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PM Browne running his campaign on the back of Sandals and 'Butch' Stewart

By Glendon Phillip

Friday, November 10, 2017

Hiding behind a fake news website called 'Caribbean News Now', Antiguan Prime Minister Gaston Browne and his friends have been viciously attacking me for my comments on his anti-Sandals shenanigans in the Jamaica Observer.

What I have largely tried to do is to put the facts of the current spat and alerted Browne to the obvious risk of his behaviour hurting Antigua and Barbuda by driving away investors wary of a head of government attacking a major investor from, of all places, the Caribbean Community.

Browne is proving himself to be a smoke and mirrors man who is as intellectually dishonest as they come. He is also betraying his anti-Jamaican feelings which I have always known he harbours.

Given his continuation of his un-prime ministerial behaviour, I have spent some time looking behind the quarrel between Sandals Antigua and PM Browne to satisfy myself and the many prospective investors who have sought my opinion.

First of all, on the question of taxes, it should be recognised that all taxes are political and are negotiable. So an investor cannot pressure a prime minister, as Browne claims, into giving tax concessions. One can merely negotiate and enhance success by what is being brought to the table.

But, while Prime Minister Browne is claiming he is being pressured by Mr Gordon “Butch” Stewart, the principal of Sandals Resorts International (SRI), for better concessions, it turns out that it is he who is pressuring Stewart and Sandals to increase his personal hurricane donation of EC$150,000, saying that it was insufficient.

The offer was buttressed by a pledge by Sandals Foundation to spend hundreds of thousands more to help put the children of hurricane-wrecked Barbuda back to school, working in conjunction with the Ministry of Education and its agencies.

In a rather ungracious response to the personal offer of $150,000, Browne wrote: “I wish to state my profound disappointment at the level of support given by Sandals at this time of need…One would have expected large conglomerates like Sandals to be anxious to contribute meaningfully to the difficult circumstances of the people of Antigua and Barbuda.”

Ironically, Browne himself made a smaller personal contribution of EC$100,000. He was angry because he had hoped, apparently, to use hurricane reconstruction assistance as a guise to get money to bail out his Government, given his abject failure to attract any major investor since taking office.

So livid is he that he has told the Sandals Foundation to go it alone in their offer of assistance to educate the children of Barbuda: “In the circumstances, if it wishes, Sandals should distribute the school supplies without the involvement of any government agency or department. It is my hope that this letter will influence the Sandals Group to reconsider their level of support and I look forward to a pledge of additional support,” he wrote. Which prime minister does that?

He has been further pressuring Sandals to make a big donation to his ruling Antigua Labour Party's new headquarters building. I have the facts and I challenge him to prove that this is not so.

On the question of the Antigua and Barbuda Sales Tax (ABST), a consumption tax, he has caused much obfuscation. One hopes that a prime minister can at least do math. But if he can't, he should have enough people around him who can.

His accusation that Sandals had been paying only a part of the tax and pocketing the remainder is past ridiculous and demonstrates his own inability to compute the tax in accordance with the concession agreement signed with the previous Government.

When the original agreement was signed, Sandals was given a concession on the then hotel and guest levy taxes, in exchange for the building of an additional 100 rooms on the Sandals Grande Antigua resort. SRI overperformed and built 180 rooms instead.

The Government then proceeded to abolish the hotel and guest levy taxes and introduced the ABST. In order to ensure that Sandals did not suffer adversely under the new arrangement, the parties agreed an all-inclusive package where one price pays all, covering food and beverage, rooms, gratuities, watersports and tranfers (local taxis).

Consequently, the Sandals guest pays once, and it is not possible to “double dip”, as they say in the industry and collect taxes a second time. In other words, the concession was built into one comprehensive package. There is, therefore, no EC$100 million to be written off, as the prime minister so wildly claims.

But certain types of politicians will always play politics. Browne believes he has seen an opportunity, albeit through sheer dishonesty, to extract additional taxes from Sandals, not caring how that would affect the viability of its biggest investor and largest employer of labour.

Regrettably, the prime minister has chosen to run his political campaign on the back of Sandals Resorts and is trying very hard to fool the wider communities of Antigua and Barbuda and the Caribbean, hoping that they would not understand the computations. This is mischievous and appalling.

Sandals Antigua is a company which has been audited by his own tax department and for many years by the prestigious Pricewaterhouse, which gave way recently to the equally credible Grant Thornton.

Its current closure, for maintenance work, is the first in 25 years. The relationship between the hotel and the staff has been admirable, based on the presence of a principled union. While the hotel is closed without revenue, it has agreed to shorten the closure period from five to three months.

Unlike most resorts on the island when closed for maintenance — some every year — Sandals pays the benefits and 20 per cent of the salaries, in order to help out the staff somewhat. This is very much outside the norm.

Compare this to when Sandals sold the Grand Pineapple hotel last year. The new operator cut staff significantly and reduced salaries for most of the remaining staff, from levels paid by Sandals while it owned and operated the resort.

Browne is a strange man. While protesting his pain and innocence over allegations that he had received three million euros from Brazilian construction firm, Odebrecht — which has been accused of bribing numerous heads of government in Latin America to cover up or facilitate money laundering activities — he finds it so easy to tarnish the reputation of Sandals, without an ounce of proof.

Browne strenuously denied the allegations, later saying that he had been exonerated after a private arrangement with the newspaper, El Pais which he had sued for defamation for carrying the original story quoting a former Odebrecht lawyer.

He more than anyone else should appreciate the pain and anger of Stewart and Sandals when he accuses the Caribbean's top hotel brand of tax theft.

The prime minister began his vendetta when he tried to apply tremendous pressure — some would call it a shakedown — of Sandals to do further development in Antigua, including on land over which the Government had no authority.

He had been very liberal in his verbal enticements of “Butch” Stewart, offering to provide all the concessions he could ever want, and doing so, fortunately, in front of witnesses. Hence his claims that he is against granting Sandals greater concessions are shallow, at best.

All of this is not surprising, because there are other operators and proposed developments which have been offered far greater concessions than Sandals.

This whole fiasco has been extremely bad for Antigua and Barbuda as while Browne may be the 'big man' in that island, his habits are frowned upon internationally. Investors are famous for choosing to spend their money where they are most comfortable.

He says he is now willing to enter into new hotel ventures with new managers, thus risking money that Antigua does not have. This begs the question: Which group either has a better name or has outperformed Sandals Resorts?

For 25 years Sandals Antigua has earned more hard currency and contributed more dollars and cents to the country than any other company, not to mention the skills training, starting with the Sandals Corporate University, which has been able to develop human capital in Antigua and Barbuda.

The Antiguan people deserve much better than to be led by a man who has not shown any ability other than making empty promises. Mr Browne does not display the decency and refinement that is expected of a prime minister. As unfortunate as it might sound, his behaviour resembles that of a buffoon.

Browne suffers from political amnesia. He forgot that it was he who started the public spat when he went on TV to charge Sandals Resorts with grand theft and to defame Sandals and its founder.

Even in the past week, he or someone in his government also released a document which, they clearly did not appreciate, is in the first instance a comprehensive indemnity provided by the Government of Antigua to the benefit of Sandals Resorts.

He hangs his hat on a sentence which was near and dear to his government's heart of a fictitious EC$101 million. The same sentence states that Sandals neither acknowledges nor agrees to forego anything. So knowingly realising that the sentence is benign and harmless, he attaches the government's signature, for simplistic political purposes and misleading the people of Antigua and Barbuda.

 

Glendon Phillip is an international investment consultant working in the Caribbean region.