The REX, the Text and the Next

The lease of Crown lands for development purposes generally carries a set of standard terms and conditions. Typically, these will specify the purpose of the lease and certain performance criteria covering both pre-construction and operational phases of an investment project, in the main.

Note the fact that the land on which the REX Grenadian hotel sits was leased to an overseas company. So this is a foreign investment case. Keep this observation in mind as there could be negative international public relations implications for Grenada.

It is not known that the Government of Grenada has in place any administrative mechanism for monitoring the performance of hotels, which sit on leased Crown lands. Normally, these leases do not contain a schedule of performance assessments during the operational phase.

If these propositions are correct, then the first concern is how did the Government evaluate the performance of the REX and reach a determination or “the opinion” (Minister Steele) that it was not performing in the best interest of the people and economy of Grenada? Another way to look at this is to ask how did the REX become available for alternative investment?

There is an accompanying presumption in this context that where the Government is bothered by the state of the REX, having been triggered by an outsider or third party, the first order of business would be to hold discussions with the REX. The impression is given by Minister Steele that the REX was reluctant to dialogue with the Government having been approached so to do. But that disposition may well have been due to the known interest of the ‘advancing investor’, which may have caused the REX to be uncomfortable.

It is not inconceivable that such an investor may first have approached the REX and having failed with them, resorted to the Government. In any case, Minister Steele did not say that the REX was in breach of any specific provision so that it is to be implied that the Government somehow held them in breach of a provision relating to the “best interest of the people and economy” of Grenada.

On the assumption that the hotel was in breach of one or more of its performance obligations, the Government’s duty was to bring such breach or breaches to the notice of the REX and give them reasonable time to remedy same. Official statements to-date do not disclose that Government engaged in any such course of action. It would appear from the briefing given by Minister Steele recently that the Government has heard from the REX in the wake of its notice of acquisition and is now in dialogue with them “seeking a solution” to the problem.

The unbridled bravado with which Minister Steele spoke was highly reminiscent of the period of “heavy manners” whereby those who did not hear would feel the weight of the ‘Revo’, only this time without the means of enforcement by force or the gun! If his conduct at the media briefing is acceptable to the Government then Grenada is again on the slippery slope of ‘bullying by way of Office’!

The problem with this approach is that while the REX may offer reasonable proposals to remedy any existing breach, same will now be assessed, not on its merits, but against the offer proposed by the ‘advancing investor’. So here is a case of pre-existing unreasonableness, if not prejudice, which raises questions of fairness.

The logical conclusion of this reasoning is that if someone did not put “better” proposals to the Government then there would be no incentive to relieve the REX of the land and buildings, as any reasonable proposals to improve on current operations would be acceptable.

The disturbing upshot of this is that every hotel in Grenada, whether local or foreign-owned, which sits on leased lands could find itself the subject of acquisition where the Government receives proposals from others that are deemed to be in the “better” interest of the people and the economy! ‘Woiiii’! Do you understand what you are reading?

The following sequence of events and opinions seem reasonable and are presented as an aid to understanding what has happened and is happening with this matter; this may NOT be factual in every respect:

I. A foreign investor sets his eyes on the REX property and approaches the Government

II. The Government did not initiate things based on an objective and professional assessment of the performance of the REX under the terms of the lease agreement

III. Government becomes excited by the investor’s proposals including legitimate enticements and resolves to act speedily so as to seize the new opportunity

IV.  Government causes its intentions to acquire the property to be published in the Gazette

V. The REX reacts to the Government’s actions and asserts its rights under the lease; strong-arm tactics as intimated by Minister Steele, notwithstanding

VI. This causes the Government to talk to the REX as it now realises that its hands are tied, in addition to which, it is burdened by its failure to dialogue with the REX regarding its plans for the hotel

VII. For purposes of public consumption, the Government declares that the REX was not performing in the best interest of the people and economy, and offers this as justification for its planned acquisition to satisfy the public purpose requirement stipulated in the Constitution. The rider to this would be that another hotel brand on the property would better promote the economic interests of the people and country

VIII. In addition, by employing and relying on the ground at (VII) above, Government hopes to escape accusations of arbitrary acquisition of a foreign investment which would be bad for Grenada generally and the image of the Government in particular

IX. Two sets of negotiations appear to be on-going at this time; one with the ‘advancing investor’ and the other with the ‘original investor’, i.e. the REX.

X. The issue of good faith may now emerge as a problem given Minister Steele’s disclosure that “time is of the essence”. This message implies that the ‘advancing investor’ has a timeframe for having the property made available to him and the Government wishes to have the new investment on the ground in the shortest possible time to advance its own interests!

In summary, the planned acquisition of the REX property raises important issues with respect to proper procedure and fair treatment, including the prospect of arbitrary acquisition. Additionally, it may well cause all investors occupying leased Crown lands to be worried as to who may be next. All of the foregoing derives from the text of the statement published by Minister Steele on the subject at the post-Cabinet briefing held on February 16, 2016.

It is clear that there were gaps and omissions surrounding the Minister’s statement. However, the responsibility is Government’s to be clear and comprehensive in the information it publishes pursuant to policy decisions of the Cabinet. What is the public to conclude when the Minister for Tourism tells GBN News (February 22nd) that she does not have enough information on which to make a comment on the REX issue? Can it be that that Minister, not being a member of the ‘New Economy Committee’ of the Government, is a member of the “other” Cabinet only?

 William Joseph

Tagged , . Bookmark the permalink.

Comments are closed.