was not.

Sandals has now agreed to pay ABST at the full statutory rate as from January 1, 2017 and waived from that date any right that they may have had to a discounted rate of ABST under any prior arrangement or agreement with the previous government.

Notwithstanding its agreement to the terms of the deed of release and settlement of claim, in apparent retribution Sandals closed down its Antigua property for several months without notice, ostensibly to implement previously unannounced repairs and renovation.

This closure prompted the government to introduce and pass in Parliament the Investment Authority Amendment Bill of 2017, which was designed to prevent a similar repeat occurrence, not just by Sandals but by any significant resort operator seeking to impact or manipulate the Antigua and Barbuda economy in like manner.

During the parliamentary debate on the Bill, Antigua and Barbuda’s prime minister, Gaston Browne, addressed the Sandals issue at some length, as part of a broad discussion about the hotel industry, which contributes some 17 percent of the country’s GDP.

“Are we going to allow the tourism industry to become an extractive industry? One in which workers are exploited, one in which government income is manipulated? Or are we seeking to have a stakeholder relationship in which all of us as stakeholders in industry will benefit equitably from its gains?” Browne asked, adding, “We can’t have a situation in which workers in this country are considered to be mere commodities for exploitation.”

He referred to the economic consequences when a hotel takes the decision to put 700 people out of work.

“Do you understand the effect on the living standards of these people? When you put a man out of work for seven months, how is he going to live, how is he going to take care of his family? Those individuals at the lower echelons of the industry don’t have the money to save; they’re living hand to mouth. The truth is not only are they living from paycheck to paycheck the money is so small they cannot even meet the obligations. When you deprive them of those checks for five months how are they going to survive? Those who have mortgages how are they going to pay the mortgages? Those who have can loans how are they going to meet the obligations? Those who have school fees how are they going to pay the school fees?” he asked.

“Unfortunately Sandals has taken a very myopic view about its operations. It will appear as though the principals of Sandals believe that they are the only stakeholders in this business,” Browne said, noting that that the closure of Sandals for three months, potentially five months “is an act of hostility”.

“It is an act designed to extract additional concessions from the government of Antigua and Barbuda. It is a form of retaliation for the fact that … Sandals either failed to collect 65 percent of the guests’ tax or they held on to 65 percent of it,” he said.

Browne noted that Sandals had claimed they never collected the tax in question, but asked, “If you didn’t collect it why are you paying 35 percent of it?”

In common with many other Caribbean countries and territories, when Sandals first came to Antigua and Barbuda, they extracted ten years of tax and import duty concessions.

“They paid not one cent in taxes on anything that imported into the country. No building materials, no capital equipment, no machinery, no furnishing, no fixtures, nothing,” Browne noted, pointing out, “They are still enjoying those concessions up to today, those have not been revoked.”

He also noted that Sandals also enjoy exemptions from withholding taxes, from corporation taxes so that whatever they gross in the form of profit is net, government gets nothing.

“Invariably those profits do not stay in this economy for further expansion of the business; almost invariably it is repatriated to expansion in other countries… generally speaking these profits are repatriated to support the expansion of Sandals in other counties.

“What we found was that the ten years was not enough, they then demanded 15 years, and they got it. Fifteen years tax free, free of all withholding taxes, free of taxes on everything they import into the country, barring food and beverage. Well, they had food and beverage at one point and I’m coming to that. So everything duty free, tax free. Then you had a situation in 2004 they demanded more taxes, they said 15 years is not enough, they said they wanted 25 years. They got it.

“Then in 2014 they came again said you know what, this ten years that would have elapsed from our concessions we want a renewal for another 25 years and they got it. In other words, if you look at the last ten years, they would have gotten 35 years tax free concessions [and] even though they have all these concessions they continue to manipulate the accounts.

“They have their parent company, Sandals International; a company that apparently does all of the bookings. What they do is that they will cream off the top of all the bookings $10 million … $20 million and then they will remit probably about $50 million for the two properties here. They will report the $50 million revenue from which they will deduct the expenses and then would have an overall profit of maybe about $7 million or $9 million. But you have to understand that the moneys that they creamed off the top that is going straight to profit,” Browne explained.

To be continued…

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24 COMMENTS

  1. The ABST waiver was negotiated in good faith by Sandals with the previous government in exchange for expansion of its room capacity which resulted in increased employment but which this government wickedly and capriciously revoked.

    The greedy Browne government, like its counterparts around the Caribbean, are the main economic exploiters of the people which companies like Sandals, which could choose to build their hotels and resorts anywhere in the world, have helped to raise from dependency on government handouts to self reliance and dignity.

    This is just nasty election propaganda by a desperate regime.

  2. I’ve seen nor heard anything from Sandals to suggest that Gaston Browne is not right on every count in this Sandals extortion. His parliamentary presentation and subsequent live radio pronouncements also suggest that most of Antigua and Barbuda overwhelmingly agree with him too

    • What you term “extortion,” others would call breaking good faith agreements made with previous regimes. If there is extortion, it is coming from this greedy government hell bent on biting the Sandals hand that is feeding so many of its people.

      • This C ben-David is obviously on Butch Stewart payroll so makes no sense to reason with a well rounded jackass. Congrats to you Mr. Browne for standing up to Butch the bully shame on Mr. Lovell and Chastanet

        • People like you who have a good job outside the tourist sector should be ashamed of promoting policies that would restrict the job opportunities of otherwise unemployable Antiguans.

          • C. ben are you even listening to yourself? I have pity on you if you work in the tourism sector & seem to be comfortable with the wages of the lower end employees of that sector, did you even read or listen to the presentation by the PM? These corporations are about exploitation of prime resources just like the sugar crop they’re not trying to use the tourism sector in the Caribbean to further drive developing countries into deeper poverty. Can you take a vacation? Can you say you have a comfortable amount of savings in an account? Can you say that you don’t have to worry about bills meeting each other when the month comes if you miss a workday? The average citizen don’t have those luxuries as much as they do the most work. So I agree with the A&B PM hold them accountable for all they need to pay every cent. For too long governments of the Caribbean have allowed this type of crap to continue, they looking to target T&T next these bloodsuckers. Smh!

  3. The ABST waiver was a despaeteove by a failed finance minster named Harold Lovell who was easily voted out for his incompantace in 2014. Now comes Gaston Browne who saw this move was not benefitting Antigua and Barbuda and not only revoked it but to put Butch the bully in his place. Unfortunately there are suck up like this C Ben-David who just nah love see black people strive and would kiss Butch ass. To Gaston Browne Sir the Caribbean needs more leaders like you who is will to tell these corporate bullies enough is enough we are not slaves anymore. Hope you and your party are reelected in the upcoming elections

    • Pip-squeak, two-bit politician Browne needs brilliant capitalist Stewart far more than Stewart needs Browne. The Caribbean will not be the only part of his successful tourist empire for long.

      • You really on Butch payroll. Hope when he does move he walks with you cause you kissing his ass hard. People like you are an insult our forefathers hard work of sweat blood and tears to kiss the ass of a person like Gordon “Butch” Stewart. Move on house slave and further more that tittle to go for you. Cheers to Antigua’s PM Gaston Browne don’t fear or falter to this waste of sperm named C ben-David or bullies like Gordon Butch Stewart keep fight the fight

        • Employed peope like you who have a good job outside the tourist sector should be ashamed of promoting policies that would restrict the job opportunities of otherwise unemployable Antiguans.

      • It’s because of his capitalist mentality we are still developing nations are seen as the third world by him and many in the world as well, only for exploitation. Mr C ben-David I don’t even think you are Caribbean. Do some research on Caribbean history man.

  4. Excellent report on Butch’s “everything duty free, tax free” exploitation of regional countries. Our supine, venal leaders even sign development agreements that allow Butch types to employ cheap foreign labour (Baha Mar). He might not be as devious as Ashcroft (Belize/TCI) but he’s clearly no less exploitative. Here’s to this uppity “Brown” boy from Antigua for daring to call him out for treating regional tourism as an extractive industry.

    • You talk as if he have any choice except to sign these agreements which are legal contracts between governments trying to maximize the employment opportunites of their people and corporations trying to maximize their economic well being in the highly competitive global hospitality industry.

      I guess you would prefer that our people go back to cutting sugar can under the searing tropical sun, which is the only other source of revenue countries like Antigua have.

      You people are sure brain dead when it comes to the global accumulation of wealth.

      • You sound so stupid. If that what you think of the people of Antigua you are badly off. Not everybody thinks like you and kiss butt

      • Seriously? Signing an illegal agreement with Sandals is the only alternative to going “back to cutting sugar cane under the searing tropical sun”? Give me a break.

  5. If that be as it is stated ALL THEM GOVERMRNT MINITERS MY GO TO JAIL FOR DOING THAT TO THE PEOPLE OF ANTIGUA. Let them fight among themselves how they will share 25years.

  6. Hanah and Brianna you best described C. ben-David to a tee. The good book teaches you cannot reason with a foolish man and in reading a lot of his ideas on different websites I have to scratch my head and wonder.
    He is a loyal supporter of our colonial masters and I believe he would be very happy to re-introduce slavery in these isles. His latest bullshit was to beg Vincentians to never ever vote to become members of the Caribbean Of Justice because a Vincentian Judge is now the head of that court. He wants us to stick with the British Privy Council where he claims that is the only place where we can get true justice. I have never heard of ben-David in St.Vincent which leads me to believe he is an imposter or was dropped on his head as a baby and suffers from brain damage. Don’t try to reason with a fool.

  7. The Gaston brown government just like under the table and when they not getting it they they try to disrespect honest investor.i live in Antigua the sandals group as employed the most workers that are well train and the leading hotel on island.where is csme

    • I am Antiguan and former employee of Sandals. While the employees are well trained they are overworked and underpaid. Sandals staff are the leaet paid hotel workera on the island. And if you thinj the service charge is good, well think again. They are trying to cap it at $300xcd weekly. This is how Butch stewart is taking advantage on the islands. Butch Stewart promised a Beaches resort and for 4 years played cat and mouse with the Government and when the ABLP won in 2014 he refused to build the hotel under that administration. Butch Stewart only negotiate where he has most of the benefits. He does not care about the country just about making money.

      • Thank you for this info. There is now a raging debate in Tobago where Sandals and Beaches are moving in for the kill with a govt who does not pass the smell test for transparency. The big promise is “jobs” and “airlift” so your first person account is valuable. Can you share any more info?

  8. If an investor signs an agreement with a government, and a subsequent government deems the agreement illegal, the way to go is not to curse off the investor. Sensible people know that the way out is through negotiation, and if that is not working, then arbitration, preferably by means of the courts. Gaston Browne clearly lacks the skills and sophistication of an educated prime minister, hence he appeals to the lowest common denominator. He must believe that Antiguans and Barbudans cannot see through his cheap politics, and he is right, given the mindlessness of the article above and some of the commentary we see here. Mr. ‘Butch’ Stewart has proven his love for Antiguans for 26 years. Mr Browne has been busy these past four years manipulating Antiguans to feather his own nest.

  9. I live in Antigua and I can tell you 80% of Sandals Antigua staff from the low level housekeeper to the top management position are JAMACIANS. Honstely Butch Stewart has been taking advantage of Antigua for years. From forceing the government to write off eletricty bill to the give away of the ABST about time them pay tax like the rest of us.

  10. If Melanius “Melanie” Alphonse wants to talk about full disclosure, maybe he should talk about his attempts to shake down a certain political party in the EC for $650,000, threatening to run a hate campaign against them if they didn’t give him the money, which they didn’t.

    Hmmm, I wonder who you love to hate on.

    But then birds of a feather flock together, since Gaston also demanded money for his campaign HQ and the elections from Butch, which he too did not get, and now suddenly Sandals owes taxes!

    What Melanie needs to do is leave that basement in Toronto that he and his boyfriend are living in, and tell people the truth. And talking about boyfriend, what exactly is Melanie’s relationship with GASSton?

    http://bit.ly/2Dvw5HB

  11. This chat has been enlightening we in Tobago are getting a sandals soon.
    However we the population are unsure of what deals were made with our government as it`s a closed deal.
    As it`s a secret deal conspiricies abound.
    Presently we are just hoping they don`t sell us down the road.

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